This economy has presented some of the greatest challenges most of us have seen in our lifetimes. Unacceptable levels of unemployment, unprecedented numbers of defaulted loans, foreclosures. With challenge, however, comes opportunity and a chance to review current practices looking for better ideas.
With baby boomers at the door of retirement, many are naturally seeking the assistance of a qualified financial adviser. Who better than the service-oriented credit union to meet this need? The benefit of seeking the counsel of an experienced, knowledgeable investment professional is access to this knowledge and expertise that has been developed over many years.
The opportunity for the credit union is to meet this critical need by providing an investment and insurance program with outstanding financial advisers and excellent management. If a program is in place, it is important to ensure that all members are aware of the services and have the opportunity to benefit from these services. The program, however, should still be managed with an eye on expenses and cost control. Success is defined as providing outstanding service while adding and retaining members and increasing revenue. The keys are availability, accessibility, accountability and marketability.
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For any credit union not offering investment services, the time to prioritize this additional program is now. Timing could not be better than just as the baby boomers are hitting age 65. As these members develop relationships with the financial adviser, they will also cement their relationship with the credit union. Those who are eligible, but who have not yet joined the credit union will be presented with an excellent reason to join once they determine that they can meet their needs for retirement and investment planning.
An investment relationship is a long-term relationship and one that tends to be very sticky. When a financial adviser meets with a member, he or she will often meet them in their home. They may meet their children. They will have conversations that are very personal as the individual or couple opens up about their hopes, their dreams and their concerns. The interaction builds a foundation for a long-term, indispensable, trust-based, association. Wouldn't this be a valuable connection for credit unions to have as well? It is the perfect combination of the member-first philosophy.
Some credit unions who have provided investment offerings for years have struggled with profitability. They see the value of the investment program and want to retain members by offering these types of products, but they also know it takes time and resources from the credit union to do so. This does not have to be the case. Investment programs can be very profitable when the proper combination of remote resources, technology and cost-effective management is deployed.
Financial advisers working on commission will often prioritize the members with the greatest chance of a large investment resulting in a large commission. This presents a challenge for the credit union. While we need to serve the most profitable member in order to ensure net income for the investment program, we also need to serve all members as is our commitment to the membership. This can be accomplished through effective organization, delegation and technology. The benefit of a well-managed investment program is it should be very profitable, as well as invaluable to the membership.
Credit unions of any size should be cost conscious in running an investment program and those commissioned with that responsibility must take that mission very seriously. Those that choose to hire financial advisers as employees can easily become buried in the fixed costs. A generous commission structure tends to provide the most motivated sales person, and the independence of the position is a good fit for the independent spirit and self-directed motivation necessary for a successful adviser.
Credit unions wishing to position themselves as financial service providers need to become a one-stop shop and products and services should be accessible largely online. Between relocations, branch closures and member growth and retention goals, credit unions interested in remaining competitive must be cognizant of online capabilities. The investment program can lead the way in achieving growth goals of the credit union and more aggressive marketing can drive new members seeking retirement assistance. The second area of competitive necessity is the application of technology to ensure cost effectiveness. Online investing programs can fill in a lot of gaps and also reduce expenses for both the credit union and the member.
Eileen Griffin is executive vice president of marketing at Veriture Financial. She can be reached at 858-254-6402 or [email protected]
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