"A bank is a profit-making institution answerable to its shareholders," says Pete Snyder of Snyder Consulting Services in Roseville, Calif. "The delivery model is generally dog-eat-dog. Banks would do well to try to encourage more of a service culture."
A number of advisors and program managers who made the switch from banks to CUs swear by the customer loyalty that a true service culture provides. Michael Gradl, a program manager at Redwood Credit Union in Santa Rosa, Calif., says, "The relationship with members is just incredibly compelling, and the internal support is also amazing, because the employees at a CU have a real drive to make a difference in the members' lives."
Larry Braley has also experienced the CU magic. He moved from Guaranty Bank in Stockton, Calif., to the Kern Schools Federal Credit Union because, with $1.8 billion in assets and 185,000 members, it was the largest financial institution in Bakersfield. At first, he worked for CFS, a CU-owned broker-dealer, but the investment program moved in-house as it grew to five reps and three assistants. "When our logo changed from KFS to Kern Schools Federal Credit Union, it gave us instant credibility," he says. "It turns out that link with the members is critical. Within weeks of that change, referrals jumped like crazy."
Of course, bank reps, too, can get involved in the community and infiltrate local companies. But where a sales culture prevails, client service can take a backseat. Banks might consider a more consultative and less sales-heavy approach to forge stronger ties. "I've always had an educational approach to my work, as opposed to a transactional approach, and at the bank there was a lot of encouragement to sell product, not to do education and analysis," says Barbara Koontz, a former U.S. Bancorp advisor who switched to Oregon State University Federal Credit Union, where she was hired to "improve and stabilize" the CU's financial advisory business.
There may be fewer opportunities to work in CUs than banks-of the 7,800 CUs in the U.S., three-quarters have less than $50 million, too little to sustain investments-but they do exist. The U.S. Navy Federal Credit Union, for one, has more than $35 billion in assets and three million members, and several hundred CUs boast assets of more than $500 million. A number of these institutions are adding financial advisors either directly or through third-party marketers.
It also isn't necessarily true that working with CU members is less profitable for advisors. "The vast majority of financial advisors at CUs can make as much as financial advisors at banks," says Neil O'Connor, a senior investment advisor at San Mateo Credit Union and CFS rep who formerly worked at Wells Fargo's private client division and at Washington Mutual. "You don't get as many seven-figure accounts, but you get more six-figure ones." The only rep at his $600 million CU, O'Connor manages $50 million, which he says is "only the tip of the iceberg."
Chris Austin is a CFS rep who worked at a series of community and regional banks before moving in 2007 to Allegacy Federal Credit Union, a $1 billion CU with 110,000 members, based in Winston-Salem, N.C. Austin and two other advisors handle a book of $44 million in assets, an amount that has grown by $8 million to $11 million each year he's been there. Allegacy began as a CU for RJ Reynolds employees. "Many RJR employees had 30 years with the company, and this is a company that paid good wages, so they are people who had good 401(k)s," Austin says. Now anyone in the Winston-Salem area can join. "My income did not suffer when I came over to Allegacy!"
Management support for investment services is also a huge plus, CU converts say. Braley admits he took "a little income hit" when he joined the Kern Schools, but he got the chance to develop an in-house program. "I got the strong sense that senior management was behind this and that I'd be able to have something really good at some point, and it has worked out that way," he says. After seven years, he oversees five financial advisors who manage a combined $165 million in assets.
CUs tend to treat their staff well too. "You see very little turnover among the members or the staff," says Austin. "That's golden when you're trying to build a clientele. It's just a great environment: Everybody knows each other. You greet the CEO each day by his first name, and he's accessible to every employee and every member."