ROCKLIN, Calif. — The good news is the aggregate value of the investment accounts that members have through credit union investment services programs has been increasing in excess of 12% year-over-year since 2005.
That's according to Pete Snyder, president of Snyder Consulting Solutions, LLC, an investment and insurance service consulting firm. The mildly bad news is 2007 represented "another year of nominal growth" for the credit union investment services business channel. Citing data from the Callahan/SCS Benchmarking Study for Credit Union Investment Programs, Snyder confirmed that credit unions have much more room to grow.
"This data, combined with the other data points that we have, continues to validate that credit unions have only begun to scratch the surface of gaining a representative portion of the wallet share of their members," Snyder said.
Recommended For You
For 2008, credit union investment services programs will need to continue to focus on increasing their overall household penetration within their households from an average of about 2%-3%, Snyder suggested. The "better performing programs" have achieved household penetrations of up to 8% and a handful [of them] are actually in excess of 10%.
"We shouldn't feel too bad, however, as the household penetration rate in banks is essentially the same," Snyder pointed out.
While there is a continued focus on increasing overall household penetration, Snyder said there are a few other key business initiatives that investment services programs will need to pay attention to in 2008. First, for established programs, it will be critical to maintain the strong relationship with their member/clients through exemplary service, responsiveness and regular reviews of their accounts. If the number of accounts that each financial consultant oversees continues to increase, programs are at risk of diminishing the overall satisfaction level that members have today which correlates to a retention problem.
"Numerous programs have experienced this actual issue and have put in place modified staffing models that actually serve to generate additional revenue to correct it," Snyder said. "Organic growth of existing member/clients is crucial to attain overall net penetration growth. Credit unions know this ever so well as they continue to focus on net member growth."
Second, an overall growing trend in financial institution investment services programs is the commitment to getting in to the "fee-based" marketplace, Snyder said. Although credit unions have lagged the bank channel in this area, well-established credit union programs have active projects and initiatives in place to participate in this business channel, he added.
"To do so, credit unions will need to fully understand the risks of implementing a fee-based strategy incorrectly," Snyder offered. "The fee-based market segment represents an opportunity for significant incremental growth to existing credit union investment services programs."
Given that, to ensure continued success and overall growth in this business channel, Snyder said credit unions "must get their arms around" the overall dynamics of the fee-based model and the extent to which it supplements the in place program's overall staffing and financial models.
Finally, Snyder said at the organizational level, the gains that have been made in recent years to effectively "collaboratively integrate" the investment services channel into the credit union must continue.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.
