Holistic Wealth Management Services: Enhance Member Value and Credit Union Revenue (Whitepaper) | Money Concepts


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Structural changes in the banking industry initiated by consumer demand and convergence of financial services have forever changed the face of the credit union landscape. In the past two and a half decades, the depository intuitions share of total U.S. household financial assets fell 44 percent to 12.4 percent, while the share of mutual funds increased 16 times to 11.4 percent. For more info: www.nafcu.org/moneyconcepts

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Holistic Wealth Management Services: Enhance Member Value and Credit Union Revenue (Whitepaper) | Money Concepts

  1. 1. Holistic Wealth Management Services Enhance Member Value and Credit Union Revenue By: Barry L. Dayley, CFP®, RFC® Structural changes in the banking industry initiated by consumer demand andconvergence of financial services have forever changed the face of the credit unionlandscape. In the past two and a half decades, the depository intuitions share of totalU.S. household financial assets fell 44 percent to 12.4 percent, while the share of mutualfunds increased 16 times to 11.4 percent1. This fact, coupled with the ever increasingcommoditization of traditional banking products and banking services offered by non-bank competitors pose a real threat to a credit union that is not able to address wealthmanagement needs. Now, nearly every large financial institution in the world offers some semblanceof what they refer to as Wealth Management as part of their Private Banking platform.They provide very sophisticated services for their most wealthy customers and members. In fact, wealth management services are reportedly being provided by 83% oflarge banks, 63% of medium-sized banks, and 49% of small banks.2 However, many ofthese organizations count offering investment products or access to online financialplanning calculators as their source for wealth management services. However, tocompete in this space, a credit union must offer real and practical wealth managementsolutions. So what is wealth management and what impact can it have on the offerings ofyour credit union? Wealth management is a specialty of financial planning. The wealth1 The Impact of Bank Sales on Disintermediation of Bank Deposits, Kehrer Disintermediation Study, 2007,Kehrer-Limra, Inc.2 2006 Study of Bank Brokerage & Retail Investment Services, American Brokerage Consultants /American Banker 1
  2. 2. manager’s focus is the client and his efforts are devoted to helping clients achieve lifegoals through the proper management of their financial resources. The practice of wealthmanagement is holistic and individually customized. Success is not measured byinvestment performance relative to other managers, but rather by the client’s success inmeeting life goals. Key factors for the choice of a credit union to offer wealth management servicesare still discretion and safety, image and reputation, service quality and performance.Many clients still have classic needs from the financial planning and investmentmanagement perspective. However, member expectations of wealth management services are changing.“Member experience” has become a differentiator for success, and requires a newgeneration of relationship managers who embody not only competence but encouragetrust and confidence. To illustrate the impact of true wealth management services, delivered by a highlyprofessional relationship manager, let me introduce you to Benjamin Pahl, a WealthManager located at Great Lakes Credit Union in North Chicago, Illinois. In 2005, GreatLakes Credit Union brought in Mr. Pahl to head the wealth management programworking in connection with Money Concepts International, Inc. Ben, who took over theprogram from an unsuccessful start and had to rebuild the platform and transform it into awealth management and financial planning program. The philosophy of Great LakesCredit Union was to offer valuable services targeting their best members with acommitment to take all comers. Offering the member a truly unique and holisticexperience was to be the approach with an emphasis on gathering assets and fee based 2
  3. 3. services. A unique member experience customized to each individual is deliveredthrough their systematic process of services, communications, and experiences that makethe client feel appreciated or special as well as building greater confidence in achievingtheir life goals. Since the launch of the Great Lakes Credit Union wealth management program,they have achieved or exceeded every initial goal it set for itself though they raise the bareach year. Member loyalty has increased, bringing new assets under management at arate of 53.41% annually, and over 75% of their new clients come from referrals. Inaddition, they have developed a book of business totaling more than $40 million in fee-based assets under management. Their success can be traced back to several things, but delivering a unique holisticexperience has accentuated the member-oriented value of their services developing aloyal, referral giving client base. Client acquisition and retention are still imperative for successful participation inthis market battlefield. Knowledge both of markets and of clients, and their “financialpersonality”, are vital factors for sustainable performance. These, along with theintegration of all of the divisions operating in the credit union, are essential for asuccessful program. Most credit unions operate through a traditional banking platform providingdepository or savings products, lending products and services, and in many casesinvestment and insurance products are also available. Without exceptional leadership andvision, these three divisions become self-serving silos with little or no interaction andcommunication. See Figure 1. 3
  4. 4. In order to build a robust wealth management program, it is essential that thefocus be placed on the needs of the member and an alignment take place to break downthe silo walls for a fully integrated life planning approach. See Figure 2. No matter thesize of the credit union, this approach can enhance relationships, increase sales volumeand product count per member, and increase and diversify the revenue stream. Inaddition, the Life Planning approach can set a credit union apart through the delivery of a“Member Centered” experience that will raise your credit union to the top in thecompetitive investment arena. If your credit union is not offering wealth management services, or if yourinvestment program is not as successful as it should be, consider offering wealthmanagement services and aligning your credit union with an organization that can helpyou deliver these services in a way that will set you apart from the competition andposition your credit union as your member’s wealth mentor. This approach will broadenrelationships with your member base while enhancing traditional services and wealthmanagement income and profits.Barry Dayley is Executive Vice President of Money Concepts International, Inc. andheads up their Financial Institution Program. Money Concepts International, Inc. is afull service wealth management organization. Money Concepts has been helpingindependent financial advisors and financial institutions deliver professional financialplanning and wealth management services since 1979. Money Concepts is a PreferredPartner of NAFCU Services, Inc.E-mail: barry@moneyconcepts.com 4
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