Navy Federal Creates Online Investment Tool
Digital Investor is designed to be an easy, affordable way to draw young members into investing.
Navy Federal Credit Union is offering members monthly subscriptions to a new service that allows them to manage investments online.
Digital Investor was launched Tuesday by Navy Federal Investment Services (NFIS) and its investing technology partner DriveWealth LLC of Jersey City, N.J. NFIS is a subsidiary of both Navy Federal Financial Group and the Vienna, Va.-based parent credit union, the nation’s largest with $153.4 billion in assets as of Dec. 31.
It features dual platforms intended to match users’ investing style: One allows more automatic investing and another provides more hands-on options.
The “Automated Investing” platform helps those interested in having technology choose the investments in their portfolio by matching pre-built portfolios to their goals and risk tolerance. This tool automatically rebalances quarterly.
The “Self-Directed Investing” platform allows investors to choose their own securities and manage their portfolio directly. They can choose from more than 1,000 pre-selected investment options or pick a pre-built bundle.
Mathu K. Mathu, vice president of operations at Navy Federal Financial Group, said Navy Federal is not trying to encourage speculative investments, but instead is trying to educate members on how the stock market works and the returns possible from long-term investing.
“The general goal is to teach members that investing is something they can and should be doing as early as possible,” he said. “We tried to build this tool to be as simple and easy-to-use as possible.”
Navy Federal is charging members a flat fee of $3.50 per month. Active-duty service members, who account for 871,928 of Navy Federal’s 11.1 million members, can use it for $2.50 a month.
The fees might not be much of a revenue-growth engine, but Mathu said they are enough to be “economically viable for us to provide this in the long run.”
Offering an easy-to-use investment tool allows Navy Federal to extend the trust it has developed with members in traditional services from checking to auto loans into the sphere of investment services, Mathu said.
“We want to build relationships with members as early as we possibly can,” he said. “We put it at a price point that we thought would be very attractive to a lot of our members. And the pricing model is very simple and easy.”
“We’re seeing more people who want to take a more active role in their retirement savings,” Mathu said. “Digital Investor is well suited to those kinds of people, especially the young and very digital savvy.”
Despite having this tool, Mathu said people should first sit down with an investment advisor before setting off to invest on their own.
The program starts by asking members to fill out a questionnaire that helps them determine the level of risk they’re comfortable with. “We’ll invest according to the parameters of that risk profile,” he said.
Navy Federal offers investment and advisory services digitally, by phone and onsite in over 150 Navy Federal branches.