How can credit unions help members achieve financial wellness?

Is it enough for cooperatives to sponsor financial wellness seminars, post how-to-manage money blogs and financial education resources on their websites, or offer personal financial management tools?

While these methods and others have had different levels of success for members, and have promoted the movement's message of “people helping people,” the $348 McGraw-Hill Federal Credit Union has taken a different approach to what president/CEO Shawn Gilfedder said he believes will usher in a new era in financial services.

And it all began when Hurricane Sandy swallowed the credit union's lower Manhattan branch under 30 feet of water in October 2012.

After Sandy ravaged the New York tristate area, millions of homeowners and thousands of businesses, including hundreds of credit unions, were in the dark for days because of widespread destruction and power outages. Some suffered in darkness for weeks.

However, for McGraw-Hill FCU, Hurricane Sandy created a catalyst for the credit union to transform its traditional branch at 55 Water Street into what the cooperative claims to be the nation's first financial wellness center.

“Manhattan right now is truly a flagship opportunity for us,” Gilfedder said. “That is the key driver and that is what we are looking to emulate our business model after the learnings from [this new] location. It's allowing us to not only re-engage the membership population but also to reintroduce ourselves with the alignment of the brand message of financial wellness.”

The new center essentially personifies the cooperative's mission of helping its members achieve financial wellness. For years, McGraw-Hill FCU has promoted financial wellness to more than 23,000 members by sponsoring a variety of programs for its 170 SEGs.

“Our goal is not to make every one of our members uber-wealthy,” he explained. “Our goal is to be able to provide them with a level of service that fits their lifecycle needs. Financial wellness is a state of being for those individuals, and helping them define financial wellness within the scope of their finances is really what we're after. We have some unique tools and resources within the environment in Manhattan to accomplish that.”

The 1,700-square-foot financial wellness center, which observed a grand opening on March 2, houses three meeting rooms, an administrative office, back-office space and a front vestibule that features three large, interactive touch-screen kiosks.

“It's an interesting experience for some members when they approach the door and they realize this looks much different than anything they have experienced before,” Gilfedder explained.

Because more than 50% of the credit union's members regularly use online and mobile banking, the kiosks are essentially an extension of the same remote, touch-screen technology members use for their daily banking needs. Other technologies at the center include a Diebold 9900 In-Lobby Teller Terminal and smart ATMs that can handle 95% of common banking transactions.

“Our goal was to create an immersive environment where the physical space emulated the virtual space that we are asking members to engage,” he said. “It allows us to shape the message and to shape the engagement of financial wellness, and that is what we are really after.”

Gilfedder believes that the familiar use of technology initially engages members in the center and quickly identifies their needs, which in turn facilitates a deeper discussion about their individual circumstances.

“In helping members understand how to engage with us and what we offer to them as members, it promotes an enhanced discussion and allows us to have those really great conversations around relationships and opportunities to help members be financially well,” he said.

Read more: Touch-screen kiosks help members take steps to achieve financial goals…

The kiosks show four selections or windows that members can choose: Financial Wellness Roadmap, Financial Wellness University, Remote Services Experience and Schedule an Appointment.

If members select the Financial Wellness Roadmap, a new screen appears with a list of statements to help them identify goals and challenges about money, stuff (home, car, etc.), family and career. Under the money category, for example, specific statements such as, “I want to strengthen my savings” appear. After selecting a statement, members can drag it to a timeline of six months for a short-term goal or 10 years for a long-term goal.

The center employs certified personal financial counselors and a certified financial planner, who carry tablets to show members possible solutions, plans and ideas.

“I think in years past, traditional banking tried to make the teller into that universal banker and promote those discussions over the counter, but the physical layout became a real obstacle and it was somewhat awkward to have those conversations,” Gilfedder observed. “With the teller counter, you are always standing opposite the member. In this space, we are standing next to the member in partnership, and I think that is important. Isn't that what it means to be a credit union and a member of a credit union, to have a financial partner that is looking out for the member's best interest?”

Kathryn J. Davis, president/CEO of BALANCE/Consumer Credit Counseling Service of San Francisco, said financial wellness is on the brink of getting big. McGraw-Hill FCU is a partner of BALANCE, an organization that helps individuals and families avoid financial problems and teaches money management skills to achieve goals.

“I think employers will lead these [financial wellness] efforts and as a result will look for resources to help employees,” Davis said.

Indeed, a recent survey by benefits consulting firm Aon Hewitt found that 93% of 250 large employers are very or moderately likely to create or broaden their efforts on financial wellness topics that extend beyond retirement planning decisions.

Products, services and tools that provide savings and investing assistance to employees continue to gain favor among companies, according to the report.

McGraw-Hill FCU's Financial Wellness Center also may help attract millennials, many of whom are struggling with student debt and other everyday financial challenges.

A millennial research study by the Principal Financial Group found that 70% of young people have set a goal of obtaining financial security, and 61% of them identified financial security as their passion after raising a family (79%) and starting a family (62%).

However, only 25% of young people currently work with a financial professional. Also 65% said they worked with a financial planner to achieve financial goals, and 56% said they wanted to determine the state of their current financial affairs.

Although 67% of young people hooked up with a financial professional recommended by a family member or friend, about 9% said they connected with a financial professional through their employer and 5% through their bank. Since McGraw-Hill FCU serves SEGs, this gives the credit union an advantage.

“We want to be a strong partner to help our (SEG) organizations provide financial wellness as a benefit for their employee populations,” Gilfedder said. “That is a strong differentiator for us.”

But since the Financial Wellness Center has only been open for several weeks, it's too early to say to what degree members will use the center to address their financial challenges or simply maintain their financial wellness.

Gilfedder promised to share what the credit union learns from operating the Financial Wellness Center with the industry.

“I am not kidding anybody by saying this will be an overnight success,” he said. “This takes time and dedication. It's a strategic decision for us as an organization to follow this prescriptive path, and we do see this as an evolutionary path.”