TAMPA, Fla. — Despite the trillions of dollars of expected intergenerational wealth transfers and inheritances and the first wave of baby boomers scheduled to retire next year, trust services continues to be a green area for most credit unions.
For 2007, it will most likely be more of the same, but like the nature of building a trust services program, proponents say the rewards could go to those that are okay with slow and steady growth.
One key collaboration expected to be finalized by Feb.1 is the merger of Members Trust Company of Colorado with MEMBERS Trust Co., the three-year old, nationally-chartered, credit-union owned firm. Alone, MEMBERS Trust has $260 million in assets under management. With the merger, it will top the $400 million mark. It is these types of alliances that could become more visible in the industry, some predict.
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"I've worked for credit unions for 30 years. They have the big obstacle accomplished–they have the reputation," said Tom Walker, president/CEO. "The strategy now is being the source of financial solutions."
That means delivering products and services that can meet a member wherever he or she is at in their life cycle, Walker said. With trust services, it can be a challenge for credit unions because most are still looked to for traditional products.
"Regardless of credit union size, it's about changing the image to being the source for financial solutions," Walker reiterated.
This year, MEMBERS Trust is discussing plans to form more cooperatives where several credit unions can come together to share a trust officer, which in turn could reduce the implementation costs for all involved. The trust company is also discussing the possibility of opening a regional office in Atlanta this year. MEMBERS Trust partnered with EasCorp last year to create a trust office in the New England region. A greater emphasis on special needs trusts will also be seen, Walker said, adding many banks are shunning them because of the time it takes to manage them.
Quiet as it's sometimes kept, banks and credit unions can work in harmony. Dubuque, Iowa-based First Community Bank, N.A. has had a trust services alliance with six credit unions since 2001. Half of its assets under management, which amount to $230 million, are from credit union members, said Francis "Chip" Murray, president. He agrees that identifying when members need trust services is still critical to building relationships.
"When people retire, when they want to roll over to an IRA or move into a nursing home, they may not know when they need services but at some point they will," Murray said.
This year, First Community plans to continue to bring more awareness to the alliance it has with Iowa credit unions Dupaco Community Credit Union, Du Trac Community CU, Collins Community CU, Veridian CU, Optiva CU and I.H. Mississippi Valley CU, in Moline, Ill. The bank will also continue to assist those set to retire including baby boomers.
"We're promoting the benefits of rolling into IRAs [with baby boomers]," Murray said. "I don't see a lot of that happening based on the demographics."
Walker said expect more emphasis on financial planning and credit unions creating more growth strategies this year as well. –[email protected]
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