Rather than having to pull rabbits out of his hat in 2009, ScottBoyd took a conservative yet diverse approach to buffer his mostlyolder clients against an unstable economy.

Boyd is an investment adviser with $1.6 billion Kern SchoolsFederal Credit Union in Bakersfield, Calif. Of the 1,000 members heworks with, their average age is 65 to 75 and a big percentage ofthem have $1 million or more in assets. He spent the past yearconvincing many of his clients to spread out and diversify and keepsome links to the stock market even though some wanted to jumpship.

“They're afraid of the economy, they're afraid of losing theirmoney, and they became leery of bank deposits and the FDIC,” saidBoyd, who has been in the investment industry for more than 30years. “They certainly wanted something with a guarantee or lowrisk.”

That may be the tune nationwide as financial advisers sit downwith their members, some who may have had to postponemuch-anticipated retirements or scale back on 401(k) contributionsas layoffs, prolonged unemployment and home foreclosures erodedshored-up savings. The name of the game seems to be “goconservative.”

Boyd had a few clients who planned to retire within the nextcouple of years. Many of them are teachers who had variableannuities. Several of them of had to curtail their retirement plansbecause their pension values took a nosedive.

“People wanted to take their money and put it under a mattress,”Boyd said.

Boyd's experience and ability to keep his clients on task whileforming new member relationships were among the reasons he wasrecently named the top financial adviser for 2009 by CUSO FinancialServices LP, the San Diego-based credit union broker-dealer andinvestment advisory firm. Boyd manages $100 million in assets withnearly $40 million of that coming from new business in 2009, hesaid. He was bringing in $3 million in new assets each month. He,along with several of his peers, will be honored by CFS at anawards ceremony this summer.

Even though they took a beating in 2008, the bond fund marketcame back strong last year up 15%-20%, Boyd said. He steeredmembers there and toward equities. He acknowledged that when you're65 or 75 years old, the portions are not that big. Short-termincome funds were another recommendation for those who hadcompletely turned their back on taking any risks with themarket.

“I definitely had to do a lot more explaining and proving howprograms worked,” Boyd recalled. “Most of the people I had that hadissues had money with someone else. My clients as a whole did notsuffer.”

Tim Werdel, also a financial adviser at Kern Schools FCU, sawfear and answered more questions from his clients particularlybecause he worked with a generation of people who probably neverthought twice about the safety and soundness of FDIC-backedfunds.

“This recession was unique in that it happened in the financialsector,” Werdel said. “People were used to easy credit and peoplewent way over their deposit limits. I think people have permanentlychanged their mentality. They're no longer figuring on buying thatthird car.”

For his efforts, Werdel will also recognized by CFS, which namedhim the 2009 recipient of its Silver Pacesetter award for meetingthe criteria of “a perfect balance of focus, commitment, and thebest practice of serving clients and members.”

Werdel's member-clients run the gamut with the bulk of them withassets in the $500,000 to $1 million range. Most are over the ageof 50 and many have their eye on retirement. The recession haschanged some traditional methods, he noticed. For instance, some ofhis clients in their 60s were forced into retirement when they werelaid off. Others are not interested in going out and starting allover again with a new job.

“With unemployment at 10%, the reality is they are retiringyounger and that's not by choice,” Werdel said.

The closer a member is to retirement, the more conservative theapproach, Werdel explained. Eighty percent of his clients arewithin 10 years of retirement and most have been diligent aboutbuilding up their savings but were unclear about how to manage itso they can continue live comfortably. Fixed assets such ascertificates of deposits, annuities and bonds offered less risk, hesaid. He acknowledged they might not be what's best for them whenthe markets are at an all-time high. Werdel's experience has shownhim that people tend to lean away from risk during these highsrather than buy. Depending on a member's age, say someone in their30s with time on their side to build up a 401(k) or an individualretirement account, Werdel may suggest a more aggressivestance.

“I've done a lot of reassuring especially during this recession.For older folks who are 75 to 85 years old living on a fixedincome, it becomes difficult,” Werdel said. “To save the economy,you have to lower interest rates but it hurts people who didn'thave a mortgage or a lot of debt.”

As rates rise, the mortgage market may take a hit again, Werdelsaid. This matters to people who are used to seeing CDs that pay 5%to 6%.

Knowing what approaches to tailor depending on their client'sshort and long-term needs is why Boyd and Werdel stand out amongthe pack, said Valorie Seyfert, CEO of CU-broker dealer CFS.

“Of course, the first point is that they have each hit therevenue numbers needed to reach these top Pacesetter levels. Butwhat's more important is why they have hit those numbers. Using thetools, strategies and support available at CFS, the KSFCU advisorsand program manager have taken a very entrepreneurial stance andhave integrated into the core offerings of the credit union asuccessful process to efficiently serve all the investors in thecredit union,” Seyfert said.

Brokered CDs and 403b accounts are two ways new money has cometo Kern Schools, Seyfert noted, adding the CU's investmentprogram's success has hinged on offering products and services thatbest suits the cooperative's unique member base.

Both Boyd and Werdel said they expect to see a repeat of 2009'sconversations and guidance this year among their respectiveclients. If government intervention leads to an increase inpayments to the FDIC and NCUA, that could lower interest rates,Boyd said. To make up those losses, banks may lower things like CDrates. Credit unions may follow suit and end up having to get ridof excess money. For some members, it may mean taking their fundselsewhere.

“With that said, it will continue to be a strong year for creditunions because they are dependent on income through CDs and thingslike that,” Boyd said. “Last year, you saw people who had neverdeposited outside of a bank do so for the first time.”

Boyd said it also helps to have a support system through CUSOslike CFS. His previous stints at Wells Fargo and Washington Mutualdon't compare to the CU environment, he pointed out. The cutthroatatmosphere is nonexistent and Kern Schools staff is much friendlierto brokers than the banks were.

“People love credit unions. That's a good portion of mysuccess,” Werdel said.

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