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PASADENA, Calif. – After meeting with members during financial planning sessions, one of Wescom Financial Services’ advisors consistently noticed that many of them really didn’t understand how their 401(k) plans worked. So the division, which is a wholly-owned subsidiary of $3.3 billion Wescom Credit Union, set out to put together a program that would not only advise members on the basics of 401(k) participation but hone in other pressing retirement concerns, said Keith Pipes, president of Wescom Financial Services. Rolled out in February, more than 225 members have participated in the program, which is available at both Wescom and $667 million KeyPoint Credit Union, which is a WFS credit union client as is $130 million Parsons Federal Credit Union. KeyPoint started participating in late 2005. The way it works is members bring to the free, “no-obligation” session their 401(k) statement that includes the full menus of investment options available, statements from previous employers and traditional and rollover IRA accounts. An advisor will go over all the information to ensure that the member is taking advantage of any company match and if there’s room to increase their contributions. Pipes said while there is no discussion about recommending specific investments, advisors do talk generally about diversification, asset allocation and time horizons. “We wanted to send a message that it’s important for members to take control of their retirement,” Pipes said. “We try to make them aware that Social Security probably will not be able to contribute to their retirement the way it has for previous generations.” The sessions are anything but cookie-cutter. Life stages are an important guide. Twenty and thirty-year olds are generally told to participate to the max in their 401(k) program, Pipes said. Another common thread comes from members having multiple plans from multiple employers. They’re provided the option of possibly rolling all the plans into a single individual retirement account. Some members have expressed concerns with the number of companies that have frozen their defined benefit plans, Pipes found. “We also talk to them about other assets for their retirement,” Pipes said. “We really want to make sure they’re taking into consideration everything to meet their objectives.” Six months after the initial meeting, a follow-up call is made to members to see how they’re doing and whether any further tweaks are needed, Pipes said. A number of members have gone on to rollover their 401(k) money into IRAs at Wescom, he added. WFS was probably the first in the industry to convert to an independent broker-dealer, which occurred in September 2004. Credit unions are being encouraged to move their investment programs in house to be in compliance with SEC regulations. Meanwhile, Pipes said WFS has kept in mind ways to keep the program from going staid. At certain branches, it will only be introduced once a year while at others between two and three times annually. “We want to focus on different elements and different needs so that this doesn’t become stale,” he said. “Whether it’s college planning or long-term care, we know we need to change the subjects around to keep the interest.” As with many in the industry, the challenge is getting the word out that their credit union even offers investment services. Pipes said the penetration rate at Wescom is less than 5%. Still, one of the goals is to always continue to build long-term relationships. “This (program) is another arrow in our quiver,” Pipes said. “If you can introduce members to investment services, you might have a better chance of increasing penetration and awareness.” -

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