GLENDALE, Ariz. – When the idea to start an investment CUSO for Arizona's credit unions came up, one popular model came to mind.

Credit Union Financial Network, LLC launched in January 2005 by four of the state's credit unions using Jim Collins' book Good to Great: Why Some Companies Make the Leap.and Others Don't as a guide, said Mike Prior, president/CEO. Collins and his team conducted a five-year study looking at the practices that allowed 11 companies, including Wells Fargo, Circuit City and Walgreen's, to make the transition from solid to outstanding performance.

“I was reading the book when I was working with other banks, credit unions and independents and I discovered I wasn't really focused,” Prior recalled. “I knew I enjoyed working with credit unions.”

With that affinity, Prior began his quest to call on credit unions who he thought might be interested in getting CUFN off the ground. The first to sign on was $224 million Deer Valley Credit Union, which Prior had previously established a financial planning program for. Soon, $143 million Tucson Old Pueblo Credit Union, $30 million Sun Country Credit Union, and $176 million Salt River Project Credit Union signed on as the CUFN's founding partners. The credit unions put up $50,000 as an initial investment in the CUSO.

CUFN helps credit unions develop a custom integration plan for moving their investment division in-house, Prior said. That transition includes resolving Securities and Exchange Commission, CUSO, and financial advisors compensation issues while recruiting, training, and managing financial advisors. CUFN also provides fee income strategies, risk management/compliance, and marketing strategies. Over the past six months, CUFN has picked up programs from $54 million Desert Energy Credit Union, $708 million TruWest Credit Union and $800 million DM Federal Credit Union from several well-known industry players. CUFN has two different models-partnership/ownership and member. So far, all the credit unions have chosen the former model with two small credit unions that call on CUFN on an appointment basis. All three are now CUFN partner/owners. “The newest credit unions [that have signed on] wanted local service,” Prior said. “Sometimes programs get driven by reps, not credit unions.” For Deer Valley CU, being a part of the process as an owner as well as the CUSO having a local connection were some of the reasons that drew it to CUFN, said Robb Scott, the credit union's president/CEO and CUFN chairman. “All credit unions are on the board. The CUSO is not from another state. It's kind of exciting for some CEOs to actually have a decision in the direction of the CUSO,” Scott said. Deer Valley's investment program “had been muddling along” before it made the decision to help launch CUFN, Scott said. By combining forces with other Arizona credit unions, the credit union was able to beef up staff training and renew its commitment to stronger financial planning for its members. “We have a small percentage [of members] that are using the free financial planning service either for 401(k) plans or college funds,” Scott said. “There's a huge chunk of members who can use the service. We're looking for deeper penetration and a wider network of advice.” CUFN's management team includes Wylie Dougherty, senior vice president, a 40-year industry veteran, and former head of the Arizona Credit Union League and U.S. Central Credit Union. Debra Mobley, a former Bank One executive is the operations manager and Mike Ruggieri, who previously worked at Vanguard and USAA, is the compliance manager. The search is on to have a marketing manager in place by July. Prior said the biggest challenge is finding “high quality advisors.” All of CUFN's 16 advisors have more than 10 years in the advising business and many have MBAs. CUFN has and continues to recruit from big firms such as Merrill Lynch and Goldman Sachs. “We're picky so it takes us awhile to find those high quality advisors,” Prior said. As for the type of credit union CUFN serves, having the resources to support a dual employee model is the main feature, Prior said. That means the employee can be considered an employee of the credit union and CUFN. Scott said a credit union must also be committed to making financial planning a core product. Right now, the focus will be on Arizona's credit unions, regardless of size, Prior said.

-msamaad@cutimes.com

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Arizona Becomes Spring Board for Launch of CUSO to Help Credit Unions Transition Investment Programs In-House

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