Missed opportunities and some in management who considered investment services a low priority essentially stalled Consumers Credit Union's efforts to build more relationships with its members.
The $325 million cooperative in Kalamazoo, Mich., actually experienced some strong numbers when its investment program launched several years ago through a partnership with a well-known industry vendor. Gross dealer concessions increased and plans were in place to move the figure even higher, said Scott Sylvester, chief financial and technology officer at CCU. However, the momentum failed to gain enough steam to keep going.
"Over a period of time, we weren't seeing results, and we just didn't have buy-in throughout the credit union," Sylvester recalled. The CU's incentive program wasn't enough to motivate offices to generate referrals. CCU refers to its branches as offices.
Last year, a shift occurred when one of the CU's strategic focuses became building investment services a goal for 2010. Sylvester said the credit union was introduced to Gateway Services Group, a Denver-based CUSO that provides management and advisory expertise for member investment, trust and insurance programs.
After a two-day, on-site assessment, GSG honed in on some of the credit union's strengths and had a discussion about specific needs and goals for the investment program, said Tom Ostrand, director of GSG program management. For one, CCU had in place an experienced duo, representative GR Young and licensed assistant Micki Florinchi.
"You may have an idea of how it's supposed to work but it may be something different translating out in the field," Ostrand said. "For us, we don't go in saying, 'This is how you should run your business.' That wouldn't be right. It's very important to determine needs and goals."
The growth plan consisted of establishing a business model containing well-defined goals for each of CCU's 12 offices, Ostrand said. Specifically, where the office wanted to be in terms of referrals, actual relationships established and GDCs in meeting its annual projections. An office schedule was also put together for the investment rep so that it mirrored the goals: the higher the goals, the higher the number of visits the rep would need to make to each office. Time slots were set in advance with Florinchi confirming each appointment. An "office champion" was identified at each location to serve as the liaison to GSG. This model was already in place in other areas of the CU, Ostrand. It was so successful, that the decision was made to implement it within investment services.
"We wanted to identify someone who had a heightened awareness of the business, someone who got into the heart and soul of what's really happening," Ostrand explained, adding the office champion is not licensed or serves as an investment representative but assists with things like organizing training sessions. They typically are not the office managers because of their heavy workloads.
In the first three months after working with GSG, CCU's investment program is on pace to earn more revenue than in the prior twelve months combined, according to the CUSO. Its GDC has grown from more than $18,000 in January to nearly $52,000 as of March. For the same period, assets under management increased to roughly $26 million from $22.7 million in January. The CU has 367 clients. Variable annuities and mutual funds are the top earners.
Sylvester said CCU initially considered hiring a program manager to oversee investment services. The idea was nixed but at some point in the near future, he anticipates having to bring on at least another two to three reps. With 600 members joining each month, the CU is set to open its 13th office in May. It has posted an average growth rate of 20% for the last 26 consecutive years.
"We're all about growth. but it's controlled growth," Sylvester explained.
Originally chartered in 1951 as a utilities CU, the cooperative started adding more select employer groups to its field of membership in the early 1990s. A few years later, it converted to a community charter now serving 11 Michigan counties.
In addition to building awareness within its membership, CCU is making its presence more known in the community. Unfortunately, that means knowing which businesses are laying off employees. The downsizings have produced increased 401(k) rollover activity, which are "probably the biggest money maker" right now, Sylvester said.
So far, some of the CCU's offices are close to reaching their annual goals, Ostrand said. This has also helped with cross selling of other products such as checking accounts and loans. Sylvester is encouraged that the investment program will reach $1 million in GDC by 2011 or 2012.
"With Reg E, and challenges with noninterest income, the question becomes how can you generate more income. Investment services are certainly one area to consider," Sylvester said.