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SAN DIEGO – Brett Everhart believes too many credit unions take a defensive approach when they offer members an investment resource. “It doesn’t have to be that way,” Everhart declares. He’s program manager of North Island Financial and Insurance Services at North Island Credit Union. “You shouldn’t figure you need to offer investments and insurance just because everybody else does. Unfortunately, I see a lot of my peers lose money in this particular area. It doesn’t have to be that way. We are in an immensely profitable position. Just to give you a six-month run, we had over $1.3 million in revenue and generated $580,000 in net income.” The investment activity was formerly carried out through a CUSO. Now, with expansion of incidental powers, it’s been pulled in as a department of the credit union. Members can either work with a representative at NIFIS or invest online themselves by logging onto eVISION or ShareBuilder. eVision is available through the NIFIS broker-dealer and members can obtain securities ranging from stocks, bonds and options for $14.95. There’s no advice, so members need to tackle their own homework and know what they’re doing. ShareBuilder is an independent service. Members can accumulate full and fractional shares of more than 5,000 securities by investing as little as $25 a month. For example, suppose you want to purchase a certain stock. Each month ShareBuilder will buy on your behalf as many shares or fractional shares as $25 allows. The fee is $4. For $12 a month you can purchase as many securities as you want. Everhart describes ShareBuilder as a “farm system” for first-time investors who want to become more familiar with the process. As they gain confidence, they may decide to sit down with an advisor. eVISION is targeted at do-it-yourself investors who know what they want to do. They’re seeking the best execution at the best price and probably aren’t interested in working with a financial advisor. From the credit union’s viewpoint, the on-line options are “really a member service,” Everhart says. NIFIS receives $1 for every eVISION trade. With ShareBuilder the credit union earns 10% of whatever fee is collected. NSFIS is neither losing money nor earning significant income through this online activity. “We think it’s important to offer a variety of different distribution points,” Everhart explains. “It would be a little bit close-minded to assume a member only wants to deal with a representative. There are so many different ways consumers can obtain financial services today. We felt it would be important to have a number of different means to satisfy members desires. “Another item to consider is with stock trading so competitive and prices coming down, there’s really no financial opportunity there for credit unions. So we think it’s important to refer and defer to that type of (online) resource. It provides the most efficient means to our member, and it takes that monkey off our back.” On the full-service side NIFIS works with 9,800 households and has $220 million under management including mutual funds, variable annuities and fixed annuities. With members still very much on the fence about their investments, about 60% of total volume is in fixed annuities. There are 20 individuals throughout the North Island branches with insurance licenses. They’re called annuity specialists and handle a volume of about $1.3 million a month. “We’re a $1.3 billion credit union,” Everhart notes. “For us to have that percentage in the insurance and investment side of the house is significant. I tell our CEO, and I’m not joking, there will come a point in time when assets on the investment side will surpass the credit union’s core deposits.” He does acknowledge the uncertain market over the past few years has required a lot of handholding, guidance and comforting so members can feel better about their financial future. Everhart believes credit unions need to pull together to establish themselves as reliable, viable investment sources. Those joint efforts, he indicates, could include public relations and image-building. He’s convinced it would pay off. “The members you serve for investments and insurance will typically have higher deposit and loan balances than your other members. Credit unions want to have the stickiest member they can. If you want to get the stickiest member, make sure you offer investment and insurance services. They then have so much trust built up in you they’re not going anywhere.” -

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