7 minutes
Are your retirement plans meeting the needs of all your leaders?
Broadening the perspectives of leadership is becoming a strengthening pillar of credit union growth strategy. Not only can a diverse C-suite attract a diverse employee and member base, it can also inject top-down ingenuity capable of earning the credit union actual dollars-and-cents benefits.
More people of color are joining the C-suite and board-of-director ranks. Minority representation on credit union boards increased to 14.2% by 2021, according to a report from CU Collaborate. As for people of color holding management positions, the National Credit Union Administration’s most recent self-assessment workforce profile shows a rate of almost 30% who identify as nonwhite.
Diversity Calls for Mindful Changes to People Practices
As these numbers indicate, strategically diversifying the C-suite and executive up-and-comers is not easy. It takes intention and mindful changes to hiring practices as well as internal operations. To attract, hire and retain diverse leaders, credit unions can consider a range of initiatives—key among them, rethinking executive benefits packages that can flex and shift to the distinct needs of each leader.
Benefits packages are critical retention assets, not only for current department heads but for those rising through the ranks. Emerging leaders who see the credit union’s commitment to personalized experiences may be more likely to stick with the organization for the long term. That, in turn, increases the chances that leadership continuity plans will play out as designed.
Get Curious About How Diverse Leaders See the World
Hands down, the best way to ascertain what’s important to any CU executive is to ask. That said, unless leaders know the right questions to ask, the strategy is a nonstarter. Complicating matters is that some people struggle to ask for what they want or even know what they want. For this reason, it is incumbent on CUs to increase their awareness of the many different attitudes, values, motivations and beliefs that exist across diverse leadership segments.
What follows is by no means an exhaustive collection of the nuanced mindsets that comprise multicultural leadership. Think of it as a tip-of-the-iceberg set of feelings and thoughts that run counter to the mainstream. Exploring how multicultural leaders may see the world differently builds empathetic muscles, making it easier for CU change agents to push against the status quo and make a meaningful difference.
Lack of Familiarity with Retirement Plans Moves Back the Starting Blocks
According to a report from the AARP, many multicultural employee segments in the private sector, but especially Asian, Black and Hispanic segments, historically have had much less access to workplace retirement plans. Thinking generationally, credit union executives who did not grow up hearing parents and grandparents discuss 401(k) plans and tax incentives at the dinner table have a much different starting point when they enter the professional workforce than those who did.
In recent TruStage™ consumer research, Black, Hispanic and Native American people were least likely to own any investment products. Most of the people of color who said they do own investments can credit the opportunity to their employer for sponsoring a plan. In addition, very few representatives of these segments said they work with a financial professional (37% of Black consumers, 25% of Hispanics and 23% of Native Americans).
When top-tier leaders have not received adequate exposure to proper benefits, they may not know to ask for them. It may be a much more equitable and transparent approach for CUs to advise—rather than to merely ask—which benefits executives to expect.
How to Earmark Money Varies from Executive to Executive
One person’s vision of retirement may be quite different from another’s. So, too, may the notion of how much money is enough—for not only retirement but also for leaving a legacy. Whereas one CEO may fantasize about leaving a windfall to a set of heirs, another may hold the financial values of a “die with zero” enthusiast.
The TruStage survey highlighted some of these differences when asking multicultural groups about their top concerns. For instance, a greater number of Hispanic people were focused on saving for retirement, whereas a greater number of Black consumers said leaving an inheritance was the most important factor to their investing.
It’s important to consider that end goals aren’t the only area of difference. As discussed above, starting blocks on the financial journey are set differently for traditionally marginalized groups. Female executives, for example, may come to a leadership position with fewer earning years under their belts. Their 35 biggest-income years, therefore, may not be as high as their male counterparts, reducing their expected Social Security payout.
Understanding the emotional drivers for investing, as well as milestones reached along the savings journey, can help credit unions collaborate more closely with their executives on designing the best benefits package.
Perceptions and Tolerance of Risk are as Unique as the Leader
Interestingly, risk preferences across racial groups may also contribute to differences in financial investments. Hispanic and Black households tended to perceive financial investments as riskier than their White counterparts. According to the Office of Economic Policy from the U.S. Department of Treasury, between 2013 and 2016, 23% of white households reported being willing to take at least “above average” financial risk compared to just 17% of Black and 14% of Hispanic households.
Life insurance, in general, however, proved to be most attractive to multiracial and Black consumers in the TruStage research, with six in 10 saying they purchased life insurance within the last five years. Four in 10 said they intended to purchase life insurance in the next five years. Women, too, tend to have a lower tolerance for risk. In many ways, this makes female executives a great match for most CUs. Yet, the tendency to be careful can backfire when it comes to planning aggressively for a financial future.
CUs may want to consider the possibility that an investment benefit that appeals to some executives may be off-putting to others. Understanding how a particular individual performs their risk-reward calculation of different investment, insurance and retirement strategies will be essential to crafting a truly engaging package.
Ask Empathetic and Educated Questions
Again, the above is merely a small sample of the full spectrum of executive needs and wants, beliefs and ambitions. Each credit union will require its own exploratory endeavor. If possible, learning sessions should be led—or at a minimum, attended—by an individual who shares a similar background with the executive. (They may need to join from outside the organization.) Especially for women and people of color, who tend to have greater battles with imposter syndrome, feeling they aren’t up to speed on the smartest personal investment, insurance or financing strategies can get in the way of candid conversations.
When asking empathetic and educated questions of executives, consider the following questions. Giving the executive a look at them well in advance is a best practice, as is advising employees that participating in a learning session like this is purely optional.
- How do you feel about our credit union’s existing executive benefits package?
- Does the package fit into your personal plans?
- What would you change or add?
- Would you advise a close friend with similar experience to accept the same benefits package?
- Are we neglecting to consider any cultural nuances in the design of our benefits package?
- Do you have financial goals that the CU can help accelerate?
- Who are the people you consider when you evaluate career or compensation decisions?
To ensure empathy-building with executives happens on a continual basis, credit unions may want to add regular exploratory talks about their internal policies and/or procedures. Working with an outside consultant committed to frequent touch-base meetings is another way to bake in some accountability to help keep executive benefits fresh, relevant and inclusive. cues icon
Opal Tomashevska is director of multicultural business strategy for CUESolutions provider TruStage. Kwame Smith is executive benefits specialist for Cuna Mutual Group/TruStage. They can be reached at Opal.Tomashevska@trustage.com and Kwame.Smith@cunamutual.com.
CUNA Mutual Group and Cuna Mutual Group are marketing names for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. CPI Qualified Plan Consultants Inc. and CMFG Life Insurance Company are subsidiaries of the CUNA Mutual Holding Company. Annuity insurance products are issued by CMFG Life Insurance Company, located in Madison, Wisconsin. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Securities distributed by CUNA Brokerage Services Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 866.512.6109. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value, and are not obligations of or guaranteed by the financial institution. Representatives offer retirement and investment education but do not provide investment, legal or tax advice. Participants are encouraged to consult their financial professional. CMRS-6020378.1-1023-1125
