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LAS VEGAS – If wealth-characteristic research shows members would benefit from trust services, credit unions and CUSOs have several options to choose from in bringing a wide array of offerings to their members, two experts recently told attendees at NACUSO’s annual conference. Speaking before nearly 200 attendees on May 3, John Henry, senior vice president, Member Solutions, and Dan Wroblewski, vice president, Wealth Management, both of CUNA Mutual Group, offered a case study outlining the objectives, structuring options, pricing strategies, and benefits CUSOs could gain from offering trust services. “First and most importantly, credit unions and their CUSOs need to assess their membership-their age, their net-worth parameters – to see if it makes sense to offer trust services,” Henry said. “Then, look at the kinds of trust services being offered in your marketplace and at what service level and cost. If your members aren’t being served properly, you may have an opportunity.” CUSOs and credit unions can choose to set up one of two types of trust organizations: a pure, personal trust company, or an institutional trust model to manage pension funds or profit-sharing plans, Wroblewski said. Each uses a different kind of operating system because of differences in tax calculations and liabilities. An institutional trust might make sense for CUSOs wanting to further serve or expand their small business niche, he added. MEMBERS Trust Co., the recently-formed national trust cooperative providing trust services to credit union members, is an example of a personal trust company. The company opened its doors for business Nov. 3, 2003. A CUSO ready to begin offering trust services then must decide whether to build its own trust department, or buy into a partnership, Wroblewski told attendees, adding building versus buying involves trade-offs. A CUSO buying into an established trust company reduces start-up costs such as recruiting and hiring staff, charter application and fees, legal expenses, and does not require capital to be set aside. “Working with a partner also lessens your risks, as your partner already has analyzed and mitigated issues of liability and insurance,” Wroblewski said. “A downside to such a partnership might be that the CUSO has little control over product and service offerings, must deal with a myriad of start-up issues, and must comply with complex regulations.” Henry and Wroblewski said CUSOs operating a trust company benefit by building equity, generating a profit and raising capital independent of the credit union. They also enable marketing of services to non-members and isolate liability from the credit union. “It goes without saying that trust services enhance your standing as members’ primary financial institutions and you can retain them for life,” Wroblewski said. The two experts reiterated the marketplace need for trust services, noting that: * the growth rate of households with between $100,000 and $1 million in assets exceeds 10% every year * many consumers have the need, but not the expertise to manage their assets * estimated personal net worth of Americans over age 50 is between $12 trillion and $15 trillion-that’s 70 percent of all personal wealth. “Your non-credit union competition will generally have a higher minimum account size and have a fee structure based on required profit margins, and perhaps be better known than you are,” Henry added. “Keep these differentiators in mind as you market yourself.” [email protected]

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