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401ks are a core business service CUSOs told
LAS VEGAS (4/30/08)--Credit unions that have adopted a formal strategy to enter the business services market should consider offering 401(k) retirement plans to select employee groups (SEGs), business members and other businesses, a panel told attendees at the National Association of Credit Union Service Organizations (NACUSO) annual conference Monday.
Participating in a business services discussion at the National Association of Credit Union Service Organizations' annual conference Monday were (from left): Kevin Thompson, CUNA Mutual vice president, asset accumulation products; Peggy Mostowy, assistant vice president of business development, Clearview FCU, Moon Township, Pa.; and Chuck Purvis, senior vice president, Coastal FCU, Raleigh, N.C. (Photo provided by CUNA Mutual Group)
Steve Dowden, CUNA Mutual Group’s senior vice president of asset accumulation sales distribution, moderated the panel, which included Kevin Thompson, CUNA Mutual vice president, asset accumulation products; Peggy Mostowy, assistant vice president of business development, Clearview FCU, Moon Township, Pa.; and Chuck Purvis, senior vice president, Coastal FCU, Raleigh, N.C. Credit unions are showing more interest in offering retirement programs as part of an overall business services strategy, Thompson said. “That makes sense, because offering 401(k) programs to SEGs and small businesses directly supports a business services growth strategy,” he explained. Thompson said marketing retirement services can help credit unions:
* Attract and retain members, including younger ones; * Generate ongoing fee income from plan sales; * Attract 401(k) rollovers and individual rollovers from participants; * Strengthen current business relationships; * Increase cross-selling opportunities for credit union products such as lending and checking accounts; * Increase retirement expertise awareness within the community; and * Remain relevant to baby boomers, while helping them do a better job of saving for retirement.
“For Coastal FCU, it gives us an opportunity to deepen the relationship with our 1,100 SEGs and provide valuable business services to diversify and grow our revenues,” Purvis said. Retirement services also can help the credit union meet demand from small businesses for reasonably priced services from a local, trusted and tenured institution, he added. “The average community bank in our market is less than seven years old. Our credit union has an established track record here over the last 41 years,” Purvis said. Coastal offers a full menu of business lending and business account services. Adding employee benefit plans seemed a logical extension, Purvis said. “The ability to offer 401(k) plans will better position us to capture rollover funds in our Trust and Investment Services group, and these additional services will enhance our visibility within our SEGs, particularly with human resources decision-makers,” he said. Clearview’s Mostowy echoed those sentiments, and said her credit union’s target market is small businesses--those with annual sales up to $5 million--and the mid-market--annual sales between $5 million and $10 million. “This product will assist small businesses as they grow and their needs become more complex. With mid-market clients, it will deepen the relationship and provide us the opportunity to compete with the larger financial institutions,” Mostowy concluded.
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