HOLLYWOOD, FLA. -
While attending the Bank Insurance and Securities Association's (BISA) annual conference here, Gluck said the credit union's board had made the decision because they didn't want to bring investment services back into the credit union proper. "That makes it necessary for us to become a broker/dealer," said Gluck.
Why choose not to integrate investments services back into the credit union as most CUs did, following the NCUA's passage of Incidental Powers? "Liability was a concern the board had. Anyone can make a mistake; we're all human and it could present a liability problem. So weighing all of that, the board chose to keep investment services separate."
Gluck cited compliance issues as another reason and allowed that becoming a B/D can be costly, "but we can do it because we are a pretty streamlined organization and we have a very supportive board." Compliance issues will be dealt with through a clearing firm, said Gluck, the choice of which was yet undecided. "We're very close, though, to making a selection."
Gluck explained that ISG would continue to have a relationship-driven business model rather than a transaction-based one. "We'll eliminate margin accounts, options and other riskier investments. Those are just not the clients we want to attract. We want our reps to deal with members on a personal basis. So, we'll partner with a firm that has the technology that can do that, taking care of the compliance concerns so they can concentrate on service."
ISG has been providing financial planning, retirement planning, general investing and insurance services to Vantage CU members and other consumers since 1986. Previously, its broker/dealer was SWS Financial Services. ISG is a full-service brokerage, presents seminars and focuses on advice and planning. Gluck said that representatives would have dual registration. ISG assets under management (AUM) are approximately $150 million.
Jennifer Green, ISG's investment manager was also attending BISA, saying she came to get exposure to what other financial specialists are doing. "I'll be formulating our best practices for dealing with members," said Green.
