According to a January 2015 study by Kehrer Bielan Research& Consulting, only about 10% of people say they would consult acredit union about investing a $25,000 windfall.

That's a huge missed opportunity because people who buy investments at their primary financial institutions are farmore likely to have higher deposit and savings balances, more assetmanagement accounts, and are more likely to say they won't switchfinancial institutions

There are a few things credit unions can do to capitalize on therelatively untapped retail investment sector and build a morelucrative, loyal member base to boot.

“Credit unions are eager to celebrate milestones such as thefirst car or home, but don't put the same emphasis on creating anew investor,” Kathy Scarbrough, chief communications officer atthe $300 million Navigator Credit Union in Pascagoula, Miss., whichhas $150 million in assets under management in its retailinvestment portfolio.

David Foster, vice president of wealth management at CUNA MutualGroup, said Navigator is a stand-out in the retail investmentfield. Having a referral goal, like a credit union might have forauto lending or mortgage lending, is a big step in the rightdirection. “What gets measured gets done,” he said.

“Sometimes, the investment division's kind of viewed upon as thered-headed stepchild,” Jim McCrudden, vice president of insuranceand investment services at the $2.1 billion Citadel Credit Union inExton, Pa. “One of the differences that I see is if you're in abank program and you're an employee, whether you're an assistantmanager or you're on the platform, you're required to referindividuals to the investment representative or the financial adviser in your branch. If you don't, they're goingto kind of whack you over the head with a big mallet, put you onprobation, whatever it might be.”

Others say tread with caution on paying the staff to refermembers. Citadel's retail investment business grew dramaticallywhen it eliminated referral bonuses, McCrudden noted.

“Once we stopped giving the people in the branches the $25, ourquality of referrals went through the roof,” he said. “Here's why:When someone's trying to just throw as much stuff at the wall overto you as can, trying to get that $25 fee, then you're in a battleat the end of every month. They're not really trying to give youthe qualified people, they're just trying to throw as much as theycan so they can get $150 bonus at the end of the month for the sixqualified referrals.”

McCrudden said once the credit union stopped doing that, peoplehad a better understanding that the overall goal became clear.

“If we're able to enhance the relationship with the member,historically, in credit unions throughout the country and with ourcredit union, the average member has a little over four accountsper household. If they have an investment relationship, they have almost eight accounts perhousehold,” McCrudden said.

Members are also four to five times more likely to have amortgage, five to eight times more likely to have a direct depositand a debit card with Citadel, he noted, adding, so, they're goingto hold all of those more profitable products and more profitablerelationships if they have an investment account.

“We had to really say, 'look, part of your job is to enhance therelationship if you are on the teller line or you're a memberservice representative or a senior member representative,”McCrudden said. You're required to do that.'”

Kevin Mummau, EVP of brokerage and investment advisory CUSO Financial Services in San Diego, said sometimes, creditunions worry a dollar going into a retail investment program is adollar not going into deposits.

The philosophy goes something like this: “I can't be introducingmy members to your investment program because I need deposits forloans right now,” Mummau said. “The truth is, “it's not aneither/or. It's an and. I think banks probably understand that alot better.”

Citadel, for example, grew its retail investment serviceswithout cannibalizing its deposits.

“We did about $110 million in investment last year,” McCruddensaid. “Almost 90% of that came from outside of the credit union. Ithink in a lot of credit unions there's that disconnect. They'renot talking to each other. The senior manager's like, 'Yeah, I wantthis to work' but the people in the branches are like, 'I don'treally, I'm not buying it.' We've been able to overcome that and Ithink that's a big part of why we've been successful.”

Mummau suggested creating enough scale so a credit union canservice members once they start coming in the door.

“The Chases or the Wells Fargos of the world,” he said, “they'llhave one representative for every $100 million in deposits orless,” compared to credit unions, which might have onerepresentative for every $300 or $500 million.

Foster said if it's a billion-dollar credit union, there mightbe two or three advisers but four, five or six seems morerealistic.

“From an adviser perspective that's hard to grasp, because ifyou cover four branches and we're taking a branch or two away fromyou to hire another adviser, you're not going to be happy becausethe branches or the retail areas are a source of leads,” McCruddensaid. “But in the long run, it actually helps the adviser becausethere's less windshield time, less travel time. The time thatthey're in the branch, they'll get more walk-ins because they're inthat particular branch more.”

Making retail investment services accessible and comparable towhat members can get at bigger, name-brand institutions is alsokey.

“Do you look as credible as Wells Fargo or Bank of America?”Mummau asked. “When your members sign on can they see theirsavings, their share accounts and their credit card accounts andeverything online and their CDs; do they see their investmentaccount? Do you have that? Do your representatives have credibletechnology? Can they do, at a push of a button, a full performancereporting on the person's account? It's more and more importantthan it's ever been in the past.”

The catch is that you need sales in order to pay for moreadvisers and better technology. Credit unions with successfulretail investment programs have to be experts at getting the wordout.

“The marketing should be very strategic,” Mummau said. “I thinka lot of mistakes are made at just blanket marketing.”

Scarbrough said a credit union must build a brand that standsabove the rest.

“We're up against a lot of well-established, heavy hitters, butour tradition of genuine, personalized services gives us an edge.If possible, create a niche. Become an expert in areas that othershave neglected,” she said, adding that retirement planning is themost valuable retail investment service Navigator provides.

Many SEGs have outsourced employee retiree assistance, which canonly be reached by calling an 800 number and some HR departments donot have the time or skills needed to discuss retirement planning,Scarbrough said.

“If a representative can unlock the mystery of a company'sretirement plan options and articulate them well, they can fill avoid that others have not,” Scarbrough said. “It can take a greatdeal of time, but the rewards of doing so are well worth it.”

Foster said offering and advertising seminars can bring a lot ofmembers into the retail investing fold. The champion of the effortshould be the branch manager, he suggested. “They have a pulse ofwhat's going on in the community to be able to, then do that typeof target marketing.”

“The banner on the branch, yeah it's good, it's great, but it'snot going to get you that much business,” McCrudden said.“Obviously, the banner on the front of the credit union is a touch.The e-mail that they receive that says 'meet your local adviser,'that's a touch. But it's really when they call our call center orwhen they come into the branch, we really need to take advantage ofthat opportunity.”

McCrudden continued, “We train our folks. Look for people thatare 55-65, don't just look for high balances. Look for people andsay, 'Hey, I've noticed you've been a member of Citadel for over 10years,' or however long they've been a member. 'Did you know you'reentitled to meet with one of our advisers? I highly recommend youtalk to Kevin. Let me schedule an appointment with him.' That'sreally how it works. Much more than any billboard.”

Though retail investment services contribute just 5% to thebottom line at best, according to the Kehrer Bielan study,developing investment relationships with clients increases theirstickiness and makes deposit and lending products more profitablebecause clients will use them longer. The direct incomecontribution from investment services is just the tip of theiceberg.

“One of the things that you do wrong initially starting aprogram is trying to be everything to everyone,” McCrudden said. “Imean, for years we just opened up pretty much any account. Anybodythat came through the door that was referred to us, we wanted to dobusiness with. What happened was we spent most of our timeservicing those accounts. So, we may have had two or three advisersand 1,800 accounts, and of those 1,800 accounts, you really hadmaybe a deep consultant relationship with 20% of them.

Eighty percent of the people weren't calling advisers back andreps couldn't get a hold of them, McCrudden said. Some clients hada couple thousand dollars with Citadel.

“If they had an IRA we were waiving a $35 IRA fee. They wereactually costing us money,” he noted.

McCrudden said that things have changed in the last three yearsat Citadel, which now has a half a billion dollars in assets undermanagement.

“We let the staff know our goal is not to be everything toeverybody. We can't. We want to identify the certain group ofpeople, those pre-retirees that we can build up deep consultativerelationship with. And that's kind of the direction that we movedin.”