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SAN DIEGO – As one industry expert put it, once upon a time it was quite “cool” for a member or customer to have multiple accounts at multiple financial institutions. Those days may be heading towards extinction as many seek out outlets that will offer all of their financial wants under one roof. Some credit unions and an unlikely competitor, brokerage firms, have taken heed to that desire with the aim of being the primary financial institution for all a member or customer’s financial needs. The one-stop shopping trend can be traced back to the Great Depression. The stock market crash of 1929 brought on the passage of the Glass-Steagall Act (GSA) in 1933. That landmark piece of legislation stopped commercial banks from investing in the stock market, which history says was the main culprit that led to the crash. More than 65 years later in 1999, Congress repealed the GSA with the establishment of the Gramm-Leach-Bliley Act, which eliminated the GSA restrictions against affiliations between commercial and investment banks and allowed banking institutions to provide a broader range of services, including underwriting and other dealing activities. Today, dozens of brokerage firms have taken advantage of the latitude and have begun to offer traditional banking services such as credit cards, mortgages, checking and savings accounts. Among them include Charles Schwab Corp., E*Trade Financial Corp., Ameritrade Holding Corp. and Citigroup Inc.’s Smith Barney brokerage division. Credit unions are not immune to the intermingling of services occurring at broker-dealers. LPL Financial Services, for instance, saw a shift in consumer attitudes in the late 1980s, said Bill Dwyer, managing director of branch development. LPL works with 150 credit unions that account for half of its $1.1 billion in revenue and is the largest independent broker/dealer in the nation. In all, the broker has 400 financial institution clients. “It’s a dramatic change from the 1980s when the cool thing was to have multiple (financial) relationships,” Dwyer said. “Now, the trend we see is financial advice. Consumers want to get their securities support but they also want their mortgages, credit cards, insurance and trust services through one trusted financial advisor.” To that end, LPL has expanded its offerings beyond traditional brokerage services over the last three years. LPL now offers trust services through its Private Trust Co., N.A.; mortgages through its Innovex Mortgages firm and insurance via its Linsco/Private Ledger Insurance Associates, Inc. The broker-dealer also has partnerships with MBNA America Bank, N.A., the largest issuer of affinity credit cards in the United States, to offer LPL credit cards and FinancialAid.com, to provide college loan options. “While we offer all of these services, a client may have a strong mortgage origination program or a credit card alliance,” Dwyer said. “They’re free to do that. For those credit unions that don’t have a trust department but a member is looking (for those services), we have that option for them.” Rather than see the blurring of the lines between traditional brokerage services and credit union and bank offerings as an encroachment, credit unions may want to see it as an edge, said Jim Norwood, LPL senior vice president of financial institutions services division. “We’re trying to position credit union clients to be able to provide all the services needed to compete in a highly competitive marketplace,” Norwood said. “And, it’s not just banks anymore. It’s wire houses and discount firms. We do what we can to place all credit unions in a position to compete.” Brokerage firms are certainly pulling out all the stops to compete as well. In March, Citigroup Inc.’s Smith Barney brokerage division started allowing its clients to withdraw cash, make cash deposits and cash checks at Citibank branches with the use of a brokerage account’s debit card or checks. Initially, Smith Barney clients could only use Citibank ATMs to get cash from their brokerage accounts and had to use Smith Barney branches to make deposits to those same accounts. Federal law prohibits Smith Barney’s brokerage division from accepting and dispensing cash but Citibank can do those transactions. The Wall Street Journal reported in April that Ameritrade Holding Corp. is seeking a banking charter so that its customers can put their cash and other holdings in deposit accounts insured by the FDIC. Interestingly, XCU Corp. Inc. partnered with Ameritrade Financial Services earlier this year to provide online retail trading to its more than 30 credit union clients. The CU-owned broker-dealer serves more than 46,000 members with more than $1.6 billion in assets under administration. Calls to Mark Allen, president of XCU Capital Corp., Inc., the holding company for XCU Corp., were not returned by press time. Another broker-dealer, E*Trade Financial Corp., has launched a brokerage account that can be used to pay bills and track transactions online including fees charged by other banks for use of their ATMs. Two years ago, Charles Schwab Corp. obtained a banking charter and since then has offered a credit card that rewards extra points for brokerage trades and a mortgage where stock can be used as collateral. While it’s been nearly six years since Gramm-Leach-Bliley Act allowed financial institutions to offer non-traditional offerings, some brokers with ties to the credit union industry are not so receptive to the idea of venturing beyond their bread and butter. San Diego-based broker/dealer CUSO Financial Services, L.P. (CFS) serves more than 90 credit union clients and has taken those relationships into consideration when presented with outside opportunities. “We have certainly been approached by vendors to (offer other types of services),” said Valorie Seyfert, CFS president/CEO. “We deal exclusively with credit unions and have taken the position that we would not compete with (them) in their traditional areas.” Seyfert said CFS does not plan to or foresees offering things like checking accounts, credit cards, loans or mortgages. “We have good cross-selling opportunities and have taken a very strong position to avoid any type of conflict from a marketing perspective,” Seyfert said. Meanwhile, Dwyer at LPL said a different approach is needed today to help those who have a diversity of financial needs. “The Baby Boomers are here, they turn 59 this year,” Dwyer said. “And, they’re bringing $30 trillion that they’ll transfer to the next generation over the next 15 years. That’s going to require a more comprehensive approach to financial planning. For a client worried about intergenerational wealth transfers, you need a more holistic plan than just college funding. You have to provide non-traditional services.” -

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