In Retirement Planning, CUs Seen As Having Advantage-If The Members Know

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Credit unions can fill a critical need for their members-and grow their business-by helping the baby boomer generation bridge the potentially enormous gap between government and private retirement programs and the money the soon-to-be retirees will need to live, according to three experts.

"Baby boomers changed America as they moved through each of their life stages, and they will revolutionize retirement," said Bob Buckingham, vice president of asset accumulation products for CUNA Mutual Life Insurance Company. Buckingham, along with Chuck Purvis, senior VP of Raleigh, N.C.-based Coastal FCU, and Steve Joiner, president of Winston-Salem, N.C.-based Truliant FCU's CUSO, Truliances, led an educational session at CUNA Mutual Group's Discovery conference here.

Retirees will have savings-Buckingham said the rollover market will total approximately $300 billion by the end of this year.

To attract retirement savings, CUs must draw on the existing relationships they have with their members. Buckingham said the trust members have in their credit unions gives them advantages other organizations "can only dream about."

Workers Are 'Worried'

Originally chartered to serve IBM employees, the $1.5-billion Coastal FCU still has close ties to the company, which is freezing existing benefits for employees after 2007-a move that has many CU members worried their pensions "will retire before they do," Purvis related.

"As IBM and other companies are removing that safety net, do-it-yourselfers are having to turn to other services...and that's where we think credit unions can come in," Purvis said.

Coastal has three primary strategies for its trust and investment business: branding and marketing to let members know the services are available, upgrading staffing and facilities, and a greater emphasis on retirement services.

Coastal has placed in-branch "retirement centers" in its two busiest branches, and held "retirementality" seminars during "retirement week."

Among other things, Purvis said the CU has learned these services have a "very long" sales cycle, and require considerable upfront resource investment.

"Credit unions are trusted, which is a huge advantage over the sharks circling these waters," he said. "But, it requires a lot of marketing to tell members the credit union is in the business. Becoming a 'trusted retirement advisor' to our members is the deepest relationship we could have. The consequences are huge-it is very important business for us, and will require patience and commitment."

CU To Open Retirement Center

Truliances has $46-million in assets under management and 1,250 client-members. After months of planning and testing, it plans to open a retirement center in the fourth quarter.

Truliant members who participated in focus groups were unaware CUs could supply retirement planning assistance. Truliant hosted 60 people in six groups; 30 members and 30 non-members. Joiner said 80% indicated they thought about their finances "daily," with "worry" being the term used most often.

"Retirement was the No. 1 concern far and away, with college funding second. Nearly all knew they need help, but hadn't sought it or found it or had given up. They believe no one wants to work with them."

Joiner said Middle Americans are intimidated by financial terms and feel ignorant because they don't understand the jargon, so they just go away. Nearly all the Truliant focus group participants "fundamentally distrusted" any advisor whose recommendations were tied to commissions. Most agreed advice from a CU would be unbiased and in their best interests.

"We heard this even from members of other credit unions," he said. "But, they were unaware it was available."

Truliant will go to market with salaried, veteran advisors, he said. Financial planning will be available at no direct cost to the members, with a focus on retirement planning and college funding. "The retirement center will help us deliver our mission: improve the quality of our members' lives."

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