Changing Habits Still Require Investment Adviser Creativity to Meet Them
o Having a strong investment team and program can go far in alleviating members' fears about their retirement plan choices.
o Credit unions are coming up with new solutions to reach members who never come into the branch.
o The program manager's role has expanded but still relies on the basics to generate revenue and build lasting member relationships.
As members contemplate the moves they need to make with their investment plans in light of layoffs and market fluctuations, are those credit unions that have yet to enter that realm really losing out?
At the very least, when it comes to having another source of non-interest income, they likely are, according to Judy Sandberg, senior vice president of strategic direction for Gateway Services Group LLC, a CUSO that provides investment program management and insurance services.
"If there has ever been a time, now is it for members," Sandberg said during a recent webinar on growing investment programs. "With [regulation] E and the interchange income challenges that we're all watching, an investment program can be an important source [of income]."
The retirement market is huge, she pointed out. With 77 million baby boomers approaching retirement age and pre-retirees in the 55-64 age range expected to be the fastest growing segment over the next five years, the data is alignment with the average member age of 47. The average American life expectancy is 85 for women and 82 for men, with half expected to live even longer.
"Members are looking for someone to help guide them," Sandberg said. "In general, people don't put in the time for planning for retirement [on their own]."
Offering that assistance starts with having a strong team. The $740 million Workers' Credit Union in Fitchburg, Mass., had one part-time and two full-time staffers in its investment program when it started working with Gateway Services Group in 2005. The credit union was doing about $500,000 in gross dealer concessions-an impressive number, Sandberg said. After the program manager left, staffing changes were made and measures were put in place to increase the branch staff's confidence in the investment reps. One year after the adjustments, Workers is doing $1.4 million in GDC and is maintaining that production.
By adding more licensed personnel and reducing territory coverage per rep, credit unions can give members the one-on-one attention they seek, she said. Ultimately, this could lead to an increase in revenue. A team-based approach is another solution. If there is a strong rep at one branch, a CU may want to consider building a team around that person.
For some credit unions, making members aware that they even have an investment program is an ongoing battle. Sandberg said a comprehensive, integrated marketing plan that is coordinated with the CU's overall marketing plan is critical. That includes offering seminars, having branch contests, creating posters and even looking at hold time on calls. However, she acknowledged that it's a challenge to reach those members who never come to the branches.
Sandberg offered the $1.1 billion University Federal Credit Union in Austin, Texas, as an example of the power of seminars as a way of reaching non-branch users. The CU stopped relying on branches to get the word out and instead created a master calendar with a year's worth of dates for the seminars, most of which were focused on retirees. The calendar was posted on the website and the credit union used e-mail and other online tools to make retirees aware of the upcoming sessions. University FCU has roughly 18 of them a year with nearly 20 attendees per seminar. Sandberg said 20% of revenue has come via the sessions.
Referrals continue to be a key driver of building relationships. Select employee groups as well as friends and acquaintances have been helpful here. The $2.8 billion San Antonio Credit Union was having problems leveraging its database leading to broken links with current members and new referrals, Sandberg said. GSG helped the CU clean up its database and focus on client appreciation strategies at an annual gathering and a handful of more intimate ones. San Antonio CU went from doing $350,000 in 2004 to more than $1 million, with 40% of business coming from referrals.
As members seek more hand-holding and change the way they do banking, the role of the investment program manager has expanded.
"They need the ability to provide accounting and coaching to reps and to be a key advocate for the program," Sandberg said.
The $392 million Financial Resources Federal Credit Union in Bridgewater, N.J., laid the groundwork before it hired a second rep in the fall of 2009, Sandberg said. This way, the rep was able to jump right into meeting with members and generating revenue. Fifty-seven percent of the program's production came from the new hire as a result of getting all the paperwork out of the way first.
"People are basing their decisions on whom they can trust," Sandberg said.