Credit unions that want to increase revenue should look toward investment and insurance products, attendees of CUNA Mutual Group’s fourth-annual Online Discovery Conference were told Tuesday.
In addition to providing good member service, such products are a good source of non-interest income.
“Growing your credit union’s investment program is not only good business, but it’s good for business,” said conference speaker Hendrix Niemann, managing director of practice and wealth management services for CUNA Brokerage Services.
According to recent Raddon Financial Group research, credit unions lose an average of $165 on CDs but make an average of $177 providing investment products to their members.
This means converting CDs to investment accounts can potentially result in a substantial increase to bottom-line revenue, while simultaneously improving the capital ratio, Niemann told online attendees.
Currently, credit unions only attract around 3% of their members’ investment dollars, while 46% of members have investment accounts elsewhere. According to Raddon research, 54% of members did not know if their credit union offered an investment program, and 16% were not aware of their credit union’s investment program, making marketing such programs paramount, he added.
However, a recent Kehrer Saltzman & Associates study found that members who purchased credit union investment and insurance products were 40% more loyal than those who did not, and were two-thirds more likely to consider the credit union their primary financial institution
“The importance of this ‘stickiness factor’ cannot be overemphasized,” said Niemann. “Offering an investment program will lock in additional revenue for many years to come, and it’s beneficial for members, too.”
Niemann told session attendees that older members need to be educated on retirement income planning and healthcare planning, while younger members need help getting started with investing.
“Who’s going to give your members sound financial advice if you don’t?” Niemann asked. “Credit unions need to start treating their investment programs as core products.”
Online Discovery is an annual, free conference sponsored by CUNA Mutual Group that this year attracted a national and international credit union audience of more than 1,300, the company said.