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As we leave the Great Recession, it’s appropriate to look at what credit union financial advisers should be doing for and with their clients. There is no question client money is on the move. Research firm Cerulli Associates estimated in early September that $800 billion in client assets will likely change hands this year. This is largely due to financial advisers changing firms but also because of heavy outflows from the major wire houses and into registered investment advisers and independents. This confirms that clients are highly dissatisfied-and angry-with the performance of the big guys. Some credit unions are taking advantage of the opportunity. Randolph Brooks FCU in San Antonio launched an aggressive campaign to capture new assets and members. The campaign started with billboards all over town with one word: “Why?” After two months of teasing, a new set of billboards answered the question: “Because Investing Isn’t Status Quo.” This time, of course, Randolph Brooks-specifically its investments and insurance group-was clearly identified. You get the idea. Clearly, the timing is right for individual financial advisers and individual credit unions to launch a national campaign of their own. My contact with credit union members indicates they are looking for someone they can trust, and they are willing to give their credit unions the business if we can demonstrate credit unions have the sophistication, knowledge and tools to help them regain their financial footing. Here are just a few ways credit union advisers can distinguish themselves as the go-to person for their clients-members. Understand what business we’re really in. When I ask financial advisers what business they think they’re in, I usually get the phrases retirement planning, investment planning or financial planning. Maybe that was true before September 2008, but it’s not true today. We’re now in the risk-management business. Many of our clients have seen the value of their homes and portfolios hammered. They have taken on more debt than they should have. They wanted to retire next year, but they can’t. They are risk averse and wondering who they can trust. Our job now is to provide sound, objective advice and to help them with a solid plan for the future. Do a comprehensive asset allocation. Most credit union members-even those of substantial means-have never had a comprehensive asset allocation done for them. A total or comprehensive asset allocation takes all their investable assets, qualified and nonqualified, and all their accounts (no matter who is managing the assets) and shows members-clients how diversified they really are-or aren’t (which is often the case). The analysis often reveals an overly heavy concentration in a particular sector or asset class. It is also not unusual for the report to reveal a potentially dangerous over-concentration in a particular stock, like the member’s own employer. This is important information for the client; but it is equally important for the financial adviser, since he or she is now the only adviser who knows where all the client’s investable assets are. Do a family paperwork review. Most credit union members have never had an adviser offer to review their documents-beneficiary designations, insurance policies, etc.-to make sure everything is in order. For example, we’ve put together a client document checklist and a family wealth planning issues checklist to help our advisers and clients through this process. There’s typically no charge for this service, and you can imagine how sticky the relationship is when the client and adviser have gone through this process together. Do an analysis of other options for clients with defined-benefit pensions. While defined benefit pensions are dramatically decreasing in number in the private sector, they’re still out there. It is exceedingly rare for any financial adviser to offer to analyze the various survivor benefit options and help pensioners decide what is right for their families. Additionally, financial advisers typically leap at the opportunity to recommend the lump-sum pension option without thoroughly analyzing if it is the right thing for the client. Don’t do it. It really may be in the client’s best interests to take the pension-for-life option from their employer. If advisers do the right thing, they’ll often get the lump sum anyway-not to mention the client’s loyalty and gratitude and a host of referrals. If credit union financial advisers do these things, I believe they will have all the business they can handle. They and their clients-members will be better off for it.

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Peter Westerman


Credit Union Times

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