The frustration with representatives pushing products on members who did not really need or want them was behind SAC Federal Credit Union's decision to rethink the positioning of its investment services program.
Just as important was having a representative who could work within the culture at the $455 million SACFCU in Bellevue, Neb., said Gail DeBoer, president/CEO.
"We had gone through several reps. They just didn't have a good fit," DeBoer recalled. "For us, the key with financial planning partners is having the right personality. That's the only way the relationship works."
Looking for that connection, in 2003, SACFCU reached out to Securities America Inc., a La Vista, Neb.-based investment advisory firm with more than 1,900 financial advisers and $53 billion in client assets under supervision. DeBoer said the credit union found what it was looking for in Tom McDonald, who is now the investment specialist with SAC Financial Services.
Securities America serves more than 120 financial institutions, and half of them are credit unions, said Gregg Johnson, senior vice president of branch development, training and support. To help build even more relationships, the broker-dealer brought in Nathan Bergeland, president of USAdvisors Network, a firm that had been helping credit unions create investment programs since 1992. While Securities America serves credit unions of all sizes, over the last four months, the firm has received requests for proposals from mainly mid-sized ones in the $150 million range. Johnson said the timing could not be better.
"Because of mergers and acquisitions over the last two to four years, we're finding that credit unions and banks are seeing a tremendous amount of opportunities to look at alternatives," Johnson said.
Through its previous relationship with another broker-dealer, SACFCU had a limited product line, McDonald said. The offerings were also proprietary putting more restraints on what was available to members. Securities America's open platform helped to meet a wider variety of needs. Even so, SACFCU members tended to lean on the conservative side, especially with the current market flux, he added.
"I've been in the business for 20 years, the last 10 in the investment markets. I've come to realize that some members may need the safety of a CD or a money market account. More times than not, the credit union's overall feeling is to be more conservative than most places," McDonald noticed.
Indeed, DeBoer said it was important to have someone meet members where they were in their lives.
"We didn't want someone with hard core sales. We wanted someone to look at our members' needs and take care of them. Tom will put someone in a certificate with the credit union. I like that because he's not out trying to make a dollar."
McDonald said between $25 million and $50 million is managed through SAC Financial Services. In 2007, DeBoer started a cultural development training program for staff to be aware of opportunities to refer members for investment services. That launch, coupled with the collapse of Lehman Brothers in 2008 and the demise of banks like Washington Mutual, brought in an influx of funds and a substantial increase in referrals, McDonald said. On Nov. 10, SACFCU held a ribbon-cutting ceremony on its 19th branch.
Most of SACFCU's members using investment services are age 50 and older, McDonald said. The group is a mixture of empty nesters, those who are five or six years away from retirement and senior citizens with strong investment experience looking for more conservative choices. To come are workshops on topics such as estate planning, when to take Social Security payments and insurance need and analysis.
"We've had steady growth, it hasn't been overnight," said DeBoer about the credit union's investment program. "Tom has steadily built the relationships with members. We've never had a bad comment from one of them. That's remarkable."
Both Johnson and McDonald agree that member penetration with investment services continues to be a challenge. Securities America has increased awareness measures providing management and business development tools to help advisers develop their expertise as well as making available marketing materials for credit unions to tap. McDonald reiterated that the education process begins with staff, specifically, at the teller line: from employees setting up checking and savings account to those taking mortgage applications.
While McDonald is proud of the strides SACFCU's investment program has made over the past seven years, he acknowledged that it took a little time for him to alter his thinking on how to serve members. A blunt meeting with top brass at Securities America helped to shake things up.
"They said 'what you're doing, it's not working,'" McDonald said. "These were guys who had more than 25 years of experience. I had to shift from how I worked from being independent to working with financial institutions."
For DeBoer, having an alliance with a firm that consistently nurtures client relationships is steeped in SACFCU's core values.
"They didn't come in, sell us their plan and leave," she said of Securities America. "They've been there all along."