Effective Investment Programs For Cost Conscious Credit Unions

This economy has presented some of the greatest challenges most of us have seen in our lifetimes. Unacceptable levels of unemployment, unprecedented numbers of loans in default, foreclosures even in the real estate havens of California and New York. With challenge, however, come opportunity and a chance to review current practices looking for better ideas and approaches. Many credit unions have been offering investment services for years. In some cases, it is properly positioned as a leader on the credit union products and services menu. In other cases, it is not. Given the current need for increased revenue, growth of new members and a plan for future long term development combined with a current need for cost containment, we should consider taking a second look at how these programs are handled. With baby boomers at the door of retirement, they are naturally seeking the assistance of a qualified Financial Advisor. Who better than the familiar, friendly, service-oriented credit union to meet this need? The benefit of seeking the counsel of an experienced, knowledgeable Investment professional is access to this knowledge and expertise that has been developed over many years. The opportunity for the credit union is to meet this critical need by providing an investment and insurance program with outstanding Financial Advisors and excellent management. If a program is in place, it is important to ensure that all members are aware of the services and have the opportunity to benefit from these services. The program, however, should still be managed with an eye on expenses and cost control. Success is defined as providing outstanding service while adding and retaining members and increasing revenue. The keys are availability, accessibility, accountability and marketability. For any credit union not offering investment services, the time to prioritize this additional program is now. Timing could not be better than just as the baby boomers are hitting age 65. This is an opportunity to reach out that should not be lost. As these members develop relationships with the Financial Advisor, they will also cement their relationship with the credit union. Those who are eligible, but who have not yet joined the credit union will be presented with an excellent reason to join once they determine that they can meet their needs for retirement and investment planning in a comfortable, non-threatening environment. An investment relationship is a long term relationship and one that tends to be very “sticky”. When a Financial Advisor meets with a member, he or she will often meet them in their home. They may meet their children. They will have conversations that are very personal as the individual or couple opens up about their hopes, their dreams, their concerns, and their worries. A quality Financial Advisor is usually also a quality human being; compassionate, understanding and an exceptional listener. These conversations are valuable to the Financial Advisor gaining insight to provide a suitable financial plan, but they are also very valuable to the client who is talking through these issues sometimes for the very first time. The interaction builds a foundation for a long term, indispensable, trust-based, association. Many Financial Advisors maintain these bonds even after they have left the business and gone into their own retirement. Wouldn’t this be a valuable connection for credit unions to have as well? It is the perfect combination of the “member-first” philosophy with the high level dedication of a quality investment professional. Some credit unions who have provided investment offerings for years have struggled with profitability. They see the value of the investment program and want to retain members by offering these types of products, but they also know it takes time and resources from the credit union to do so. This does not have to be the case. Investment Programs can be very profitable when the proper combination of remote resources, technology, and cost-effective management is deployed. Financial Advisors working on commission will often prioritize the members with the greatest chance of a large investment resulting in a large commission. This presents a challenge for the credit union. While we need to serve the most profitable member in order to ensure net income for the investment program, we also need to serve all members as is our commitment to the membership. This can be accomplished through effective organization, delegation and technology. The benefit of a well-managed investment program is it should be very profitable, as well as invaluable to the membership. Credit unions of any size should be cost conscious in running an investment program and those commissioned with that responsibility must take that mission very seriously. Those that choose to hire Financial Advisors as employees can easily become buried in the fixed costs of salaries, benefits, travel, office space, computers, phones, and supplies. A generous commission structure tends to provide the most motivated sales person and the independence of the position is a good fit for the independent spirit and self directed motivation necessary for a successful Financial Advisor. What cannot be minimized are expenses necessary to support the broker and be sure he or she is an integrated, valued member of the team. Support for the broker in terms of marketing, referrals, and problem-solving is a critical piece of success. Credit unions wishing to position themselves as financial service providers need to become a one-stop shop and products and services should be accessible largely online. Between relocations, branch closures, and member growth and retention goals, credit unions interested in remaining competitive must be cognizant of online capabilities. The investment program can lead the way in achieving growth goals of the credit union and more aggressive marketing can drive new members seeking retirement assistance. The second area of competitive necessity is the application of technology to ensure cost effectiveness. Online investing programs can fill in a lot of gaps and also reduce expenses for both the credit union and the member. With an effective investment program as a primary service and a cost containment plan to ensure a reduction in overhead, credit unions of any size can offer a full range of financial products that will provide members what they need, there will be no reason for them to ever consider looking outside of their credit union for any financial service.