Municipal Credit Union brings wealth management to members

Amid the changing landscape of wealth management, Municipal Credit Union in New York is partnering with the Minneapolis-based Ameriprise Financial Institutions Group to help members building intergenerational wealth and plan for the future.

Financial planning has been a tumultuous area for banks and credit unions over the last year. While JPMorgan Chase, Bank of America's Merrill Lynch and some fintechs have made significant investments into wealthtech platforms and personal financial management, Intuit shut down its Mint personal financial management division due to what it cited as profit struggles and JPMorgan Chase wound down its robo advisor for similar reasons. This vacuum has encouraged other firms to launch their own programs.

"Advancements in technology have increased scalability, not only enabling advisors to manage more clients but also enabling banks and credit unions to further extend their reach to self-directed investors," said Dylan Lerner, senior digital banking analyst for Javelin Strategy & Research.

Since the $4.2 billion-asset MCU officially rolled out its Municipal Wealth Builders program in June of last year, the credit union has worked to capitalize on its partnership with Ameriprise Financial and expand the reach of the program across its membership spanning the metropolitan New York area. The credit union did a soft rollout and marketing campaign from August until November. Today it has 700 interested members and 42 that are registered.

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Members signed into their account on the credit union's web-based digital banking platform can schedule appointments with Ameriprise's network of virtual advisors, where specialists start by walking through the consumer's goals and risk appetites. Once the goals are understood, advisors will begin structuring tailored plans using investments like mutual funds, stocks, bonds and other products.

Account holders can track the progress of their investments through the online portal and request new purchases or sales through an advisor, assisted by Ameriprise acting as the registered investment advisor and broker-dealer for MCU. The firm's experts will also provide members with ongoing advice to ensure constant communication on goals and help consumers stay on track.

Due to the competitive nature of New York's talent market, the costs associated with hiring in-house advisors and building the framework to offer members wealth management products were too much for MCU, said Cania Infante, chief marketing officer for the credit union.

"We're in New York City, so to recruit and retain financial advisors in a very competitive market can be costly. … Another concern was the costs of maintaining their licenses and all the things that come along with having this type of initiative," Infante said.

But Infante realized that a wealth management partnership was a necessity for MCU's more than 600,000 members, as many "have not previously considered that financial planning" was an option accessible to them due to its typically high cost.

"If we think about the members that we service, they're the teachers, the hospital workers, the firefighters, anyone from an administrator down to an entry-level position — they already trust MCU as their financial institution of choice," Infante said. "We really wanted to create a program that provided more access to our members and gave them the opportunity to" engage in something that was previously out of reach.

MCU joins a growing number of institutions striking up partnerships with financial planning firms or developing independent projects to expand the array of products and services they can offer members.

The $6.8 billion-asset Kinecta Federal Credit Union in Manhattan Beach, California, partnered with the wealth management software firm FusionIQ to integrate its investment advisory platform for both large- and small-dollar investors. Members can use standard or customized portfolios to invest in exchange-traded funds, fractional shares and other assets.

At the Providence, Rhode Island-based Citizens Financial Group, which has been steadily growing its wealth management expertise over the last few years and debuted its strategy to launch a nationwide private bank in the fourth quarter of last year, leaders recruited two JPMorgan Chase executives to oversee Citizen's new private bank. The first branch was opened in Boston, with plans to expand to Florida and California later this year.

These banks and credit unions are representative of the growing trend in shifting focus away from just high-net-worth individuals and beginning to accommodate the underserved "mass market" of American households with investable assets under $100,000.

Ashley Longabaugh, principal analyst for Celent's wealth management practice, said financial planning tools go beyond providing added value for consumers to additionally build brand loyalty amid an ongoing "war for deposits."

"Overall, the increasing interest in wealth management financial planning tools is driven by advancements in technology, growing recognition of the importance of financial planning and regulatory changes. … While there are challenges associated with adopting and using these tools, they can help institutions differentiate themselves and provide added value to their members in the ongoing war for deposits," Longabaugh said.

With cost-of-living increases continuing to outpace the growth of consumer wage levels, those seeking to build financial security for the future are struggling to wade through the struggles of the present.

"Banks and credit unions are wanting to offer financial planning and investment services to their membership and clients, but so many of them that are not fortunate enough to own their own broker-dealer are doing it in partnership with firms like Ameriprise," said Jay McAnelly, group vice president of the Ameriprise.