Mark Lynch speaks to students during an Enhanced CU Financial Counseling Certification Program (FiCEP) during a session organized by the Mississippi CU League.
Financial counseling doesn’t just mesh with credit unions’ mission—it also can and should bolster the bottom line by developing more creditworthy and fiscally responsible members, says Mark Lynch (above), a key player in the Enhanced Credit Union Financial Counseling Certification Program (FiCEP).
“The first reason credit unions should be doing counseling and education is because there’s an enormous member need,” Lynch says. “The second reason they should be doing it is, it’s good for the bottom line.”
CUNA Financial Counseling Certification Program (FiCEP) develops credit union counseling professionals to guide members through future financial situations and enables all credit union staff to become more confident in helping members.
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A longtime credit union member and board member, Lynch has spent the last five years training certified credit union financial counselors through the National Credit Union Foundation’s REAL Solutions program, which partners with CUNA’s Center for Professional Development to orchestrate FiCEP. During that span, Lynch has trained nearly 1,400 credit union staff at 390 credit unions in 25 states.
In mid-April—during National Financial Literacy Month—Lynch spoke with Credit Union Magazine about FiCEP, which provides staff the tools and confidence to guide members through financial situations.
CU Mag: Why should CUs think about financial counseling as part of their culture and mission?
Lynch: Three reasons. First, there is compelling evidence their members need it. We know two-thirds of their members are living paycheck to paycheck, that more than 50% don’t have any emergency savings, and that close to 20% of their members are spending more than they’re earning. So, we have a percentage of people that are buying their groceries on credit and probably getting themselves into more trouble.
Second, it’s good for the bottom line. The more members they help avoid bankruptcy and avoid not paying off their credit union loans, the better it is for the credit union.
Third, if they do counseling and education in an effective and creative way, they can sell more products. Many members don’t qualify for a loan or a product, so the member goes somewhere else because they need the product—and they pay a lot more. That puts the credit union’s loans at risk because they’re now over-committed.
Helping members attain a creditworthiness that allows you to say “yes” is good for the member and good for business.
CU Mag: Counseling helps people in crisis, of course, but doesn’t it also benefit people who have some means?
Lynch: There are three types of counseling: remedial, preventive, and productive.
Credit unions can play a role in helping people facing foreclosure, repossession, and eviction—that’s remedial counseling.
Then, there’s the people living paycheck to paycheck. If their car breaks down or there’s an unexpected medical bill, they’re potentially in trouble. Credit unions can help them move away from the edge by reducing their debt, creating some savings, and getting their budget under control. That’s preventive counseling.
There’s another group of members who are motivated to do better by preparing for retirement or college and getting as far away from the edge as possible. That’s productive counseling.
Our training credit union employees to identify each group and how to help each group.
CU Mag: Just as many members would benefit from counseling, wouldn’t CU staff also benefit?
Lynch: When I do the training, I say to credit unions, “Why don’t you offer counseling for your staff?” And I generally get two reactions. One is, “Wow, that’s a great idea—yeah, let’s do that!” Or I get the other reaction, which is, “Well, actually, we’d be the last people that our staff would come to if they have a financial problem.”
Doing financial education and counseling for staff is actually a risk management strategy that all credit unions should be involved in. You want to help credit union staff who are experiencing financial problems and might see stealing money as a solution.
CU Mag: Can you talk about FiCEP’s sustainability, and how the different groups—the National CU Foundation, CUNA, and the leagues—work together to produce the programming?
Lynch: Real Solutions follows three criteria for developing financial counseling programs: Is it good for the member? Is it sustainable and good for the bottom line? If possible, can it lead to growing the credit union? We aim to find that training piece that teaches them how to apply their skills to meet the three-part criteria.
CUNA provides the materials and the certification process. The leagues have the credit union relationship and recruit the students, and they do some proctoring. And then at Real Solutions, we provide the teaching, the training, and all of the coordination.
CU Mag: What sort of foundation should a CU construct before initiating a financial counseling training regimen?
Lynch: It’s really difficult to go from not doing any education or counseling, to a program that meets members’ needs and is good for the credit union. I always ask, “How long does it take your credit union to add a new service or product?” Most people say no longer than a year. A lot of credit unions that started education and counseling got to the end of the first year and said, “Well, we haven’t counseled anyone and we haven’t educated anyone.”
I teach how to overcome this problem.
The first year might just be determining member needs, getting approval, and starting the training process. You have to have a long-range vision, preferably 10 years out. Then you say, “What do we need to do in the first year to make the first step toward the 10-year vision? What are the goals we have to set? What are the things we’re going to do to meet those goals?” Then project that out and do it every year.
Also, I can’t overstate the importance of tracking. Unless you have a plan to track and measure, it’s really hard to recreate at the end of the year what a member’s credit score was when they first came to see me, what is it after a year of counseling; how much debt did they have when they came, what was their debt to income ratio, what is it now?