Why One CU, CUSO Believe Investment Services Will Unlock Movement's Futurej4

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MANHATTAN BEACH, Calif. - With membership growth stagnant across the credit union industry, one CU and its CUSO are showing how investment services can be key to unlocking that door.

Kinecta CEO Simone Lagomarsino has hired Pete Snyder to run the investment and insurance program at the CU's CUSO, Kinecta Fianncial Management Company, LLC.

Lagomarsino had been president at Kinecta FCU less than six months when she told the Credit Union Journal "I believe it's important never to focus inward, but rather outward, toward the members, and a big key is hiring the right people. I only want the best."

Snyder, who will be SVP at the CU and president of the CUSO, will oversee the management company's two subsidiaries, the broker/dealer Kinecta Financial & Insurance Services, LLC, and Apollo Insurance Agencies, Inc. Snyder will also create a consulting division to assist other CUs in creating and/or upgrading their own investment and insurance services and will provide much-needed productivity and performance benchmarking plans for CUSOs. Also under the umbrella is Go Financial, a DBA of Kinecta Financial & Insurance Services that provides marketing support, staff recruitment, Office of Supervisory Jurisdiction (OSJ) services, estate planning, living trusts and overall program management for its clients and offers a full range of financial vehicles including stocks, bonds, 401(k) and 529 college tuition plans.

Snyder's hiring was an outgrowth of the consulting work he'd been doing with Kinecta through his private company, Snyder Consulting Solutions, which he formed after leaving his position as chief operating officer at Addison Avenue Federal Credit Union, and his dual role there as president of Addison Avenue Financial Partners, its CUSO.

"I go home and I have to pinch myself," said Lagomarsino, who laid out her expansion plans for Kinecta, together with Doug Wicks, the VP of Investment Services. "This is such a great marketplace, and we have a very good demographic here in Manhattan Beach. And we're spread out in three counties, LA, Orange and Ventura. We've got 19 member service centers and plan five de novo for the next year." Now, she said she counts Snyder as integral to the CU's overall growth and future planning.

Lagomarsino added that Kinecta is looking to expand into growing population areas and boost SEG development (right now Kinecta has 200,000 members and $3.5 billion-in-assets). Snyder's hiring only adds to Kinecta's ability to grow assets-under-management that pass through to bottom line credit union numbers in what he calls the flow of "wallet share."

"Someday, the average assets-under-management (off balance sheet) will be 500% of the credit union's on balance sheet assets as opposed to an average of only 40%," said Snyder in a separate interview before the announcement of his move to Kinecta.

He described Lagomarsino as someone who "really gets it," the "it" being the importance of the investment services channel being "recognized and embraced internally from a business perspective, just like the other products the credit union offers."

"It's more than just non-interest fee income," Snyder explained, "it's about deepening the wallet share with the member through an expanded relationship." When he left Addison, Snyder said he toiled over the creation of a formalized scorecard with consultant Ken Kehrer Associates that allows a credit union to really see how it's investment program is doing. Key ratios to measure household penetration and average loan balances (for members with and without investment accounts) and the number of services per account reveal the importance of such programs, he said.

Attention must be paid

"All credit unions are focused on improving upon their operational, infrastructure and process efficiencies. But we need to capture and build upon the synergies that result from the leveraging of our businesses throughout the entire operating model," he explained, "by using a scorecard for the measurement of a program's productivity, performance and positive impact on the credit union."

"We measure everything else in credit-union-land for very good reasons," he noted. "The uplift to average loan balances, deposit balances and services per household is measurable and represents a potential cost savings for the marketing area as well as a boost to loan interest income and the capacity for a CU to borrow (because of additional inflows of deposits)."

Snyder acknowledged that Gary Raddon had been delivering much the same message in presentations to CUs and CUSOs for some time, and that finally, the message is being heard (and now, felt). "Raddon's data shows that the average loan balance for a member with an investment relationship at the CU is 47% higher and the deposit balance is 260% higher. That's what has gotten the attention of the marketing people and the loan department, I can tell you."

Snyder's hard analysis approach found an ear in Lagomarsio, who came from the banking side. "I ran a $3-billion community bank, the Hawthorne Savings, which was sold last year," she said. "In many ways, my approach then was very like the Kinecta approach, very service oriented and in the community. We had shareholders at Hawthorne, and customers, two different groups whose interests did not always align. Here at Kinecta, we are aligned and I get passionate about proper service to members."

Wicks, who has been with Kinecta for six years, reported that the CUSO has some $825 million in assets-under-management and 6,500 clients and got that way by caring about member relationships (Kinecta's insurance division including Apollo has 35,000 policyholders). "We want to share the expertise we've gained over time. I've been to many credit union meetings, and there always seems to be a track on Best Practices. It's time for us to now share what we know with credit unions that lack the infrastructure to do it themselves. It's expensive to think about getting into this business now; we already have the structure in place." The human part of that structure is 14 financial consultants and five back office personnel.

Snyder said that current SCS projects and other industry initiatives SCS has in place will continue, including a collaborative initiative with Callahan & Associates to provide CUs with their own investment and insurance benchmarking tools on an ongoing basis.

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