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MIAMI – Tropical Financial CU seems to have pulled off what a number of forward thinking CUs across the country are trying to do – become the place members think of for non-traditional CU investment and insurance products. The CU was honored earlier this year by CUNA Mutual for becoming CUNA Mutual’s No. 1 client of its MEMBERS Financial Services program of mutual funds, life insurance, annuities and other non-traditional CU financial products. The honor was actually bestowed on the CU’s CUSO, Tropical Values, which is the conduit of the products to the CU’s members. At its peak last year, Tropical Values had approximately $125 million in assets of MFS products under management, a lofty number given that the CU itself only has about $480 million in assets. Those $125 million in assets come from relationships with about 2,000 members. Credit unions are known for low rates on loan products and high rates on deposit accounts, but getting members to think about the credit union with these non-traditional products was a bit tougher said Tropical Financial CU President/CEO Greg Blount. “We’ve been at this for seven years now. We acknowledged back then that financial planning had to become a central part of our relationship with members in the future. As an outgrowth of financial planning, you need products to fulfill the plans. More than just checking accounts, you need mutual funds, long-term care, and those types of products,” said Blount. Blount himself went through some financial planning courses to get a feel for what it involved. He learned that solid financial planning requires a good mixture of investment and insurance products. The credit union had some of these products, but not the full gamut that members could get from other financial players like Merrill Lynch, Prudential, and others. So the CU contracted with CUNA Mutual to place MEMBERS Financial representatives in Tropical branches to sell these products to its members. The reps are paid through commission and salary from CUNA Mutual; the CU has no role in their compensation. The reps do have full-time Tropical CU support employees who assist them. Blount said just because the employees are paid by CUNA Mutual, doesn’t mean the credit union didn’t have a say in who they would let represent the credit union. “We were part of the hiring practice. We had the financial vision. We wanted people that knew the products, but we were also looking for a cultural match,” said Blount, who noted that the CU had the last word in which reps to hire. Tropical Financial currently has two CUNA Mutual investment reps and one CUNA Mutual protection specialist, who deals with the MFS insurance products. The program is expanding so quickly that Tropical will add another investment rep in January. Once the personnel was in place, Blount said educating members about financial planning in general was the key to success. The CU holds about three to four financial planning seminars a month, ranging from retirement planning to saving for a house or a child’s college education. Nancy Rappaport, senior vice president of Tropical Values, said one reason the program has been so successful is the penetration it has with one of its largest SEGs, BellSouth. The CUNA Mutual reps honed in on BellSouth veterans who were nearing retirement age. “The reps really got to know the retirement program of BellSouth. The word has spread over there. We’ve developed a nice little niche at BellSouth,” said Rappaport. Rappaport said now BellSouth employees think about Tropical Financial CU when considering what to do with their retirement packages, which can be an intimidating problem for soon-to-be retired employees, said Blount. “There are people leaving with $250,000 to $500,000 retirement plans that the company no longer manages. Most have never handled these types of dollars. A lot of people are ill prepared to handle the money,” said Blount. Blount said the CUNA Mutual reps are trained to do suitability tests as to what type of investments members should make at different stages of their lives. “Obviously we don’t want to give a 98-year old a risky real-estate investment overseas,” said Blount. Rappaport said other CUs thinking of bringing in outside reps need to treat the reps as their own. “Treat them like your employees. Don’t keep them in the dark about marketing plans and other things that might affect them. We provide the reps with full-time assistants. We welcome them and treat them as our employees. Most members don’t realize they’re not our employees,” said Rappaport. As for the image to members, a co-branded face is a constant throughout any sale to members. Tropical Financial’s name is prominent on all the materials, as is the MEMBERS Financial Service’s name. Ron Williams, account vice president of members services for CUNA Mutual, said mutual funds are one of the most popular products sold by MFS reps. He said about 20% of the total dollar amount sold through MFS actually comes off of the CU’s bottomline somewhere, whether from a deposit account or CD, and goes into an MFS product, often a mutual fund. However, Williams said nationally for every $1 MFS reps are taking off a CU’s bottomline, they are adding $1.50 by counseling a member to some other CU product, such as a mortgage loan. Blount admits that he wasn’t too impressed with CUNA Mutual’s in-branch rep system back in the Plan America days, but thinks the MEMBERS Financial Services program of today deserves a second look. “I was never an apostle for CUNA Mutual, to be honest. I checked out American Express and others. But today this program is a lot more responsive to us and what we want them to do for our members. It’s a partnership, but they are our members, so I don’t want reps pushing mutual fund products to make a commission. I don’t want to lose long-term relationships for a rep’s $5 mutual fund commission. I think Mike Kitchen (CUNA Mutual’s president/CEO) has turned that organization around and deserves a lot of credit,” said Blount. -

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