Holistic wealth management services

by. Barry Dayley

Structural changes in the banking industry initiated by consumer demand and the convergence of financial services have forever changed the credit union landscape. In the past 2½ decades, the depository intuitions’ share of total U.S. household financial assets fell 44 percent, to 12.4 percent, while the share of mutual funds increased 16 times, to 11.4 percent. This fact, coupled with the ever-increasing commoditization of traditional banking products and banking services offered by non-bank competitors, poses a real threat to a credit union that is not able to address wealth management needs. Today, nearly all large financial institutions in the world offer some semblance of what they refer to as wealth management as part of their Private Banking platform.

In fact, wealth management services are reportedly being provided by 83 percent of large banks, 63 percent of medium-sized banks and 49 percent of small banks.2 However, many of these organizations simply offer investment products or access to online financial planning calculators and count that as wealth management services. To compete in this space, a credit union must offer real and practical solutions.

So what is wealth management, and what impact can it have on the offerings of your credit union? Wealth management is a specialty of financial planning. The wealth manager’s focus is the client, and his or her efforts are devoted to helping clients achieve life goals through the proper management of their financial resources. The practice of wealth management is holistic and individually customized. Success is not measured by investment performance relative to other managers, but rather by the client’s success in meeting life goals. Also, credit union staff must endeavor to debunk the myth that these services are only for high-net-worth individuals.

Key factors in favor of choosing a credit union to offer wealth management services remain discretion and safety, image and reputation, service quality, and performance. Many clients still have classic needs from a financial planning and investment management perspective. However, member expectations of wealth management are changing. “Member experience” has become a differentiator for success, and it requires a new generation of relationship managers who embody competence and encourage trust and confidence.

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