Coastal CU Shares How It Grew Its Member Investment, Trust Services

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Deciding to offer members investment and trust services is just the first decision a credit union must make. The second, and sometimes bigger question, is how committed to be to the program.

In remarks before CUNA Mutual Group's MEMBERS Financial Services Management Conference here, Coastal FCU shared its perspective on those questions with the 70 program managers from 53 CUs.

Coastal FCU said it had provided investment services through CUNA Mutual for more than a decade before deciding to make a stronger commitment to investment services by ramping up its MEMBERS Financial Services program from a managed to a dual-employee program. CFCU Senior VP Chuck Purvis said Coastal reevaluated its service two years ago and decided it needed to either take a more active role or get out of the business.

As part of that effort, it built a Financial Advisory Center dedicated solely to investment and trust services. With the changes, MEMBERS Financial Services would continue to provide the programs and licensing under the new dual-employee program, but Purvis said Coastal would have more control by doing all the hiring and setting the salary and commission levels.

"CUNA Mutual Group had been encouraging us to go to the dual-employee program, but we initially decided not to act," said Purvis. "Eventually we realized we needed to make the commitment and take away the protection offered by CUNA Mutual. It was easy to let them take all the risk, and we would take a smaller percentage."

A critical step, he said, was increasing the number of financial advisors and raising the bar on their qualifications.

The new Financial Advisory Center has a separate entrance from the rest of the credit union, and Purvis said it was important to look the part to help members feel comfortable and trusting when they are making decisions about their life savings.

Purvis said CCU also identified a target range of members with $100,000 to $2-million in investable assets, noting most banks and brokerage firms won't handle this level because it is too small. Approximately 28,000 member households fit the criteria for having the minimum amount of investable assets.

The credit union sponsored five seminars in April and had more than 250 attendees. Shortly thereafter, the credit union closed a $1.9 million trust account that resulted from a seminar.

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