Lock In More Retail Revenue

Day Air Credit Union grew its retail investment portfolio to $18 million in part by teaching staff to identify investors.

Day Air Credit Union’s main goal with its four-year-old, $18 million retail investment program is increasing reoccurring, or trail revenue, by better targeting members’ financial needs, says Jonathan Peirson, financial advisor for the credit union.

The program, which started in 2008 with $9 million, drew about $100,000 in gross dealer concession (GDC), which is the revenue to the credit union from selling the securities. Last year, Day Air CU ($257.7M, Kettering OH) drew $176,000 in GDC and this year it’s on track to earn roughly $240,000.

The program has been growing aggressively, says Peirson, who took the helm of the program in 2010. He expects the credit union to achieve about $500,000 in the next five years. About $80,000 of its total revenue from retail investments this is recurring revenue, up from about $35,000 in 2010. It’s a portion of the revenue stream the credit union is trying to grow further.

One of the reasons why we’ve had such a growth rate is we’re working on reoccurring revenue, Peirson says.

Day Air CU, with 27,176 members, reported 9.8% increase in 12-month loan growth and 14.3% increase in 12-month share growth in the first quarter of 2012, according to Callahan & Associates’ Peer-to-Peer data. It offers financial services through CUSO Financial Services.

To lock in strong growth, Day Air CU teaches staff to be alert for members who may need financial investing services to refer them to the financial planning center. Frontline employees look for clues that a member may be open to investing by listening closely to what the member says about their key life changes, like when they mention plans to get married or retire. They are on the lookout for checks or direct deposits from other institutions’ funds.

We’ve been having great conversations with the members and we’ve come up with some great solutions to help them achieve their goals, Peirson says. That’s what comes down to the success of our program: we’ve got great staff to generate referrals.

The credit union conducts financial seminars quarterly on topics from retirement income and long-term care and it received a grant to provide financial education to the community at the local library. Both of those financial educational outreach efforts have led to new investors. Marketing campaigns reach out to a wide array ofmembers from college students to veterans but Day Air’s main focus is retirees.

It’s helping its babyboomer members who are preparing to retire and who will need planning to help them maintain their income and ensuring they won’t outlive their income. Babyboomers are a significant section of the retail investments market and Peirson says Day Air’s babyboomer members are the ones now with the greatest needs.

Simply, what we’re trying to do it create reoccurring revenue for the credit union and help our members achieve their> financial goals, Peirson says.

May 27, 2014

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