PLEASANTON, Calif.-Patelcorp, Inc., an investment and insurance subsidiary of $3.6-billion Patelco Credit Union, has rolled out an investment savings product it says will make investing easy and affordable for its members and those of other CUs.
The new product, known as InvestDaily, allows members to automatically invest as little as $5 at a time into a select list of mutual funds. It was developed in partnership with Seal Beach, Calif.-based SaveDaily. Patelco said it is the first credit union to offer such a service.
Mark Hoaglin, VP of investment and insurance services for Patelcorp, told Credit Union Journal that based on his 30 years' experience in the investments business, it is the "right product for these times."
"People are looking for a way to supplement their retirement income and catch up from the market meltdown in 2008," he assessed. "Many people think they have to have thousands of dollars to get started, but this helps them get started even with a small amount. The idea of an investment is still a bit intimidating, so the biggest challenge will be to have an educational component to help take the mystery out of investing."
Through InvestDaily, members designate the amount and frequency of their investments, which are deducted from any CU or non-CU account. Unlike some investment programs, there is no penalty to redeem shares. The monthly fee is $5.95.
InvestDaily's registration process requires the completion of "suitability" questions to help determine the member's risk tolerance and investment goals.
Patelco manages the largest number of HSA accounts of any credit union in the country, 44,000, Hoaglin said. After working to solve several internal technical issues in recent weeks, the CU will begin marketing InvestDaily to its HSA holders this month. The product has been available to Patelco's general membership since July, but marketing has been limited.
Currently, "several hundred" members have signed up, Hoaglin reported. When the HSA accounts come on board, Patelco will increase its marketing efforts. He said there currently is a description of InvestDaily on the CU's website, and because it has a "captive audience" in its HSA holders, it will be sending e-mails and direct mail promoting the service.
"This will help move their money into an account that would earn more than a standard HSA, and it would be more profitable for the credit union," he said. "Right now, the best one can do on an HSA is 0.75%. Because many people use their HSA as a supplemental retirement account, we are looking for members who would like to take advantage of an opportunity to earn more. There is no guarantee of return, but the opportunity is there."
Coming Soon To Other CUs
SaveDaily invented an "omnibus program" that allows consumers to buy fractions of a mutual fund, Hoaglin said. In addition to offering the investment service to Patelco members, Patelcorp will help promote the SaveDaily platform to other credit unions.
"This is the company's entrée into the credit union market," he said. "SaveDaily provides all the back office support. It usually takes one credit union to start a service, then that credit union acts as a resource about getting a project started and launching it."
The response has been "good" so far, Hoaglin reported. He said SaveDaily has had its team out in the field and speaking at credit union trade association meetings. Hoaglin has been a spokesman at those meetings to share Patelcorp's experience.
"I do not have exact numbers on how many credit unions are in the due diligence process, but there has been a lot of interest at trade shows because it is clear this is an opportunity to serve the small saver and help those members get ahead of inflation."
