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BAKERSFIELD, Calif. – When it comes to its investments program, Kerns School Federal Credit Union’s mantra is to the point. “Less is more. Simple is better.” The $1.5 billion credit union has seen its investment division, initially launched in 1985, evolve from service to an outsourced third-party provider to its current relationship with CUSO Financial Services, LP, the credit union-owned broker dealer and an in-house move of the program out of its credit union service organization. At the end of 2005, it had $60 million in assets under management and is on track to add $40 million by the end of the year, said Larry Braley, KSFCU program manager of investment and insurance services. For 14 years, KSFCU worked with a third-party provider but by 2000, it was clear that a change was needed. “The credit union wanted a more hands-on approach,” Braley said. “Our CEO and the rest of the staff saw what was going on with some of the credit unions and thought there was just a better way to service the member.” Enter CUSO Financial in 2000, which immediately shook the trees with an assessment of KSFCU’s investment program. The firm found that while building in other areas within the credit union requires transactions, an investment outfit had to be built in order for members to use it. That meant creating Braley’s new position to head the restructured department, bringing in more representatives and more frequent deployment to KSFCU’s 11 branches, Braley said. CFS also helped bring the program along with its technology infrastructure, he added including a electronic referral system that produced 300 referrals in 2003, 450 in 2004 and more than 1,700 in 2005. Sixty-five percent of KSFCU’s business comes from internal referrals while 35% is generated by the reps. Braley would like to see a 50/50 mix. Investments currently have a 4% member penetration rate but the goal is be 7% or better, he said. Another factor that has helped the credit union’s investment program prosper is a buy-in from the CEO, Vince Rojas, which included hiring the “right people” and then giving them the latitude to really manage. “The message from the top is investments are viable to members,” Braley said. “In years past, I don’t care if it’s a bank or credit union, someone would have to trip and say `oh, yeah, I need a retirement account.’” Financial planning is no longer an afterthought for most members at KSFCU given the increase in accounts managed. It really helped when the investment program was moved in-house in February 2004, Braley said. Now, members were comfortable with the close connection and staff saw investments as another department. “It has made a huge difference. The credit union has been around since 1940 so we’ve built tremendous trust with our members,” Braley said. Since 1997, CFS has methodically built relationships with more than 100 credit unions using a business model that emphasizes awareness, integration and credibility, said Valorie Seyfert, co-founder and CEO of CFS. ” We didn’t achieve our success and reputation with sleight of hand or smoke and mirrors,” Seyfert said. “ We’ve been successful because we put a great deal of thought into our business approach and worked in partnership with credit unions to show them how their programs can be structured to be as productive as possible.” A major component of the process is giving the investment program “the same visibility as the rest of its core offerings,” Seyfert said. “That integration helps heighten awareness among members and staff, which further helps to integrate the program, she explained. “All of that taken together helps build credibility for the program and for the credit union by extension.” Power 1 Credit Union literally started from scratch with its investment program when Doug Brown, vice president of investments/financial advisor, came aboard in February 2001. The $375 million credit union, which, at the time, had three branches – two in Miami and one in Juno Beach, nearly 80 miles away – had been working with a third-party financial planning firm to handle its referrals. “If you can compare it to building a house, we started with the bare lot,” Brown said. Founded in 1951 to serve Florida Power and Light Co., Power 1 now has nearly 140 select employee groups, field of membership authority in 30 South Florida cities and six branches. The larger branch network has helped the credit union to build more relationships, Brown said. Today, its investment program, also through CFS, has $45 million in assets under management. Most of their business comes from members ages 50 to 65 and those close to retirement who have, on average, $500,000 or more in assets, Brown said. But there’s also business from younger members who may just need an individual retirement account. Educational seminars and carefully-designed marketing pieces have helped woo some away from Fidelity, Florida Power’s investment administrator. By 2005, 11% of Power 1′s membership was participating in the investment program, according to CFS. By way of comparison, the average penetration rate of all CFS programs is 8%. “A lot of what we’ve done is experimentation,” Brown said. “When I walked in from the banking side, I didn’t know what a credit union was. I was pleasantly surprised at the technology CFS offered.” Going forward, Power 1 is hoping hurricanes won’t be in the picture like they were last year, Brown said. Understandably, members shifted their financial priorities if they were affected by a major storm. Getting a roof repaired was much more important that mutual funds then, Brown empathized. “We’re going to continue to build on some momentum,” he said. “In five years, we’ve made great strides and the credit union has been extremely supportive on how we market the program.” -

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