RALEIGH, N.C. -- As the gap between the poor and the wealthy continues to widen, State Employees' Credit Union is hoping that a series of investment product and service rollouts will help to correct the disparity.
Among the $13 billion credit union's latest offering is the debut of the Bridge Account with the mission of encouraging members to save and educating them on stock market investing. The account requires a minimum $25 deposit and a maximum balance of $3,000. Dividends paid on Bridge accounts will be based on the quarterly change in the S&P 500(R) Index. The maximum quarterly dividend will be 3% [12.00% annual percentage rate/12.55% annual percentage yield], according to SECU. If the market returns are positive, dividends will be paid up to the maximum rate. If the market returns are negative, no dividends will be declared for that quarter, but there will be no loss, the CU said.
"What gave rise to the account was having a tremendous focus on members that are not getting wealthy," said Joan McCool, senior vice president of investment services at SECU. "We want to help create wealth. We want to build a bridge to freedom and independence."
Since the Bridge account officially launched on April 2, 1,463 accounts have opened totaling slightly over $2 million, McCool said. The account also made its debut at $660 million Local Government FCU, SECU's sister financial institution, with 33 accounts opened for a total of more than $40,000. SECU did a soft rollout of the account in May 2006 to get the reps' "feet wet," McCool said. For those members who may want to transition to a brokerage account, opening a Bridge may be the way to go, she added.
"A lot of brokers want the really big dollars," McCool said. "We're trying to reach those who may not know they need a Roth IRA."
In February, SECU began offering brokerage services including Vanguard mutual funds through its broker, XCU Capital Corp., which provides investment and insurance services to more than 30 credit unions.
"It's moving along. We're pleased with the start," McCool said, saying more than 140 brokerage accounts have been opened totaling $3 million. "It's a totally new thing for SECU. We don't pay commission, our reps are salaried. We just want our reps to have the credit union philosophy firmly in heart."
The brokerage services are a follow-up to SECU's Financial Assessment Tool, which was introduced to members in January 2006. The Financial Assessment tool gives members the opportunity to evaluate their general financial condition, including net worth and cash flow, and identify progress towards meeting financial goals such as retirement and education funding. McCool said members have the option of using the tool on their own or they can come into the branch and get assistance from staff. --firstname.lastname@example.org