Let’s get our hands dirty.
There’s a Kurt Vonnegut short story about an alien named Zog who visits the planet Earth. He comes with the noblest cause: to explain how war could be prevented and cancer could be cured. His home planet is Margo, where everyone communicates through farts and tap dancing.
Zog landed at night in Connecticut. He had no sooner touched down than he saw a house on fire. He rushed into the house, farting and tap dancing, warning the people about the terrible danger they were in. The head of the house brained Zog with a golf club.
(from Breakfast of Champions)
What a nice picture of the relationship between credit unions and young people. Both need to reach each other, badly, but both tend to completely miss each other. And then someone gets clubbed and a house burns down.
Gen Y needs help.
Here are some snapshots of the state of the union (pulled from the Filene report “Reaching Generation Debt“):
- By 2004, people under the age of 25 were the fastest-growing age group in bankruptcy declarations 1
- Also in 2004 (the latest year with national data) 25 - 34 year olds with credit card debt used an average 25% of their income to pay off debt, and 45% of them used credit cards for day-today-living like rent and groceries. 1
- As if we need another crisis: “Analysts say rising defaults, coupled with federal subsidy cuts, are beginning to strain the student loan industry…the question is whether a similar crisis [to the mortgage crisis] is on the horizon for student loan borrowers.” 2
- More than half of Gen Yers aren’t saving for retirement because they’re busy with other financial obligations…like paying down their massive debt. 3
- Financial products are more complicated - 401(k)s, IRAs, student loans, and credit cards are all relatively new - and financial literacy is as dead as a doornail.
I could go on, but you get the picture. The situation is dire. Because credit unions’ actions are driven by people and social responsibility, and not lining the pockets of stockholders, they are the group to get us out of this mess.
All growns up (too growns up).
Because credit unions and their members are dying (sadly, I mean that literally). Here are some bits that most CU industry folks have heard before:
- The average age of a credit union member? 47 years old. The average age of a board member? 52.
- Prime borrowing years are 25 - 42. And as the older members continue to age, their borrowing needs dwindle and they want a higher yield on investments.
- I don’t know the stat offhand, but I do know that credit unions are merging and shutting down like crazy. Maybe one of you can help me with that in the comments.
- Only 6% of people ages 19 - 24 have said they’d use a credit union for their next financial product. 4
To quote Cornerstone’s Steve Williams:
The point is, we’ve got to replace the old customers that we lose – God bless ’em – with new, younger ones.
Again: The situation is dire.
What can we do about it?
Let’s get our hands dirty.
I’m completely floored to announce that I’ve partnered with the Filene Research Institute for the next year and a half to lead their Young Adult Implementation project. The project picks up where Ben Rogers and the 30 Under 30 (not a bad band name) left off - I’ll work with credit unions to put Filene’s Gen Y products and strategies into action.
I’ll be working alongside some of the smartest people in the industry helping to solve the problems that get my belly all firey. It’ll be hard work, it’ll be exciting, and together we’ll make people’s lives better.
Let’s do this. Who’s in?
Stuff I referenced:
1. Dirk Smillie, “Bankrupt by 25,” New York Times, April 5, 2004
2. National Consumer Law Center, “Paying the Price: The High Cost of Private Student Loans, March 2008, Consumerlaw.org
3. Fidelity Investments, “Fidelity Research on Generation X/Y Shows that Financial Intentions and Actions Are Often in Conflict, “news release, August 28, 2008, www.reuters.com/article/pressRelease/idUS140580+28-Aug-2008+BW20080828
4. Aite Group survey of 307 Gen Yers, May 2009
