SPRINGFIELD, Ore., AND COLORADO SPRINGS, Colo.-The Credit Union Service Organization concept has arguably arrived in Credit Union-land, with expansion among presently organized CUSOs taking place and the formation of new ones in progress. But from there on, it's all a very large puzzle with irregularly shaped pieces that present a challenge to even the most astute and experienced credit union CEOs. Gary Gores has reams of experience in organizing structures in the financial services arena and none too little time served in the credit union league support area too. After taking some time off after leaving his post as president of the Ohio Credit Union League, he's baaack! And he's reentered not at the league/political level, and not as a credit union president, but in a place he describes as "where the action is." That place is CUSOs. Welcome to his world, he says. And the world he's trying to make sense of, the very same situation that many credit union presidents and their CUSO president/manager counterparts find themselves in is this: how do you reconcile the operations and services of a credit union and the operations and services of a CUSO? "Well," said Gores in a recent interview- in the relaxed manner of a man who had taken two full years to travel, get closer to his family and view the splendor of the Pacific Northwest- "it's got to be an integrated effort." Just as he saw from his vantage point of working in the savings and loan industry that credit unions were a better approach to the delivery of financial services, then transitioned from the trade association side to his present and challenging position as business manager of SELCO Group Inc., the wholly-owned CUSO of SELCO Credit Union (Service Employees of Lane County CU) the evolution of the CU philosophy is a prime directive. And incorporating that philosophy, as much as possible, into the CUSO's offerings is a task he has taken on, with relish. It helps to have a credit union CEO that speaks the same language, and Gores credits the changes and growth plans he has for SELCO Group as being possible because of the "culture embodied by Ana Milosevic." "No individual institution can take these things on without a partner. The price of poker has gone up. The CUSO needs the credit union and the credit union needs the CUSO. They need to work together, make that blend together," said Gores. And so do the people trying to make the mix work. "He's pretty gracious," said Milosevic, upon hearing that, "but it's genuine." She recalled that when discussing the possibility of the job with Gores, she wondered if he'd feel fulfilled, if it would be enough. Now, she said, "He's having a lot of fun doing it." SELCO Group Inc., has been around since 1982 (it was formerly known as Member Benefits, Inc.) and has three primary business pursuits: insurance services, consisting of AD&D, personal and supplemental insurance for Medicare, and property and casualty lines; the financial solutions area, offering asset management and financial planning, which is administered by FINC; and a communications division, which sells wireless communications services and cellular telephones. It's Gores' challenge now to somehow meld the sales culture of the CUSO side with the service-driven philosophy of the credit union side, he said. Milosevic is keenly aware of the possible tug between the two. "You have to begin by asking, `What does integration mean?' because on one side, you've got a for-profit company and on the other, you have a not-for-profit, and there are a lot of reasons to keep them totally separate. You must have separate management agreements and division of responsibilities." And when there is crossover (as there are in many CUSOs, especially the start-ups) there's got to be an understanding of those cultural differences. But Gores doesn't see a clash as much as a test of communications power. "The service corporation allows us to communicate even more directly with members (on subjects the credit union cannot). We can connect more of the dots so that we can provide more services. It's the heart of the relationship business.," said Gores. It's hard to establish a firm figure for the total amount of dollars under management at SELCO Group, he said, because they are cast about in various places. One of his goals is to achieve a single statement for members in the future, he said. Right now, he's busy doing all that integrating, which means having all employees understand how all those puzzle pieces fit together. SELCO CU members in the state have been (as local government employees) partaking of the PERSs plan, the Public Employees Retirement Plan, which has been compounding at or near 25% per annum. That means that a lot of members discover their nest eggs can range from $300,000 to $1 million, no small change. Just who to trust that kind of nest egg with is critical, and therein lies the big CU advantage, said Milosevic. "This integration thing has to be transparent to members, but not to us. When we offer a product or service, even if it's through the CUSO, the members see the credit union. To them, it's the same; they don't care if it's a subsidiary. So there is a lot more riding on the integration of the two than meets the eye. It can affect the overall credit union." And where is that nexus more important than in the guarded "trust" that credit unions have so painstakingly earned (over decades)? "It's like this: if a member buys a cell phone at the AT&T store and is dissatisfied with the product and service, they don't close all their banking accounts. But if they get a phone from us and aren't happy, they're mad at the credit union." That's why, she said, the selection and due diligence process for CUSO offered services has to be precise and thorough. In Colorado Springs, where Glenn Strebe is CEO of Air Academy Credit Union, the concept of integration is also on the table. Strebe is a frequent speaker on the topic of CUSOs (he did a recent session for the CUNA CUSO Institute in New Orleans). One of his favorite topics is the cultural aspect of aligning the two efforts, another is the compensation scale differences between a CUSO's employees and the CU's employees. "It's a shifting of the hats we usually wear," he allowed. Air Academy's CUSO, called Air Academy Service Corp., runs a very successful mortgage operation, he said. The employees are mortgage professionals, not CU people trained to sell mortgages. Coming from that area, they are used to quite a different pay scale and compensation method. How to have both? "Things have to be bottom-line driven on the CUSO side," said Strebe. "It's got to be a profit-motivated thing; not cold hearted, mind you, but it is a different mind-set from a credit union mind-set." A CU, he said, can live with some product offerings that are less profitable because in the mix, any slack in one area will be made up in another, balancing it all in the end. But in a CUSO, especially if it's a single-line offering, like mortgages or financial planning, if there is a weakness, it causes pain right away. Air Academy Service Corp. is very big in the mortgage side, but also offers financial planning. It's not in the cards right now to venture much farther than those related fields, said Strebe. "I'm very big on core competencies," he said. So it's more or less stick to what you do best and learn to do it better than most of your competitors, and you'll be successful, he believes. "There's always going to be bumps in the road. "A good mortgage person can make upwards of $100,000 in a good year," he said. And financial planners can make at least that and more on a commission basis. But as a credit union CEO, it may take years (if ever) to earn the high-end salaries that bank presidents of similarly sized institutions make. Which brings to mind Gores' path of discovery and introspection; the one that led him back in a serpentine way to a CUSO that seeks to complement its sister credit union. It's the same reason many credit union people stay in credit unions. It's not just about money. "When my time is up, at the end of my life, will I think to myself that I should have made more money, or will I ask if I spent enough time with the people I love?" So there does seem to be a way to combine both the personal and the professional. It's just a matter of good integration. -
caburger@cutimes.com
