Right Adviser, Staff Incentives, Service Help Revive Sound CU's Investment Program
TACOMA, Wash. -- Throughout the 1990s, Sound Credit Union's investment program languished as it tried to find its fit with members and employees who weren't totally convinced about promoting products and services that they felt weren't in the best interests of the membership.
That's how Denise Reagan surmised it. Reagan, executive vice president/chief operating officer, who has been at the $375 million CU for 25 years, has witnessed the highs and lows. And, it wasn't due to a deficiency of effort from Sound to build the investment program.
"The trust or lack thereof with prior programs and prior reps were some of the obstacles," Reagan said. "A lot of our employees are long-term employees. They value the members' ownership. If they don't feel [certain products and services] are best for members, they won't push them."
Sound contracted with a well-known industry provider in the early 1990s but switched to another vendor in the late 1990s hoping to see better results, Reagan said. When those returns never came, the credit union decided about a year ago to make some strategic moves to increase investment service penetration among its nearly 37,000 members. After conversations with peers at conferences, Reagan and Richard Brandsma, Sound's president/CEO, came to the conclusion that it was important to find a vendor that truly understood the credit union model. Last summer, Sound CU partnered with CUSO Financial Services LP, a credit union broker-dealer and investment adviser with more than 120 clients.
Gateway Services Group, an investment and insurance management support provider, conducted the search for the adviser. This time around, Reagan said it was important for Sound to be involved in the interviewing process. After meeting several candidates, financial adviser Paul Stevick was hired. Having the right person in house was a critical starting point, Reagan said.
"The [CFS] people were knowledgeable and approachable, and the approach was better suited for our credit union," she explained, adding Stevick has done an impressive job meeting with staff and is accessible to members at each of the credit union's 10 branches as well as in the evenings and on the weekends.
With the right adviser in place, Sound set out to inspire employees. Incentives were rewarded for investment service referrals, Reagan said. As expected, that has motivated staff--and it's kept Stevick so busy that the credit union has discussed hiring an assistant.
Sound now has 225 investment program accounts totaling $8 million in assets under management. This includes $7.2 million in new clients and $750,000 recently acquired from a former advisor, according to CFS. Assets under management represent 2.13% of the credit union's total assets. Stevick generated $40,000 in gross dealer concessions in his first month. In April, Sound's earnings from financial services were roughly $6,450.
In a competitive marketplace with community banks and one of Washington's largest credit unions competing for relationships, Reagan is convinced that Sound's advantage is more on service, less on rates.
"We try to get the edge with the service we provide," Reagan said. "In everything we do, it's random acts of easy--is it easy for the members, is it easy for employees."
In these strapped financial times, Sound's members, like many others in the industry, are taking the cautious approach as they hold tight to savings, Reagan said. While members seeking out investment services at the credit union are from all walks of life, the typical member is in their 30s and 40s, established and looking for help with retirement planning. When layoffs occur in the area, there tends to be a bump in appointments. It helps that Sound has a community charter. It recently sent a letter to existing members about its revamped investment program and press releases to newspapers in Tacoma and surrounding communities.
"Unfortunately, investments had never been a real piece of our business. It just kind of existed," Reagan said. "Now, we're trying to hit the market as much as we can. We want to see continual growth."