GREENWOOD VILLAGE, Colo. - While Bellco Credit Union had been offering investment services to its members for years, it had unfortunately reached a point where some changes needed to be made.
One of the main problems was the $1.6 billion credit union did not have the control it wanted over the program and its personnel, said Sandra Blodgett, Bellco executive vice president and chief operating officer. Another nagging problem was "the poor rapport" the previous broker/dealer had with the credit union. "Penetration has always been an issue," Blodgett said. "We've been much more effective with getting the word out to members. When members come to a branch, they're not only speaking to our employees but also the investment advisory reps." The change in Bellco's investment program came in February 2001 when it hired Gateway Services Group, LLC, an investment and insurance management provider to credit unions. Gateway handled the search to find a new broker/dealer and ultimately tapped CUSO Financial Services, LP, the credit union-owned entity. Gateway also took over the management of reps and assistants and added additional support staff to free reps for more member interaction. "We're able to set goals everywhere, whether they involve reps in branches or the call center," Blodgett said. "We have reps who will visit the call center on a regular basis to educate our staff and talk to members." In its first year since retooling, the investment program earned more than $1 million in net income, according to Gateway. Last year's net income increased by 35% over 2004. Several reps have been recognized as Top 50 investment reps by several sources including CFS. Today, Bellco has $289 million in assets under management and 6,600 accounts in its investment program. Blodgett said it's aiming for a 20% penetration of its more than 151,000 member base, a lofty but attainable target since the asset under management per member is "pretty high." Blodgett goes back to the interaction between reps, front-line staff and other employees to ensure that investments are integrated right along with other core credit union products. Gateway created defined branch territories and created guidelines for interface between staff to make that assimilation happen. Founded in 2003, Gateway has serviced more than 100 credit unions. From the beginning, two of its premises have been to promote investments as a core product and encourage credit unions to become the primary financial institution, said Judy Sandberg, Gateway's vice president of strategic direction. That relationship building can lead to other cross-sell opportunities such as refinancing a home, car or changing the way assets might be situated, she added. "A lot of credit unions can leverage those opportunities," Sandberg said. "The nicest thing is when regulations changed and credit unions moved their investment programs [in-house]. The big picture is integration and the possibility of earning of non-interest income." Sandberg acknowledges that industry-wide, penetration of investment services to members still tends to be low but like business lending, the area is still very new to some credit unions. "There's still a bit of an awareness issue," Sandberg said. "When credit unions started offering mortgages, it took some time to get it up and running. It's a normal transition." Bellco members typically have higher incomes, Blodgett said. That may be an edge for the credit union and others with similar member demographics when it comes to offering investment services. It's not that smaller credit unions, which Sandberg describes as those under $100 million, can't have a viable investment program, but another approach may have to be considered. For instance, Gateway is in the early stages of interviewing several credit unions with $30 million in assets to pool funds for a networked investment program. "It's important for smaller credit unions to be able to use investments to be competitive because they're struggling now," Sandberg said, adding they're still important to the industry. Another area Gateway is starting to delve into is trust services and estate management. The firm has hired someone with trust expertise to help counsel members. "One of the challenges is how do you integrate trusts and investments," Sandberg said. "They tend to be separate. We're just starting to learn more." Meanwhile, Blodgett said Bellco will continue to build on the success it's had over the past five years. "We're extremely happy with what we've accomplished," Blodgett said. "We will continue to focus on penetration." -firstname.lastname@example.org