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WASHINGTON – The credit unions that have the know-how to successfully penetrate their membership with their individual retirement accounts are much better off than those who don’t, according to Callahan & Associates, Inc. Credit unions’ $47 billion in IRA balances account for nearly 10% of the $532 billion in deposits, Callahan reported. Almost 60% of credit unions offer IRAs to their members and those represent 96% of industry assets. Callahan Financial Analyst Casey Connelly said those credit unions that spend more marketing dollars per member, “have clearly reaped” the benefits of being able to successfully penetrate their membership with their IRA offerings. “Their average share balance and average dividend paid are considerably higher than national averages, 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 IRA accounts may have also helped them allocate almost 35% of their assets in long-term real estate loans, almost nine percentage points 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 Kim Williams. A concerted focus on educating members on the advantages of an IRA including keeping them abreast on regulatory updates has helped increase interest in the product, Williams told attendees at a recent Callahan webinar on IRAs. Nearly 46% of Bowie, Md.-based NASA FCU’s account holders are between the ages of 35-55, 40% are over the age of 56 and there is a push to target IRA accounts to members under the age of 35, Williams said. The credit union’s household penetration level is in the 94th percentile. “ Our IRA department goals have always been to maintain consistent annual growth, have excellent member service and superior IRA knowledge,” Williams said NASA FCU’s rollover kit lists reasons members may want to consider shifting their IRA dollars including ways to fund the account, detailed information on how it helps fund retirement and a direct rollover request form. The kit is used by the credit union’s “SEG Ambassadors” to distribute to new hires and employees who leave the company and is also available in its nine branches. NASA FCU recently launched an outbound calling program where members are contacted as their IRA CDs mature, Williams said. The phone calls also “open dialogue with members and make sure their IRAs remain invested (here).” This year NASA FCU will launch an IRA computer based training module as part of its new employee-training program. The credit union has six employees in its IRA department and four have the Certified IRA Professional (CIP) designation offered through Bisys, its third-party administrator. Even as credit unions’, banks’ and thrifts’ shares of the IRA market has fallen 11% over the past decade, they still hold a combined $263 billion of the $2.3 trillion IRA market, according to Callahan. IRAs also hold much higher average balances than share drafts and regular shares but not share certificates and money market balances. Partners Federal Credit Union launched a targeted campaign to 2,000 of its nearly 34,000 members in November 2002. The primary message was the IRA’s latest contribution limits and the targets were members ages 25-44 with at least one loan and a savings balance of at least $500, said Andrew Downin, vice president of marketing at $201 million Partners FCU in Anaheim, Calif. The campaign proved successful because it allowed the credit union to add custom features to its TurboTax program, Downin told Callahan Webinar attendees. The campaign also brought in 115 new IRA accounts. It currently has 2,000 IRA accounts with a total balance of $16.8 million. “We can add a reminder about prior-year contributions to all of our TurboTax communication,” Downin said. “We can send a reminder notice to existing IRA members about maximizing their contributions.” What ultimately closes the deal is effective training, Downin said. An IRA specialist “handled the difficult questions” and all employees in the department are trained to open IRAs. Annual IRA training for tellers also helps with cross selling, he added. “We want to streamline the whole IRA process for members and remove the obstacle of waiting for an available IRA specialist,” Downin said. With the nation’s retirement balances totaling $10.2 trillion, more IRA accounts hold stocks and mutual funds than credit union and banks’ savings accounts or certificates, said John Marron, Callahan senior industry analyst. That finding has led to the opening of 4.45 million credit union IRA accounts, creating a myriad of penetration opportunities. [email protected]

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