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


  • 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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