Institutional sales must take a holistic approach
I have been in the institutional sales space for 20 years, and most of that time has been spent working with domestic depository institutions. Over that period, several significant changes have taken place. New business models have been established, interest rates have cycled and significant regulatory changes adopted.
Despite these changes, one irrefutable fact has remained the same. No single transaction on the balance sheet will ever move the needle in a meaningful way for a credit union or its membership.
What does that observation mean for your credit union? Well, I was on the phone with a prospective client a few days ago. This credit union CFO said, “all you guys do basically the same thing.”
Having been in this business for so long, it’s not the first time I’ve heard this and I didn’t take offense. But it did give me pause.
At CMS, we are doing everything we can to separate ourselves from the rest of the institutional sales white noise by driving real solutions and solving fundamental balance sheet issues. We take pride in being the antithesis of bond daddies, liquidity providers, loan guys or so-called ALM experts.
Instead, we take a comprehensive view of the entire balance sheet. I’ll let you in on a dirty little secret other providers don’t want you to know: They don’t care about what happens outside their specific transaction. Bond guys want to sell you bonds, liquidity providers want to sell you liquidity, and so on. What happens following their trade is your problem
As a CUSO, we believe the transaction should be part of a strategic solution, not a tactical Band-Aid that most likely benefits the service provider as much, if not more, than the credit union and its members. Some of the better providers will feign tepid interest in what occurs beyond their trade, but most will just move on. We think that’s wrong.
If your credit union is not working with a service provider analyzing the entire balance sheet, you are doing yourself and your members a disservice. If you are buying fixed income and/or loan participations, you are not making member loans. If you are gathering non-member funding, you are not increasing member shares. If your net worth is decreasing while your loan-to-share increases, there are some fundamental issues that need to be addressed. Buying a new issue agency debenture, however cheap it may be, is not going to solve any of these problems. They must be faced head on and collectively. They cannot be compartmentalized in a vacuum.
Don’t be fooled by the next greatest program or the cheapest liquidity available. Whether you work with CMS or another firm, if your provider doesn’t look holistically across the balance sheet, you are wasting your time. And more importantly, you’re wasting your members’ resources.
As a cooperative movement, we should all strive to do whatever we can to position every credit union so that it can best serve its members. If credit unions generate stronger margins, and therefore more revenue, members benefit. If your credit union can grow through acquisitions or thoughtful use of secondary capital, members benefit from increased products and services. In my 20 years of institutional sales, I’ve never seen a single bond accomplish the same.
The world has changed, and credit unions now have real resources that can help them solve real problems. You don’t have to settle for the status quo. Expect more from your service providers, because your members are expecting more from their credit union.
