LAS VEGAS—Wealth management accounts lead to more than larger member deposits, they drive deeper relationships.
Consumers who have a wealth management account are 200% more likely to have a loan with the FI, 58% more likely to have a credit card, 122% more likely to have a first mortgage and 613% more likely to have a second mortgage, explained Michael Johnson during CUNA’s America’s Credit Union Conference here.
The CUNA Mutual Group vice president of wealth management explained that wealth management programs offer a great opportunity for credit unions to expand relationships, and not just with those who CUs might typically consider wealthy.
Johnson explained that the definition of the wealthy consumer is changing, away from just the super-rich, aligning affluent consumers more closely than ever with credit unions. He pointed out that 43% of credit union members have $100,000 to $500,000 in investible assets, and that this consumer segment is being overlooked by investment bankers.
Huge Opportunity
“At CUNA Mutual Group we see this as one of the biggest opportunities for credit unions today,” said Johnson, adding that CUs are not tapping this group effectively. He also pointed out that a large percentage of this group is in their 30s, and looking for more financial services, like a mortgage.
“We’ve seen investment providers in the market shift to a ‘high net worth or not worth it’ business model when it comes to deciding which consumers they will serve,” said Johnson. “This strategy is potentially creating a growing service gap for many credit unions members who are concerned about their long-term financial security and may have limited options for advisory services."
He added that solving this issue should be very relevant and familiar to credit unions, which have a long-standing tradition of meeting the needs of underserved populations.
“Our mission is to help people achieve financial security. Living comfortably in retirement is the great end game,” said Johnson. “Members’ investment needs can’t be an afterthought when credit unions consider their holistic member experience and service offerings.
Barrier Of Complexity
In addition to discussing the industry shift to high-net-worth clients, Johnson also shared insights into why many consumers are hesitant to engage in retirement and financial planning.
“There’s a great barrier of complexity when it comes to understanding all of the options available in the marketplace, plus consumers understandably fear losing their hard-earned money in the market,” he explained. “Consumers are also concerned with accessibility and wonder who can provide them with the time and expertise to help them meet their unique financial needs.”
Johnson said credit unions have a unique opportunity to break down these barriers and differentiate themselves in the future marketplace by applying traditional credit union values to wealth management, which could drive loyalty with existing members and attract new ones. He also noted that a combined approach of human-based advisory services paired with technology could stand out among a growing market of online and “robo-advisor” solutions.
“Credit unions have an advantage in offering wealth management services because they’ve already done a tremendous job of building trust with members,” Johnson said. “It’s now up to our industry to demonstrate that our member-centric approach to business also translates seamlessly to retirement and financial planning solutions.”