Bringing Trust Services to Members Bigger than 'Channel Conflicts' Between Reps, Trust Officers

LAS VEGAS — For some credit unions, it continues to be a hard sell when pitching trust services mostly because it remains the “big unknown,” but as banks continue to consolidate and clients are routed to call centers in another state, the timing could not be better, some industry leaders say. For instance, the $3.7 billion credit union offers trust services through nationally-chartered MEMBERS Trust Company. In the last 18 months America First has been serving members in this area, it has amassed $50 million in assets under management through 80 relationships and is expected to see $320,000 in fee income this year, according to Kerry Wangsgard, vice president/trust department manager at America First. The majority of America First’s trust and estate clients are 60 years old and older, but many are setting up plans for new grandchildren and children. A 23-year veteran of trust and estate planning, a significant amount of Wangsgard’s clients followed him to the CU after he left First Security Bank of Utah. He credits the branch managers for helping to build the CU’s trust business too. “To be successful, it’s about hiring good people,” Wangsgard said. America First has reached out to other credit unions in Utah who may not be able to afford a trust officer on their own, he added. The demand is certainly there. “I have not even scratched the surface to penetrate the business,” said Wangsgard, adding he gets calls nearly every day. MEMBERS Trust is certainly doing its part to convince the credit union of the niche it can carve out. The trust company serves 60 credit unions, has 41 owners including CUNA and CUMIS and has $400 million in assets under management. Tim Kenczewicz, president of the newly-launched MEMBERS Trust, Western Division, told attendees that the need to offer trust services continues to grow. “Credit unions are growing and prospering, bank mergers and acquisitions have diluted service and there are opportunities for credit unions to cross sell,” Kenczewicz said. Gateway Services Group, LLC has built a collaborative model in Colorado working through MEMBERS Trust to provide support to $1.6 billion Bellco CU and $618 million Public Service Employees CU, said Bruce Lamborne, vice president of trust services and business development at Gateway, an investment and insurance program management CUSO. Lamborne said one advantage of offering trust services is fees continue to build on the books on the business for long term, even forever, depending on how a trust is structured. “Some trusts can last 1,000 years,” Lamborne said, adding a $1 million trust can generate between $10,000 and $20,000 in annual fees. There’s one area of contention that can surface between investment representatives and trust officers: whether one is trying to take business from the other. Lamborne said working with MEMBERS Trust, Gateway has helped to alleviate the competitive concerns by fostering cooperation with both groups, which has led to both growing new assets and building meaningful relationships with members. As a result, 200 members have been consulted, referrals are up and a potential $20 million in additional assets could be realized. “I don’t ever want a rep to think that I’m coming in to compete with them,” Lamborne said. Meanwhile, Kenczewicz said credit unions are no longer competing with banks with trust services, but nontraditional players such as mutual funds, brokerages, nonprofits and insurance companies have come into the arena. Still, credit unions can stand out because they are traditionally known for their personalized service. “Wealth is a relative term,” Kenczewicz said. “If I’m talking to a trust client 20 years ago about $15 million and I’m talking to a client today with $300,000, it ultimately has to do with the way and when wealth will be transferred.” –[email protected]