Management

Investment Services Cement Member Relationships

They pave the way to increased profitability and stronger member ties.

July 13, 2011
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Investment Services

  FOCUS

  • Before offering member investments, understand how to set up, maintain, and nurture a program. Or find a provider that can.
  • A one-stop shopping approach helps CUs retain and grow member assets.
  • Board focus: There’s a great need for investment services—25% of baby boomers lack retirement savings.

 

Retail investment services can strengthen a credit union’s relationships with members by providing access to the advisory and brokerage services members say they need.

But before entering this realm, credit unions must understand how to set up, maintain, and nurture a retail investment services program—or find a provider that can.

Member business grows

When Workers’ Credit Union, Fitchburg, Mass., introduced member investment services more than 10 years ago, concerns over disintermediation—the withdrawal of core deposits to the investment side—weighed heavily on Doug Petersen’s mind.

“We wondered if we were going to lose our certificate money to investments,” says Petersen, CEO of the $800 million asset credit union.

But those fears weren’t realized: About 85% of members’ investments come from sources outside the credit union, and any funds gleaned from certificates have been replenished and then some, Petersen says.

“We do even more business with our members as we get to know them better,” he says. “As the program matures, we’re seeing more success. Last year was our best year ever.”

The credit union earned $960,000 in gross dealer concessions in 2010, up from $940,000 in 2009 and $750,000 in 2008. This total represents 26 basis points in noninterest income. Assets under management have grown from $70.6 million in 2008 to $111.6 million in 2010, Petersen reports.

Maps Credit Union, Salem, Ore., also finds investment services don’t take away from credit union deposit accounts. In fact, the opposite is true at the $390 million asset credit union, which offers a full line of investment and insurance products.

“The investment department adds far more to traditional credit union deposit accounts than it removes. On average, our investment department brings
$5 million into the credit union each year,” says Wayne Muller, chartered financial consultant for Maps. “Credit union accounts are used as the conservative portion of the investment portfolio because of their safety and relatively favorable dividend rates.”

The credit union’s investment and insurance offerings have allowed the credit union to serve as a one-stop financial solution for its members, he says.

“Providing investment services allows the credit union to be the only financial resource members need,” Muller says. “The investment department has built up a reputation for great service and integrity, and that encourages new members to join the credit union.”

Next: Retain members and assets

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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