Even though the $1.2 billion Anheuser-Busch Employees' Credit Union has had a fairly vibrant investment program since 1988, until recently it had to watch members interested in trust and estate planning take their business elsewhere because it did not offer those services.
"We always strived to be as full service as possible, and this was really the only service we had not offered," said Dave Osborn, president/CEO of the St. Louis-based ABECU. "We saw money leaving the credit union and going to other trust companies."
After talking to several local providers over the years and even contemplating an in-house trust services division, the credit union decided to partner with Tampa, Fla.-based MEMBERS Trust Co., the country's only CU-owned, nationally chartered trust company. Osborn said ABECU had been watching the firm's development since it launched in 2003. As the CU grew, it became large enough to support a representative with the dual roles of financial service planner and trust agent.
Through MEMBERS Trust, CUs can offer trust services through an agency office or representative office. The first establishes a trust presence in a particular state and requires a trust officer to be physically located in the CU. The second, which ABECU chose, is an extension of the CU's financial services program and uses specially trained representatives to consult and make recommendations for trust services.
Osborn said the new division builds on ABECU's financial and investment planning, launched 22 years ago when its sponsor, Anheuser-Busch, instituted an early retirement program. Members who participated in the program looked to the CU for guidance on managing their assets, a tradition that continues to this day. Of the CU's more than 100,000 members, those with assets of at least $500,000 may benefit the most from estate planning, Osborn said.
The timing could not be better. After ABECU announced at its annual meeting that it would soon roll out trust services, a member approached Osborn with some concerns. He said that because his wife had died and his children did not manage money well, he needed to set up a trust so that his estate would be managed according to his wishes when he's gone.
"We want to be able to keep in touch and help members manage their funds in a trust and through other options," Osborn said.
MEMBERS Trust continues to grow its clientele, now serving about 50 CUs with half choosing the agency office and half opting for the representative office, said Sheldon Reynolds, vice president of trust and investments at the company. The services are available to ABECU members now, but a larger debut was planned for April 1. Reynolds said the trust company will help the CU create a member awareness campaign and inform local attorneys about the new service. The planner on staff at ABECU underwent additional training courses to become versed in trust and estate planning. MEMBERS Trust's staff of attorneys, certified financial advisers and trust offices will provide ongoing support.
What sets the alliance apart is the CU brand, Reynolds said. "We think first and foremost, we share the same values," he explained. "We're owned by credit unions and, therefore, we share the same philosophy. We're a stand-alone trust company. We don't take deposits. If a credit union were to partner with a bank's trust company, they take the chance of having that money jeopardized."
Trust services continue to simmer under the financial surface for many credit unions. Some have partnered with local entities while others have linked up with other industry providers. Very few have built a trust services division from the ground up. Reynolds said that while this option is doable, the associated expenses and red tape can be daunting. "The politics of going to a state banking commission to get a trust charter can be challenging," he added.
Indeed, Osborn said that if ABECU wanted to start its own trust division from scratch, it would "take a lot of mass to develop a stand-alone company." He did say that down the road, the CU might consider going the independent route.
Meanwhile, "partnering would get us where we want to go," Osborn said. "It's a slow process and we don't expect large growth. That's why you need to align with a national, credit union-owned program, which not only helps the industry but the credit union and the members. So, it's a win all the way around."