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SAN DIEGO – Steve Hollenbeck has been keeping tabs on the “wirehouses” – the Merrill Lynches and J.P. Morgans of the brokerage industry and he’s seeing a consistent trend among its high net worth clients. Some clients, despite having what industry insiders deem “serious money,” are not getting the intimate attention they come to expect and may be open to alternative forms of money management. A 2002 Security Industry Association survey backs up that claim with investors having the lowest confidence in their brokers since 1994. “The high net worth credit union client is looking for advice and the ability to work with a trusted advisor,” said Hollenbeck, senior vice president of marketing at CFS, but unfortunately “many of the wirehouses are relegating these investors to call centers and junior brokers.” CUSO Financial Services (CFS) is hoping that its new CUSO Asset Management (CAM) product will woo members that have investable assets from $500,000 upwards to $5 million to the seven-year old firm for management of their investment accounts. With the CAM platform, advisory clients will be able to have their assets managed in both mutual funds and separately managed accounts, Hollenbeck said. Registered investment advisors and private money managers oversee the day-to-day adherence to a customized asset allocation model that is based on individual investment objectives as well as risk tolerance. The Web-based nature of the new product offering and the client’s ability, through a CFS investment advisory representative, to allocate funds to specific money managers via the Web “makes it unique.” Web-based from both the investment advisor and client perspectives, the CAM platform enables the investment advisor to prepare client proposals, run portfolio diagnostic reports, make changes to client accounts and generate research by accessing a password-protected web site. CAM clients, on the other hand, will be able to view their account activity and quarterly investment performance as well as access research and communicate with their advisor through a secure client-side web site. Initially, CFS’ investment advisory representatives meet directly with qualified clients, explain how the program works, perform a risk assessment, and develop a customized asset allocation plan to match their investment objectives. After that, the advisor and the client can conduct business both face-to-face and through the Internet in a secure environment. The fee-based advisory account is based on the amount of assets under management. Fees for accounts with lower assets range from 50 basis points to 250 basis points, on the high end. Hollenbeck said the “lower the account, higher the fee is typical of the marketplace.” Since CAM launched in April, a number of proposals have come through, but “most encouraging is what CFS reps are seeing in the pipelines,” Hollenbeck said. “We’re on track, and because of the nature of the product, I can track day-to-day activity from proposals to projections.” Clients have their choice of four accounts on the CAM platform: The CAM Funds account is reserved exclusively for mutual fund investing; two different CAM Manager accounts allow clients to invest with outside money managers; and the CAM Direct account is a fee-based brokerage account that allows clients to make up to 60 trades annually with no transaction charge. Hollenbeck said managed accounts saw an 25-30% increase over the last five years. While CFS is targeting the upper range of affluent investors, it still seeks to court the “mass affluent” or those with investable assets between $100,000 and $500,000. Depending on the client’s need, CAM accounts can be opened for someone with as little as $50,000 in investable assets to a recent proposal of $14 million. “It’s a broad range,” Hollenbeck explained. “There might be a corporate-based credit union with members having stock options and a higher net worth or a teacher or educator-based credit union where there isn’t a windfall of money but the goal may be more savings related.” Either way, “credit union members need to know that they can receive the high quality investment advice and service they need from their credit union,” Hollenbeck said. “We understand that not all clients are fee-based clients. At the end of the day, it’s about whether this type of account makes sense for that client.” -

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