While credit unions have seen some hits in their investmentprograms, some have reported steady growth over the past threeyears.
According to the Callahan/SCS 2009 Retail Investment ServicesBenchmarking Study for Credit Unions, representatives that servemembers grew from 1,902 in 2005 to 3,051 by the end of 2008. Theaggregate value of member investment accounts also grew from $38.9billion to $40.1 billion between 2005 and 2008. Still, the numberof credit unions that provide members with face-to-face retailinvestment services grew by only 3.64%, from 938 to 968 between2005 and 2008. The peak of account value growth during thisreporting period was $50.4 billion by year-end 2007. However, withthe market downturn in 2008 the aggregate account values dropped to$40.1 billion last year.
“The global data strongly suggest that the credit union retailinvestment services channel is well-positioned to sustain itselfthrough this economic downturn,” said Pete Snyder, principal andfounder of Snyder Consulting Solutions, who helped to cull thestudy's data. “Further, that when the recovery kicks in, creditunion programs are very likely to emerge with strong growth in allinstitutional metric areas.”
Meanwhile, aggregate account growth reached its peak duringyear-end 2007 at 1,320,011 from a total of 1,265,803 in 2005,according to the study. By year-end 2007 the number of accountsdropped to 1,169,001.
The reduction came from members either liquidating the funds in oneor more of their accounts to live on or rebalancing theirportfolios, which included some account consolidation. Brokeragefirms have also experienced a decrease in activity, potentiallyopening up relationship opportunities for credit unions.
“This is good news for the credit union channel as other brokeragefirms have actually experienced a reduction in their accountrelationships from their customers moving their accounts to anotherfirm,” Snyder said.
The aggregate number of accounts grew from 1,169,001 in 2007 to1,273,567 by year-end 2008 during a significant market downturn,Snyder said, adding this suggests that credit union investmentservices programs have proactively responded. The two primarydrivers around this account growth occurred between 2006 and 2008when credit unions grew their representative sales force from 1,964to 3,051 (a 55.4% increase). This new expanded sales force was ableto open new accounts with new members that had not been previouslyserved, Snyder noted.
“Based on feedback received from the participating broker dealers,credit union programs have been increasingly successful inbenefiting from having members transfer their investment accountsfrom other firms over to the credit union,” Snyder said.
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