Investment and insurance products are the largest potential untapped source of member-friendly, non-interest income for credit unions, attendees of CUNA Mutual Group’s fourth annual Online Discovery Conference were told today.
MADISON, Wis. – Investment and insurance products are the largest potential untapped source of member-friendly, non-interest income for credit unions, attendees of CUNA Mutual Group’s fourth annual Online Discovery Conference were told today.
“Growing your credit union’s investment program is not only good business, but it’s good for business,” said Hendrix Niemann, managing director of practice and wealth management services for CUNA Brokerage Services, Inc.
Niemann’s session, “Growing Your Investment Program to Increase Non-Interest Income and Member Loyalty,” provided insights into why credit unions should offer an investment program.
“Offering a strong investment and insurance program pays dividends in multiple ways,” Niemann said.
According to recent Raddon Financial Group research, credit unions lose an average of $165 on CDs but make an average of $177 providing investment products to their members (National Consumer Research, 2012). This means converting CDs to investment accounts can potentially result in a substantial increase to bottom-line revenue, while simultaneously improving the capital ratio, Niemann told attendees.
“Furthermore, investment and insurance products are the largest potential untapped source of member-friendly, non-interest income,” said Niemann. Credit unions only attract around three percent of their members’ investment dollars, while almost half (46 percent) of members have investment accounts elsewhere (Filene Research Institute, 2012), he added.
However, a recent Kehrer Saltzman & Associates study found that members who purchased investment and insurance products from their credit union were 40 percent more loyal than those who did not, and were two-thirds more likely to consider the credit union their primary financial institution (“The Opportunity for Credit Unions in Investment and Life Insurance Services, July 2013).
“The importance of this ‘stickiness factor’ cannot be overemphasized,” said Niemann. “Offering an investment program will lock in additional revenue for many years to come, and it’s beneficial for members, too.”
Niemann told session attendees older members need to be educated on retirement income planning and healthcare planning while younger members need help getting started with investing.
“Who’s going to give your members sound financial advice if you don’t?” Niemann asked attendees. “Credit unions need to start treating their investment programs as core products.”
The three keys to growing a credit union’s investment program are:
- Obtain senior management and board buy-in and commitment;
- Dedicate time and resources to member education; and
- Market your investment program to current and potential members.
Niemann emphasized marketing the program is key to its success. According to recent Raddon Financial Group research, 54 percent of credit union members did not know if their credit union offered an investment program, and 16 percent were not aware of their credit union’s investment program (National Consumer Research, 2012).
Niemann concluded the session by reminding attendees, “the statistics and demographics are in our favor; whether credit unions take advantage of this opportunity is yet to be seen, though.”
Online Discovery is an annual conference sponsored by CUNA Mutual Group that attracts a national and international credit union audience of more than 1,300. This virtual, no-cost event helps credit unions remain relevant to members, manage compliance risk and drive growth. Attendees view sessions, ask questions, visit booths and network with peers from the comfort of a computer without expense or time away from the office.
CUNA Mutual Group insurance, retirement and investment products provide financial security and protection to credit unions and their members worldwide. With more than 75 years of true market commitment, CUNA Mutual Group’s vision is unwavering: To be a trusted business partner who delivers service excellence through customer-focused products and market-driven insight. More information on the company is available on the company’s website at www.cunamutual.com.
CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Life, accident, health and annuity insurance products are issued by CMFG Life Insurance Company. Property and casualty insurance products are issued by CUMIS Insurance Society, Inc. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Corporate headquarters are located in Madison, Wis.