DENVER – Whether it’s more convenient and cheaper to offer trust services through established firms or to share resources through a new cooperative network became the key question at a brainstorming meeting here between a number of interested players. More than a dozen representatives from trust entities, credit unions, credit union service organizations and other affiliates participated in a confab on Oct. 4 to weigh in on the implications of forming a collaborative trust firm that would cater to members who most agree have long been shut out by large banks. Convened by Victor Pantea, president/COO of Member Gateways, LLC, a consortium that serves 19 credit unions, a number of pivotal figures were in attendance including Tim Kenczewicz, president/CEO of the newly-formed Members Trust of Colorado, Steve Hubbs, president/CEO of Arrowhead Trust, Inc., and Chip Murray, president of First Community Trust in Iowa. “We are very early in the process, this was a brainstorming meeting to establish what opportunities there are for us,” Pantea said. “There are established trust companies out there and we wanted to hear from some of them to get perspective on serving members.” Pantea said Member Gateways serves as a “new product incubator,” strategizing on how to bring new and innovative products and services to not only the its member-credit unions served through the Indiana-based CUSO but to the entire industry. It was after a meeting last year that Pantea started researching the fairly young frontier of wealth management services that had begun to pique the credit union industry. Since then, he has learned the expensive and often laborious task of forming a trust services firm involves understanding all aspects of the business and the importance of building long-term, nurtured relationships with clients as the foundation for survival. “There is a fairly great opportunity here because there is a large segment of the credit union population that is underserved,” Pantea said. “There also an opportunity to marriage broker/dealer services with trust services.” Hubbs of Arrowhead Trust echoed Pantea’s sentiments of sharing resources adding, “this is not the type of business where you hang a shingle out front and wait for clients to come through the door.” “Those that are successful have face-to-face relationships with their clients as opposed to doing business through a 800 phone number,” Hubbs said. “Historically, trusts have been a community-based business and as banks have consolidated, the trust client is left behind and the forgotten entity.” Indeed, some larger banks have raised the minimum initial value for a trust account to $1 million or more, leaving many consumers that want to establish living trusts with few places to turn. All the more reason to form an umbrella company that shares service arrangements through existing credit union-owned entities that are already in the marketplace, Hubbs said. One of the ideas bounced around at the meeting was how a collective trust CUSO would lower overheard costs. All three trust companies in attendance share the same accounting system, which could reduce operating costs if all were under the same holding company, Hubbs said. Presently, there are only a handful of trust companies that serve the credit union industry including a hybrid firm, Patriot Trust in Pennsylvania which is owned by both credit unions and banks. Legislation in California looks promising for state-licensed credit unions that want to provide trust services without having to form a CUSO as other state leagues watch closely. Meanwhile, Kenczewicz of Members Trust of Colorado said even if the decision is made by a CUSO to offer trust services, building business will not happen over night. “Just to establish a trust relationship with someone can take six months to a year,” he said. “We’re working hard to shorten that time frame but there are lot of important issues to consider when someone comes to you for these types of services. We came away from the meeting pledging to work closely with each other and to look for specific ways to help find efficient solutions.” Pantea said the group plans to meet again before the end of the year. The meeting was also attended by Dale Repass, CEO, First Community Trust; Jeff Farver, president/CEO, San Antonio Federal Credit Union and chairman, Member Gateways, LLC; Kelly Corah, vice president, CUSO services, First Technology Credit Union; Jim Moore, CFO, Ent Federal Credit Union; Valorie Seyfert, president, CUSO Financial Services; Kevin Coleman, vice president of project development, Experience Systems and Katherine Weber, associate, Lastowka, Messick & Malady. – [email protected]

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