At Visions Federal Credit Union, the face of wealth has taken on different and nontraditional features.
The $2.5 billion cooperative has been offering estate planning services since June 2004, garnering $100 million in assets under management, said Frank Berrish, president/CEO of the credit union in Endwell, N.Y.
"Today, with the death of a spouse, it’s not uncommon to see insurance policies pay out half a million dollars or more," Berrish said. "Even when [Visions’] employees retire, some can easily have a couple hundred thousand dollars in their plans. We’ve had employees who’ve been here 20 years walking away with $500,000 through defined benefit plans."
While some members are retiring with large retirement savings, Visions prides itself on appealing to the more typical member. The credit union has a $125,000-in-assets minimum compared to other banks that may require more than $500,000 to be seen by a trust officer, Berrish said. This, in an industry shakeup that has seen regional offices closing down and other financial institutions substituting face-to-face service with call centers, he added.
Visions was one of the early visionaries behind the launch of Tampa, Fla.-based MEMBERS Trust Co., the country’s first and only nationally chartered trust company. In 2001, MEMBERS Development Co., an industry formed to develop new products and services, brought leaders together to strategize on how to make it happen. The $5 billion Suncoast Schools Federal Credit Union figured significantly in the trust company’s 2004 debut, merging its existing trust services operation into what is now MEMBERS Trust.
Today, the trust company is still owned by credit unions that represent $80 billion in assets and the CUNA Mutual Insurance Society. It has $686 million in assets under management, more than 20 offices nationwide and 21 employees.
Depending on their needs and goals, credit unions can chose from two types of setups. The agency office establishes a trust presence in a particular state and requires a trust officer to be physically located in a credit union. The representative office option is an extension of the credit union's financial services program and does not require hiring a trust officer, but instead utilizes the services of specially trained representatives to consult and make recommendations for trust services. There are 49 agency offices and 21 rep offices, according to Sheldon Reynolds, vice president of trusts and investments at MEMBERS Trust.
"We’ve had very good growth. It’s one of our success stories given the market setbacks," Reynolds said. "Our growth is a reflection of the original thought, which is there is a demand for trust services and investment management."
Over the years, MEMBERS Trust has ventured into other areas. In 2007, the Office of Thrift Supervision granted the company approval to originate and service reverse mortgages, including the Federal Housing Administration's home equity conversion mortgages. Thirteen credit unions have formed partnerships with the trust company’s reverse mortgage center, said Tom Walker, president/CEO of MEMBERS Trust. Since Fannie Mae has stopped buying HECMs, Walker said the company is negotiating with a Ginnie Mae-approved issuer of HECM securitized pools and seeking approval from FHA to handle the origination for credit unions on a nationwide basis through a phone center.
"We are committed to providing credit unions a turnkey option to offer reverse mortgages to their members and in doing so, improve the value proposition for senior members for this very important retirement funding source," Walker said.
In 2009, MEMBERS Trust created its Trusteed individual retirement account to manage funds during the life of the grantor and during the grantor’s incapacity and at death. It contains multiple payout options to include outright payments, partial payments, time-sensitive payments, income only payments, principal discretionary payments or a combination of the above. Barclays Global Investors’ iShares ranked MEMBERS Trust first in the country in 2008 as the top manager of exchange-traded funds.
"This was good news for us because it kind of helped us bounce back from the financial crisis [of 2008], Reynolds said. "It proved that what we do is sound and solid."
A merger in early 2007 with Members Trust Co. of Colorado, which brought in $100 million in assets and expanded the number of trust officers available to credit unions, was also a key growth component. Reynolds said bringing in credentialed staff continues to be a critical plan for the company. There are four chartered financial analysts and three attorneys on board. With those additions, MEMBERS Trust has taken on more of a regional approach as it maintains its presence in states such as Colorado, Illinois and North Carolina, Reynolds said.
"In the long haul, the merger was a good move. A lot of the operations in Colorado were a duplication of what we were doing in Tampa. I think having that presence in the Western part of the country has helped us grow."
Back on the East Coast at Visions FCU, Berrish, a former trust officer, said offering trust services was on the credit union’s priority list at least 10 years before MEMBERS Trust formed. He knew and told his board of directors that the rule of thumb was a trust department typically doesn’t break even for 20 or 30 years.
"We didn’t want to reinvent the wheel. When MEMBERS Trust came out it provided all of the backroom work and we didn’t have to hire 20 people. It seemed to be a good match," Berrish said.
Visions’ trust department has expanded to three employees, including a newly hired part-time trust officer and investment adviser based in Syracuse. Having a presence there was important since a large bank had just shut down its trust division in the area, Berrish said.
Members coming in for investment management assistance are all over the gamut. When Proctor & Gamble had layoffs, some longtime employees had amassed $500,000 and $600,000 through a combination of retirement funds and 401(k) distributions, he noted. Separation packages have also proven to be quite substantial for others.
There are those who prefer self-directed investments through mutual funds and ETFs, while others are clueless about where to start. Visions layers its services for the novices, including giving members investment choices based on lifestyle changes through Visions Financial Services working with LPL Financial Corp. In a low-interest rate economy, management takes on an even more guided tone, Berrish said.
One such scenario is currently playing out with farmers in Pennsylvania and New York. It was discovered that some had land on the biggest natural gas resource in the region. Gas drilling companies were paying them by the acre to lease their land, which ranged for some between 1,000 and 10,000 acres. If gas was indeed discovered, the farmers were receiving royalties, Berrish said. One gentleman who owns 15 acres received $250 million. Donald Bernardo, Visions’ senior trust officer, has been meeting with farmers "who have become instant millionaires overnight." Just recently, he talked to 30 of them to make them aware of what the credit union could offer.
"There are a lot of charlatans trying to get to [the farmers]. Don’s been in the business for over 40 years. What we bring is credibility," Berrish said.
While Visions is not making a profit from trust services yet, Berrish said the credit union is moving along at about $2 million to $3 million a month. Visions recently completed a merger in Rochester, N.Y., where Kodak is a big employer. Three more mergers are currently being looked at. All have the potential to build trust service presences.
"We’ve got a lot of programs that fringe with trusts. We’re constantly trying to come up with new training aids to help people prepare for retirement. Our core is trust services, which gives us the ability to do other things."