You do what?' is a common question asked by members when they learn that investment services are available at their credit union. Although these services have been offered in financial institutions since 1981, many credit unions have been slow to embrace the programs, with only 16% of credit unions having offered investment programs for 15 years or more, according to Callahan & Associates’ 2010 Credit Union Retail Investment Services Study.
If we agree that investment advice is an important service for members, how do we make sure that they are taking advantage of it? First, credit unions need to commit to offering the program; it must be a core product. This needs to come from the top down, with senior management making it clear to the staff that it’s an important component of the services provided. The establishment of a referral program that recognizes and compensates for qualified referrals illustrates the commitment of a credit union to the success of the program.
Most employees have a basic understanding of how savings and lending products work, but investments are often foreign. This doesn’t mean that frontline employees should be experts–they can’t discuss products with members in any case as this may only be done by appropriately licensed individuals. However, it’s difficult to spot members who need our help if you don’t understand the offerings. Many of the more successful credit unions have gone through educational processes for their employees. This not only helps the employees spot members who need the services, but it will also assist them in their personal investment needs.
The most successful credit unions set goals for employees. These may include opening certain types of accounts, signing members up for credit cards, or reaching lending goals. Investment referrals need to be a part of those goals. They cannot be sales numbers but they can be qualified referral goals. This will allow members to realize that the services are offered and give the registered representative the opportunity to assist them in reaching their personal financial goals.
If a credit union has accepted the necessity of offering the program, how do they inform the members of the offering? In addition to employee referral goals, appropriate branch signage is essential in program recognition, but many members seldom go into a branch. A growing number use ATMs and online or mobile banking. So, how do you reach them?
Marketing plays a key role in getting the word out. ATM and on-hold messages are an easy start. But the program needs to be prominently displayed on the credit union’s website, subject to certain disclosures of course. Again, it’s a core product. It should not require the member to be familiar with the program to find it online, but it needs to be obvious to those visiting your site. Ideally, there should be one-click access to the program’s site. In addition, targeted print marketing will assist in program recognition. Print ads can be used to introduce this service as an offering available at the credit union. Target marketing can also increase public familiarity with the program. Educational seminars give something back to the member while showcasing the services.
Let’s go back to why a credit union would choose to introduce their members to investment services. In 2010, American Airlines Federal Credit Union did a study on the other relationships members with investment services have with the credit union. The study found that investment service users had a higher penetration rate for all major products than the average member. It was 13% higher for checking accounts, 12% for credit cards and 6% for mortgages. This illustrates the obvious benefit to a credit union to support a successful investment program.
According to the Callahan study, the aggregate member penetration for all participating credit unions for 2009 was 2.21%, with some top-performing programs reaching as much as 6.6%. This illustrates the opportunity available for many credit unions.
In general, these top-performing programs had best practices that included:
• It is considered and promoted as a core product and service offered to its members.
• It has a qualified team of registered representatives available to meet with members to discuss their investment need.
• There are established goals and standards for the representatives and support staff in terms of relationship development and collaboration with the credit union’s retail teams.
• There is a referral recognition system with established goals and processes to allow the credit union retail staff and the investment services staff to refer back and forth to each other.
So now you face a decision. If the average credit union is providing investment services to only 2.21% of its members and these members tend to be the more active ones, it’s time to invest in your own future and convince your members that taking advantage of investment services makes sense for everyone’s bottom line.
Sherry Reams is managing director of Flagship Financial Group, the insurance and investment program at American Airlines Credit Union. Contact 800-533-0035 ext. 4699 or Sherry.Reams@AAcreditunion.org