WASHINGTON - The credit unions that have the know-how tosuccessfully penetrate their membership with their individualretirement accounts are much better off than those who don't,according to Callahan & Associates, Inc. Credit unions' $47billion in IRA balances account for nearly 10% of the $532 billionin deposits, Callahan reported. Almost 60% of credit unions offerIRAs to their members and those represent 96% of industry assets.Callahan Financial Analyst Casey Connelly said those credit unionsthat spend more marketing dollars per member, "have clearly reaped"the benefits of being able to successfully penetrate theirmembership with their IRA offerings. "Their average share balanceand average dividend paid are considerably higher than nationalaverages, which helps facilitate stronger internal share growth,especially during periods of strong Wall Street activity, "Connelly said. Connelly also said the long-term nature of IRAaccounts may have also helped them allocate almost 35% of theirassets in long-term real estate loans, almost nine percentagepoints higher than the national average. Of the 70,000 members at$650 million NASA Federal Credit Union, 4,700 are IRA holders,accounting for a 6.83% increase from 2002, said IRA Manager KimWilliams. A concerted focus on educating members on the advantagesof an IRA including keeping them abreast on regulatory updates hashelped increase interest in the product, Williams told attendees ata recent Callahan webinar on IRAs. Nearly 46% of Bowie, Md.-basedNASA FCU's account holders are between the ages of 35-55, 40% areover the age of 56 and there is a push to target IRA accounts tomembers under the age of 35, Williams said. The credit union'shousehold penetration level is in the 94th percentile. "Our IRAdepartment goals have always been to maintain consistent annualgrowth, have excellent member service and superior IRA knowledge,"Williams said NASA FCU's rollover kit lists reasons members maywant to consider shifting their IRA dollars including ways to fundthe account, detailed information on how it helps fund retirementand a direct rollover request form. The kit is used by the creditunion's "SEG Ambassadors" to distribute to new hires and employeeswho leave the company and is also available in its nine branches.NASA FCU recently launched an outbound calling program wheremembers are contacted as their IRA CDs mature, Williams said. Thephone calls also "open dialogue with members and make sure theirIRAs remain invested (here)." This year NASA FCU will launch an IRAcomputer based training module as part of its new employee-trainingprogram. The credit union has six employees in its IRA departmentand four have the Certified IRA Professional (CIP) designationoffered through Bisys, its third-party administrator. Even ascredit unions', banks' and thrifts' shares of the IRA market hasfallen 11% over the past decade, they still hold a combined $263billion of the $2.3 trillion IRA market, according to Callahan.IRAs also hold much higher average balances than share drafts andregular shares but not share certificates and money marketbalances. Partners Federal Credit Union launched a targetedcampaign to 2,000 of its nearly 34,000 members in November 2002.The primary message was the IRA's latest contribution limits andthe targets were members ages 25-44 with at least one loan and asavings balance of at least $500, said Andrew Downin, vicepresident of marketing at $201 million Partners FCU in Anaheim,Calif. The campaign proved successful because it allowed the creditunion to add custom features to its TurboTax program, Downin toldCallahan Webinar attendees. The campaign also brought in 115 newIRA accounts. It currently has 2,000 IRA accounts with a totalbalance of $16.8 million. "We can add a reminder about prior-yearcontributions to all of our TurboTax communication," Downin said."We can send a reminder notice to existing IRA members aboutmaximizing their contributions." What ultimately closes the deal iseffective training, Downin said. An IRA specialist "handled thedifficult questions" and all employees in the department aretrained to open IRAs. Annual IRA training for tellers also helpswith cross selling, he added. "We want to streamline the whole IRAprocess for members and remove the obstacle of waiting for anavailable IRA specialist," Downin said. With the nation'sretirement balances totaling $10.2 trillion, more IRA accounts holdstocks and mutual funds than credit union and banks' savingsaccounts or certificates, said John Marron, Callahan seniorindustry analyst. That finding has led to the opening of 4.45million credit union IRA accounts, creating a myriad of penetrationopportunities. [email protected]

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