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

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 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 percent1. This fact, coupled with the ever increasing
commoditization 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 wealth
management needs.
Now, nearly every large financial institution in the world offers some semblance
of 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% of
large banks, 63% of medium-sized banks, and 49% of small banks.2 However, many of
these organizations count offering investment products or access to online financial
planning calculators as their source for wealth management services. However, to
compete in this space, a credit union must offer real and practical wealth management
solutions.
So what is wealth management and what impact can it have on the offerings of
your credit union? Wealth management is a specialty of financial planning. The wealth
1
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
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2. manager’s focus is the client and his efforts are devoted to helping clients achieve life
goals through the proper management of their financial resources. The practice of wealth
management is holistic and individually customized. Success is not measured by
investment performance relative to other managers, but rather by the client’s success in
meeting life goals.
Key factors for the choice of a credit union to offer wealth management services
are still discretion and safety, image and reputation, service quality and performance.
Many clients still have classic needs from the financial planning and investment
management perspective.
However, member expectations of wealth management services are changing.
“Member experience” has become a differentiator for success, and requires a new
generation of relationship managers who embody not only competence but encourage
trust and confidence.
To illustrate the impact of true wealth management services, delivered by a highly
professional relationship manager, let me introduce you to Benjamin Pahl, a Wealth
Manager located at Great Lakes Credit Union in North Chicago, Illinois. In 2005, Great
Lakes Credit Union brought in Mr. Pahl to head the wealth management program
working in connection with Money Concepts International, Inc. Ben, who took over the
program from an unsuccessful start and had to rebuild the platform and transform it into a
wealth management and financial planning program. The philosophy of Great Lakes
Credit Union was to offer valuable services targeting their best members with a
commitment to take all comers. Offering the member a truly unique and holistic
experience was to be the approach with an emphasis on gathering assets and fee based
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3. services. A unique member experience customized to each individual is delivered
through their systematic process of services, communications, and experiences that make
the client feel appreciated or special as well as building greater confidence in achieving
their 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 bar
each year. Member loyalty has increased, bringing new assets under management at a
rate of 53.41% annually, and over 75% of their new clients come from referrals. In
addition, 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 holistic
experience has accentuated the member-oriented value of their services developing a
loyal, referral giving client base.
Client acquisition and retention are still imperative for successful participation in
this market battlefield. Knowledge both of markets and of clients, and their “financial
personality”, are vital factors for sustainable performance. These, along with the
integration of all of the divisions operating in the credit union, are essential for a
successful program.
Most credit unions operate through a traditional banking platform providing
depository or savings products, lending products and services, and in many cases
investment and insurance products are also available. Without exceptional leadership and
vision, these three divisions become self-serving silos with little or no interaction and
communication. See Figure 1.
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4. In order to build a robust wealth management program, it is essential that the
focus be placed on the needs of the member and an alignment take place to break down
the silo walls for a fully integrated life planning approach. See Figure 2. No matter the
size of the credit union, this approach can enhance relationships, increase sales volume
and product count per member, and increase and diversify the revenue stream. In
addition, 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 the
competitive investment arena.
If your credit union is not offering wealth management services, or if your
investment program is not as successful as it should be, consider offering wealth
management services and aligning your credit union with an organization that can help
you deliver these services in a way that will set you apart from the competition and
position your credit union as your member’s wealth mentor. This approach will broaden
relationships with your member base while enhancing traditional services and wealth
management income and profits.
Barry Dayley is Executive Vice President of Money Concepts International, Inc. and
heads up their Financial Institution Program. Money Concepts International, Inc. is a
full service wealth management organization. Money Concepts has been helping
independent financial advisors and financial institutions deliver professional financial
planning and wealth management services since 1979. Money Concepts is a Preferred
Partner of NAFCU Services, Inc.
E-mail: barry@moneyconcepts.com
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5. Graphics
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