Investment Services Cement Member Relationships

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

July 13, 2011
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Consider vendor options

The credit union/broker-dealer relationship is an important one. “When we reviewed broker-dealers, we did a broad search and narrowed the choice to four programs,” Petersen explains. “We decided on CUSO Financial Services, and they do a terrific job. We now have a player/coach investment manager who supervises a department of five.”

A few years ago, the investment area lost its manager and Workers’ Credit Union outsourced the service to keep it functioning. “In hindsight, that ended up being a good thing,” Petersen says. “That company—a credit union service organization called Gateway Services Group—helped us with sales goals and with recruiting and hiring the right manager. Having that company here also gave the new manager the luxury of getting his feet wet while that company continued to manage the investment business.”

When considering third-party providers, Palmer suggests credit unions analyze the companies’ training, recruiting, and integrity. “Ask for copies of their Financial Industry Regulatory Authority report, which shows any major issues they might have had with state or federal regulators.”

Metz also suggests looking at flexibility in case you want to switch to a different provider at a later date. In addition, make sure the company has a strong support infrastructure to provide guidance and troubleshoot issues, a multifaceted training program, thorough compliance oversight, a solid technology platform, and marketing support.

Toes back in the water

Demand for investment services continues to grow, says Muller, particularly for retirement planning as baby boomers prepare to leave the work force.

There’s a great need for these services: More than 40% of baby boomers haven’t saved enough to meet basic expenses in retirement, according to the Employee Benefits Research Institute, as reported in CUNA’s 2011-2012 Credit Union Environmental Scan  Report (“Total household retirement savings,” p. 38). And 25% of boomers have no retirement savings at all, according to a recent Harris Poll.

Petersen has seen increased demand for variable annuities and mutual funds. “Members are starting to put a toe back in the water when it comes to the stock market. They’re going into investments with a little more certainty and are extending themselves on the risk curve a little more.”

Once members learn their credit union offers investment services, they embrace the fact that they’re available from an institution they trust, says Metz. “There’s a large wave of people nearing or entering retirement. Most of them know they need guidance.

“Saving, protecting assets, and investing have become more complex,” he continues. “There are more options: target date funds, target risk funds, exchange traded funds, guaranteed minimum withdrawal benefits on annuities, indexed annuities, Treasury inflation protected securities, whole life versus term life insurance. Working with a financial professional can help guide members through this complicated maze to a more secure financial future.”

Stay Involved, Even If You Outsource

Even if a retail investment program is outsourced, credit union management and staff must be involved to ensure its success.

“These programs take time to build, and require care and nurturing,” says Jim Metz, president/CEO of CUNA Brokerage Services. He says that involves:

  • Training staff. Help the entire staff understand what the investment program does and how to identify referrals. Show staff that senior management fully supports the program.
  • Offering referral incentives. A small amount paid to a referring teller or member services representative for qualified referrals will reinforce the importance of promoting the program.
  • Scheduling seminars and events. Host seminars such as “How to Not Outlive Your Lifetime Savings,” where members can ask questions—and not just receive a sales pitch. Partner with a local accountant or estate planning attorney, or hold a financial health fair.
  • Growing awareness. Raise members’ awareness of your investment and insurance services with in-branch campaigns, mailings, and roundtable lunches for members and their guests.
  • Considering a registered member services representative program. Register some member service representatives so they can handle mutual funds and annuity sales. These “platform representatives” can handle smaller, less complicated investment and insurance services.
  • Making investments central to your service. Build your investment and insurance program into a core offering.
  • Providing adequate support and seeking advice. Support your program with appropriate resources and actively oversee it. Learn from the broker-dealer consulting team about how the program can grow.




















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