The next frontier for personal finance: senior citizens

In the mid-1990s, Cindy Hounsell worked at a job where her pension was frozen and didn't know where to turn. With support from the Heinz Family Foundation, she started a nonprofit called WISER in 1996 to draw attention to the financial challenges facing women like her in retirement. Now, WISER, which is based in Washington, D.C., reaches thousands of seniors across the U.S. Its website has extensive information on savings and retirement, healthcare, social security and a retirement income calculator. Hounsell uses online banking herself to review her balance and pay bills and likes the idea of robo-advisers. But she said many seniors, even the educated and professional, don’t even know how much money they have for retirement. "They're looking for live people to help them with whatever it is they need." While many personal finance tools are geared towards millennials, the market for technology-enabled financial management tools for seniors is growing. According to census data, there were nearly 48 million Americans 65 or older in 2015, a figure that's projected to increase more than two-fold by 2060. But since many personal finance tools have been developed with young, tech-savvy customers in mind, some industry watchers argue that there's a gap in the market for products specifically tailored to older Americans or their families. "Personal finance management is totally tailored to millennials, and it's missed the mark," said Evin Ollinger, CEO of Golden, a personal finance platform tailored to older customers. "Baby boomer finances are dramatically different. You have home ownership, fixed assets and government benefits that paint a very different picture." Older Americans are getting online in larger numbers, and many own smartphones, making them good candidates for finance tools that use technology. The Pew Research Center found that last year, 64 percent of Americans 65 or older used the internet, a figure that's doubled in ten years. Smartphone adoption is also up, with 42 percent of Americans 65 or older owning a smartphone in 2016, up 15 percent from a Pew survey conducted three years before. The problem is getting people comfortable with tools they aren't familiar with or simply don't trust. How seniors manage money is also complicated by the effects of aging. Recent research from the Boston College Center for Retirement Research reported that mild cognitive impairment becomes common when people reach their 70s, affecting financial judgement, including the ability to make decisions in their own interests. As a result, seniors are more vulnerable to fraud. "You start to lose the ability to be able to manage your money, and even cognitively normal people who enter the boomer years may start to lose insight as to whether something is legitimate or a scam," said Elizabeth Loewy, co-founder and general counsel for EverSafe, a technology solution that connects to a customer's financial accounts to determine spending patterns. It alerts them of activity that's unusual or suspicious, like a missing deposit or Social Security check or changes in spending. Golden gives customers a dashboard of their finances and crafts budgets for them. It also lets seniors give their adult children to have access to the financial data, so they can act when their parents are in trouble. "Most adult children have no idea of their parents' financial picture -- if mom falls down and goes to the hospital, you're stepping in immediately," said Ollinger. "What we looked at is how we can socialize personal financial management across generations." There's a market for tools to let family members co-manage a senior's finances. Some startup personal finance app developers feel millennials and seniors share a lot of the same goals, though, and that the technology is evolving to a point where both older and younger users can benefit from it. "We see a gap in consumers having one meaningful place they can go to get a snapshot and get tailored [financial] recommendations," said Colin Kennedy, chief revenue officer at personal finance app Clarity Money. "The technology is agnostic in terms of age group but the benefits are going to be specific to age groups," he said. For instance, baby boomers would be interested in the ability to cancel subscriptions and chat with a live associate. Although Clarity Money's customers are mostly millennials, the company maintains it's aiming for a wider span of customers. "We stay away from 'kiddish' language and millennial jargon," said Marc Atiyeh, Clarity's chief strategy officer. "We try to foster advocacy and trust." But trust is where third-party apps don't do as well with older customers. An established brand name means a lot more than for baby boomers than their younger counterparts. "For seniors it comes down to two factors: brand trust and perceived security," said Peter Wannemacher, senior analyst at Forrester Research. Consequently, banks are increasingly reaching out to older people. For the past year, Capital One has been working with New York City-based nonprofit Older Adults Technology Services and learning platform Grovo on a training program for seniors called "Ready, Set, Bank." Online videos and in-person classes teach seniors how to use mobile banking apps, set up account activity alerts and enroll in direct deposit for social security and retirement benefits. "We believe that digital products and tools will ultimately increase access, and we will continue to focus on bridging digital and other barriers to ensure everyone has access to the banking system," said Mariadele Priest, senior director of community development banking at Capital One. Kony, a technology company that works with 65 banks globally on mobile apps and personal finance tools, said banks are paying attention to older customers because of the significant proportion of the wealth they control. "Based on the feedback from banks and credit unions, it would look like a simplified interface -- the core things they need, and it's less busy with bigger fonts," said Carlos Carvajal, chief marketing officer at Kony. He added that clients are also exploring chatbots powered by voice and facial recognition technology and folding personal finance tools into banking apps with older customers in mind. "They've made major investments on the user experience side, and as they do their analysis, they can't ignore the baby boomer segment," said Carvajal. "Baby boomers have different needs than millennials or other segments -- one size doesn't fit all." Photo of Gustavo, a technology student with Tom Kamber, executive director of Older Adults Technology Services (right), courtesy of Older Adults Technology Services