Consumers appear ready to get back into investments. But are credit unions prepared to assist them?
Before answering that question, it’s helpful to remember some recent history, says Ric Mathias, vice president of retail development at $2 billion asset Summit Credit Union in Madison, Wis., and a “program champion” with CUNA Brokerage Services Inc., CUNA Mutual Group’s broker/dealer arm.
“The Great Recession had one very notable effect on credit union members,” he says. “They saw their equity positions drop with fewer dollars available to them to invest. This put people in a conservative mood financially, so they either parked their money in safe, conservative accounts or paid down debt.”
From 2008 to 2011, U.S. consumers reported spending $175 per month less than they would have had there not been a recession, says Philip Simensen, president of USAdvisors Network LLC. “Over a particular eight-month period spanning 2008 and 2009, the average U.S. household lost nearly $100,000 from its property and retirement portfolio values combined.”
The resulting anxiety caused many investors to go into a “flight or fight” syndrome, he says. “Bottom line: We saw a lot of people jump out of the market.”
Six years later, says Mathias, credit unions are actually “in a better position to capture some investment traffic even though we’re constantly competing with brokerage services that are bigger and have more marketing resources.”
Credit unions, however, have several distinct advantages over larger players, he says, including:
• Their status as cooperatives, which is reflected in their member-friendly pricing; and
• Distrust of other financial institutions, driven by their poor decisions.
“Members understand that we are trustworthy and not likely to take dangerous or overly risky steps to increase investment worth,” Mathias says.
Kevin Mummau, executive vice president of program development for CUSO Financial Services, says the credit union movement saw its deposits swell after the recession’s onset, with many funds coming from big banks.
“But much of that money was misplaced investment dollars,” he says. “Credit unions must work to ensure that when those dollars are ready to go back into the market, they do so under the credit union’s guidance and management.”
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