MADISON, Wis. — A marriage between 401(k) plans and creditunions with business members is one that CUNA Mutual Group isaiming to consummate.

The company said it is stepping up its efforts to market its401(k) and defined benefit plans as an entry into the smallbusiness market. While there is a base for business loans, depositsand other related services, offering retirement savings plans isjust one more way to round out existing relationships, said KevinThompson, vice president, asset accumulation products at CUNAMutual.

“We've all known of the challenges with member growth and how toattract deposits. Many credit unions are looking to businessservices as one way to become more relevant to business customers,”Thompson said.

To that end, CUNA Mutual kicked off a pilot last summer with ahandful of credit unions to see how far its 401(k) plans wouldresonate with members who own small businesses (see related newsbrief on page 9). The $3.7 billion Alaska USA FCU was one of thefront-runners and now, more than 60 credit unions are offering thecompany's plans.

Thompson said CUNA Mutual licenses proprietary software toanalyze the geography on different plans. Meaning, representativeswill run a list of businesses in a credit union's field ofmembership that offer their employees retirement plans. The creditunion can then cross reference those plans with their selectemployee groups. Once an interested business owner is contacted,the local CUNA Mutual representative will meet with the creditunion's business development officer to present the plan's featuresand benefits as a means to build that new relationship.

New hires who attend employee orientation meetings are anotheravenue CUNA Mutual is promoting as a way not only to build 401(k)connections but to also tout joining the credit union. In the longrun, having such plans can help build touch points and couldpotentially increase business relationships, Thompson said.

“From a financial standpoint, credit unions see the fee income,”Thompson suggested. “It seems many are struggling with [return onassets] so the timing is very good for credit unions in be involvedin business services.”

As for the type of credit union prime to cross sell 401(k) plansto member-owned businesses, Thompson said he tries to stay awayfrom hard or fast rules on asset size. More importantly, the creditunion should have a financial services program that shows astrategy and commitment to the market. Having someone, say in thelending department, who would have minimal time to devote tobuilding relationships with businesses might not fly, he added.

“It would have to be someone with boots on the ground, so tospeak. Someone who knows investment products and is a salesperson.”

Above all, CUNA Mutual wants to keep it “sophisticated, simpleand guaranteed.” The sophistication part would be having a productthat is comparable to what larger plan providers offer, Thompsonsaid. The simple is keeping it stress-free for employees who mayhave been bombarded by a litany of fund options in the past. In hisresearch, Thompson discovered that the more complex plans are,participation rates decline. Finally, CUNA Mutual guarantees thatif there is an unsatisfactory experience with service or product,the company will fix it. If it's not fixed, the following year'sadministrative fee will be waived.

“The 'simple' and the 'guarantee' are where we shine,” Thompsonsaid. “The end goal is for people to retire in a comfortablefashion. The key to that is simplicity. We don't put any metrics[around the guarantee]. We're putting our money where our mouthis.”

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