First Impression of Advisers Matters for CU Investment Program Success

That first meeting a member has with an adviser may be a strong factor in determining whether an investment program can generate long-term revenue for a credit union. As a whole, the credit union industry continues to work on increasing member penetration for investment services. The composition of the investment book, experience of financial advisers, referral program success, management support, marketing initiatives and member retention are just a few of the factors that will determine the ability to increase membership penetration and increase revenue from the existing book of business, said Mark Hoaglin, president/CEO of Above the Crowd Business Development Group, a San Diego-based credit union consultation firm. “With the increased effort to promote the program comes a commitment to improve the skills of your adviser team,” Hoaglin said. “The last thing you want to achieve is an increase in referral activity only to have your members walk away in disappointment from their experience at the investment desk.” Hoaglin said using data to gauge progress and to forecast expectations for the next year can be useful. However, the danger is an aggregate approach takes into account programs “that do not look like yours and therefore tends to skew the results toward those higher performing programs.” Still, it’s a good place to start, Hoaglin suggested. Economic data is also important, because it has an impact on a member’s ability to achieve their financial goals and whether broker-dealers have the means to deliver product and service to help investors solve their problems. “Ultimately it is the credit union member who wins as you increase their awareness of your ability to help them reach their financial goals. Isn’t that why our doors are open in the first place,” Hoaglin asked. “[Credit union] programs don’t operate like a wirehouse such as Merrill Lynch where the advisers are much more transactional because of the individual equity trading, so as a result, they might turnover their book at a rate of 1% each year,” Hoaglin explained. “Our members typically have mutual funds and annuities in their portfolios which are ‘buy and hold’ investments and should not be churned unnecessarily.” There is still a need to meet with members on a regular basis and adjust their portfolios based on life changes or the addition of new assets, Hoaglin advised, adding many of these activities will not incur commissions but some will. For example, the financial institution’s investment team might forecast a minimum goal of $800,000 based on $480,000 in new member client revenue and $320,000 in existing client revenue. Hoaglin said if they have three advisers, they could divide the goal evenly or if there is a disparity in the size of the advisers’ books or experience, one might carry a larger goal of say $300,000 and the other two would have a goal of $250,000 each. The bottom line is “the turnover needle can also be moved higher as we become more proficient at managing our book of clients through regularly scheduled meetings and marketing initiatives.” –[email protected]