For Northwest Resources FCU, Portland, Ore., with its loyal member base and high assets-to- member ratio, an IRA promotion seemed a simple way to build long-term secure deposit accounts-but it wasn't. Even a preemptive Education IRA promotion last August failed to get attention.
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"It's really not working so good," acknowledged Amy Davis, director of marketing at the $60-million, 5,500- member Oregon CU. "I did tons of postcard mailings, tons of newsletter articles, banners, on the website, everything. And we were giving away piggybanks with every IRA opened and they are not moving."
Education IRAs 'Pivotal'
NRFCU is pushing Education IRAs as a way to establish a good relationship with young people that can grow from a share account to a draft account to online banking. "The Education IRAs are pivotal," Davis said. "We have an older membership and we need to capture more of the younger members so we can maintain our membership base. Education IRAs are a great product because you have parents putting into it over the years for multiple years and then you have the child drawing on something from the credit union when they are in college."
The product may be hard to sell due to a lack of understanding and sense of urgency, Davis continued, adding that members are more likely to give IRAs some thought around tax time.
"I don't think people take action until they need to," Davis said. "So when you are talking about something in August that is going to change in January, they tend to think about it in January."
At T&C FCU in Bloomfield, Mich., there's been a big IRA push since Congress approved the higher caps on IRA deposits.
"We're doing a massive education program on IRAs,'' said Lon Bone, VP of Marketing. "But our big push is on Roth IRAs. We truly believe in the product, but don't think people know enough about it.''
Bone said the benefits of the IRAs that help members put money aside for educational purposes are being featured in newsletters and direct mail pieces to members of its Teen Advantage Club. "They're working and they are eligible to participate,'' Bone said. In addition, he said the younger members are also seeing information on Roth IRAs in their statements.
"We're thinking that grandma and grandpa see a lot of these statements before the kids do and they're the ones putting money aside for their grandchildren's futures.''
Royal Oak Community Credit Union in Royal Oak, Mich., said it has been putting a lot of muscle into its IRA marketing, as well. "I've been here about eight years, and this is the first time I've seen this kind of promo,'' said Lori Roberts, branch manager.
The $94-million credit union has advertised IRAs through its member newsletter, website and lobby posters. "With so many people being laid off and out of work, they're wanting to turn their 401(k) checks over,'' she said. "The response has been pretty good.''
Forest Products FCU in Klamath Falls, Ore., is "Reaching New Heights'' with its campaign to help IRAs "grow faster with new limit increases,'' according to VP-Operations Janet Buckalew.
Using newsletter and statement stuffer support, FPFCU also created "bright and cheerful'' posters with sunflowers to help draw attention to its IRAs. In addition, she said, the CU had plans for a direct mail campaign to their members who are 50 years and older.
And, Buckalew said, FPFCU's CUSO planned to conduct a seminar for members interested in getting more information about IRAs and the recent tax changes. Staff are being offered cash incentives to promote and sell IRAs.
One credit union that has been particularly successful in attracting retirement account deposits is Bethpage Federal Credit Union, Bethpage, N.Y., which had the highest IRA balance as a percentage of total shares-almost $198 million- and the highest number of IRA accounts (11,145) for CUs in the U.S. with assets of more than $50 million as of Sept. 20, 2001, according to Callahan and Associates.
Strong Volume Expected
With tax time just around the corner and a heavy marketing campaign to lure IRAs, expect even more impressive numbers this year, said Wayne Grosse, executive VP of BFCU. "Actually, we weren't too aggressive with IRAs last year,'' he said. "But this year we've been very aggressive in both education and promotion of the product.''
That includes posters, lighted signage, handouts and articles in the member newsletter and on its website explaining the new regulations.
"In the first month of the campaign, we brought in a little over $2-million in balances,'' said Robert Schwartz, director of public relations.
It helped, he said, that the CU has been offering a .25% bonus for anybody who transfers a new IRA from another location to BFCU.
"It's pegged at the two-year Treasury rate which is 3.5% right now,'' Grosse said. "That means anyone who transfers an IRA gets 3.7%.''
