Growth for North Carolina's State Employees' Credit Union's investment services subsidiary has come at a slow and steady pace. And that's what the cooperative wants.

Formed in August 2007, Credit Union Investment Services marked a milestone in July when it surpassed the $100 million in assets mark. The distinction here was the signpost was achieved in large part through members who had as little as $1,000 to invest, according to the $23 billion credit union in Raleigh, N.C.

“Our target audience is the member who doesn't have a lot of money. We like to say our services are for the 'not yet wealthy,'” said Bill Umphlett, senior vice president of financial advisory services at SECU. “We're talking about someone who doesn't have a savings plan or retirement plan or has saved for college–and they don't trust anyone.”

With 240 non-commissioned, multi-licensed representatives state-wide, CUIS has built a reputation on having trusted advisers to form relationships with members who may be skeptical about discussing their long-term financial plans, Umphlett said.

To reach even more members, CUIS recently lowered the initial investment amount to use the CUSO's services to $250. Umphlett said there have been ongoing discussions about dropping the threshold that low. Within those talks, two schools of thought emerged, he recalled.

“There is the resistant side that said if you have $250, you shouldn't even be in the market. The other side said just because they don't have a lot of money, doesn't mean they won't later. And, maybe the best time to get in is with a low dollar amount.”

After conducting an extensive search, CUIS went with a balanced fund that met the $250 minimum requirement, Umphlett said. It's been in place for several months after members, quite frankly, wanted something along those lines, he added. So far, fund activity is going better than expected.

Meanwhile, to get to that $100 million mark, CUIS took a look at several different approaches in bringing the type of investment services to members who may be shunned by other firms. For one, it was important to build trust. Umphlett said SECU's membership is made up of everyday, working men and women. Many of them sit on the sidelines or if they have opened up mutual funds, they feel a void because their adviser had not served them well.

“They are tentative and conservative and they have every right to be,” Umphlett said.

With that in mind, since all representatives are salaried and receive no commission, members are assured to receive fair, impartial advice, SECU said. CUIS representatives guide investors based on the member's objective, time horizon, risk tolerance and overall financial condition, ultimately providing education for the member to make an informed investing decision, according to the credit union.

CUIS also noticed the inundation of advertising targeted at investors with significant amounts of money to invest. Umphlett said where consumers get hurt is the notion of buying when high and getting out of the market when fear creeps in. In the end, the investor ends up losing money in the long term, he explained.

“We're not trying to sell performance. We're very upfront with members–we talk them out of doing something before we talk them into it,” Umphlett said.

CUIS is one piece of the puzzle that ties in to SECU's overall organizational objective of helping members create a successful financial path. The other pieces include an online member financial assessment tool, a basic estate planning essentials program, tax preparation services, and partnerships with member groups, with SECU representatives providing financial education on topics from budgeting to retirement planning.

SECU's investment services CUSO sprang from its client alliance with XCU Capital Corp., a credit union-owned broker-dealer and investment advisory firm that was acquired by LPL Financial Corp in August 2007. The CUSO bought the broker-dealer's corporate shell in October 2007, bringing in 6,000 accounts totaling $30 million.

Umphlett said CUIS's growth has been slow but the route has been the best one to take.

“For us, the pride is in how we got there, not how fast.”

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&lsquo;Not Yet Wealthy&rsquo; Help Drive Growth

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