Why Trust Services Are Important
You've all heard the numbers.
There's no need for me to persuade you that credit unions need to offer trust services in order to capture some of that $13-trillion of net worth owned by Americans over age 50 that will soon transfer to the next generation. Or, that the number of households with $100,000 in net assets is growing by 10% every year.
It's your members who will tell you they need trust services. Allow me to merely state that integrating trust services with your financial planning efforts is key to member satisfaction and ultimately, your credit union's continued growth.
Financial planning is essential for building, managing, preserving, and protecting wealth. But now, a new necessity has entered the picture: distributing that wealth you've helped generate.
Just how important are trust services to your credit union and to your members? Well, I could bend your ear for an hour on income you'll earn or how trusts are another lock on you being your members' primary financial institution (PFI). These are valid, positive points. But I want to suggest another, equally vital reason why you need to integrate trust services: OFI. That's OFI, as in Only Financial Institution. Trust services close the last remaining gap to make your credit union a truly one-stop, all-things-financial, place for your members.
Trusts for All Members
First, let's address some misconceptions. Trust services are not just for the old, the rich, or the dead. Or, the 1% or 2% of your high income members. Estate planning needs affect everybody. Sure, high net worth is a big part of the opportunity to serve, but many special situations require trust services. Some thoughts along that line:
Estate planning is part of the financial planning continuum for both a young couple in the early stages of life, and for an asset-established household. Wealth issues are only part of the equation. Wills, tax-free transfers, and trusts for college tuition are important as well.
We're seeing Baby Boomers who want to leave a legacy to their children. A trust is the best way to ensure wealth accumulated by parents is passed on to the next generation according to mom and dad's wishes.
Churches and charitable organizations are contacting your members, urging them to earmark a part of their estate to help the needy. And if your members don't have a trust relationship to accomplish this, the charity will gladly offer one.
Special dependent needs for a child or adult whose physical or mental situation necessitates a well thought-out plan for future care and housing expenses, along with a reliable income stream.
Many members want an independent trustee to oversee their estate and make sure its proceeds are distributed according to their wishes-so they can rest in peace knowing their survivors are keeping their peace.
I'm seeing a lot of member demand for trust services now that credit unions can offer them to members located throughout the country. Members are proactively looking for information on how to deal with trusts.
Many younger members are helping their parents sort through their financial affairs and are seeking guidance. Help them define their needs, then offer your solutions. I'm also seeing credit unions excited about offering trust services because today, credit unions of all sizes have the opportunity to offer trusts. Before, they had no choice but to send their members and their members' assets off to a bank.
Fortunately for credit unions, many financial institutions are not interested in working with trust accounts that have less than a $1 million or even as much as $5 million, in investable assets. And there lies our niche market.
These members, and potential members, have real needs. We need to proactively get our solutions to them.
Trust services are a sticky business: once members begin a trust relationship, they won't quickly move it. Done correctly and nurtured along the way, you'll have a relationship that's going to continue for several generations with an affinity and loyalty not easily disrupted. Integrating trust services is so very important to the growth and viability of your credit union because it will ensure your credit union's membership base remains solid and your members have no reason to leave you for a bank. They'll stick to you, beyond a lifetime's generation.
Elevating Your Credit Union
Trust services elevate your credit union to become your members' Only Financial Institution. That completes the financial planning process. As I mentioned, credit unions of any size can begin offering trust services. There are many partnering opportunities in the marketplace. Look for one that will not shift assets out of your credit union, one that offers solid product offerings, has a proven track record of experience, and has an experienced back-office support system. Take a look at who owns the company-is it publicly held or mutual company. Will it, like you, provide fiduciary services long into the future? Does your partner have your members' best interests in mind? Will it transfer assets out of the credit union system?
Educate your members that you offer trust services. Use target mailings to invite members to informational seminars. Team with members who use your trust services and use them as ambassadors to help get the message out.
You have already built a trusting relationship with your members. Together, you've accumulated wealth. Now's the time to fortify that trust to address their wealth transfer needs.
Chris Rafanan is Member Services Officer with CUNA Mutual Group and can be reached at (703) 822-0200 or, christopher.rafanan