Members who are tech savvy, highly mobile and rarely visit branches were those the $5.2 billion American Airlines Federal Credit Union took into consideration when it came to the table to discuss retooling the cooperative's investment program.
After 10 years with a major industry company, the Fort Worth, Texas-based credit union knew it was time to take a hard look at ways to boost the usage of investment services among its 223,500 members. That meant looking at other providers to make it happen.
"They helped us start our program, we did dual management, converted from a CUSO to a department in the credit union," said Sherry Reams, managing director of the investment and insurance program at AAFCU, regarding its previous provider. "With that said, as we grew the program, we wanted to look at other things that would help us grow the program even more."
After a yearlong due diligence search that included meeting with five firms, AAFCU recently partnered with PrimeVest Financial Services Inc., a St. Cloud, Minn.-based broker-dealer that has set out on building its 25-credit union client base. The company serves nearly 600 financial institutions nationwide.
AAFCU's investment and insurance program will be branded as the Flagship Financial Group. Products offered include 529 college savings plans, disability income, long-term care and other insurance plans. The investment team will include seven full-service financial consultants based in offices in the Dallas-Fort Worth area, Tulsa, Okla., Miami and Chicago.
Reams, who will head Flagship, said the agreement with PrimeVest was signed over the summer and the program began Sept. 22. The credit union is in the midst of converting about 4,500 accounts, with the aim of completing the transition by Dec. 12. Members have helped to speed the process up by sending in the necessary paperwork, she added.
Through Flagship, members will have more access to financial planning channels and life insurance choices. Reams said the investment program will build on assets accumulated through fee-based and money-managed structures. Talks are under way to host at least six education seminars on topics at airports served by American Airlines to accommodate members who may have long layovers.
"If there is anything going on in the country it's uncertainty," Reams said. "People want to know what's going on, will Social Security be there, will I have enough money to live on in retirement. We want our staff to be advocates for the members. We want to meet them at different major life events."
Reams would not say what amount of investment assets are under management. She did offer that the figure has grown substantially over the last two-and-a-half years.
"It's not bad but it's not where we would like it to be. It's a moving target given the markets. Our goal is to have it moving up all the time."
Meeting that objective may mean connecting with members wherever they are in the world. AAFCU has a travel industry profession charter to serve the air transportation industry in addition to serving American Airlines' employees and their family members. Their travel activity often means they do not go into the credit union's branches, instead relying on online banking. For those reasons, a financial planning option will be available online and over the phone in addition to via face-to-face sessions.
Reams said this was among the main reasons why AAFCU partnered with PrimeVest: its technology presence. All five of the firms they looked at had strong points, she noted. PrimeVest's track record with financial institutions was another draw. Even though AAFCU's previous provider offered financial planning services, Reams acknowledged that they were not heavily used by the credit union.
PrimeVest is hoping its remote capabilities will aid in building more relationships with credit unions, said Sean Casey, executive vice president at the company. Two more are scheduled to sign on this month, he pointed out.
"It's been our focus for a long time to reach out to credit unions," Casey said. "There has been a concentration in the industry of providers. Our complete focus is from clearing to execution in a challenged regulatory environment to providing life insurance and planning."
Casey said services like Rep on Demand, which creates a custom phone line for credit unions, are valuable financial planning tools offered by PrimeVest. The firm is also working with AAFCU to meet the needs of more retired members.
Reams said that like many industries, the airline sector has been hammered by financial losses. American Airlines, however, has never filed for bankruptcy and recently called back laid-off employees. Still, the trepidation remains for many.
"They're concerned about the economy in general," Reams said when asked about members' most pressing investment anxieties. "They want to know 'where can I put my money and not worry about it.' What we try to do is eliminate that worry by working with their risk goals, tolerance and finding investments they're comfortable with."