Protecting Your Book of Business – Best Practices and Program Risks

Associated With Advisor Recruiting and Retention

Thursday/May 10th From 11:15AM – To 12:30PM

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The NACUSO/BISA Expanded Collaboration

NACUSO’s Financial Services Advisory Boards

NACUSO’s Investment Services Advisory Board

• Carolyn Cereghino, BECU • Bill Partin, Partners Federal Credit Union • Matthew Clark, Mountain America Credit Union • Sandra deChastain, Multiple Credit Union Program Manager • Keith Pipes, Wescom Credit Union • Michael Prior, Credit Union Financial Network • Matt Snively, Eli Lilly Federal Credit Union • Douglas Wicks, Kinecta Federal Credit Union • Todd Phillips, Bethpage Federal Credit Union • Jeff Callan, TDECU Wealth Advisors

NACUSO’s Property Casualty Advisory Board

• Lynda Andrews, FirstLine Insurance Services • Nick Bloxham, Mountain America Credit Union • Lennie Gzesh, The Golden 1 Credit Union • Tom Linn, Marsh, Berry & Co. • Lyle Sandlin, Wescom Insurance Services (Wescom Credit

Union) • Jim Sarver, CEFCU • Wes Wolff, TDECU • Jill SmithEly, Apollo Agencies, Inc. (Kinecta FCU)

The 2012 Callahan/SCS Benchmarking Study for Credit

Union Investment Programs Set to Launch

•Look for an email with information on how to participate •The 2011 Study is available

Our Panelists…

• Michael Prior, President/CEO of CUFN • Carolyn Cereghino, Vice President Wealth

Management, BECU • Sandra de Chastain, CFP®, Regional Program

Manager, CUSO Financial Services

Michael Prior Credit Union Financial Network

President / CEO

Credit Union Financial Network, LLC Overview

Credit Union Financial Network, LLC (CUFN) is a Credit Union Service Organization (CUFN) which is multi-credit union owned. The CUSO provides investment, insurance, and estate planning management services to our 12 Credit Union Partners and 3 non-owner credit unions. Management includes performing the Compliance / Office of Supervisory Jurisdiction (OSJ) functions through an agreement with the currently contracted Broker-Dealer, LPL Financial. Based in Phoenix, Arizona, CUFN’s owner credit unions have a physical footprint in the states of Arizona California, New Mexico, and Texas. The twelve (12) owner credit unions combined with our non-owner credit union relationships have a total of $5.1 billion in member assets, over 620,000 members and 107 branches. CUFN currently works with twenty-four (24) dual employee registered representatives, 6 independent contractor registered representatives, seven (7) Licensed and Non-licensed sales assistants, and twenty-two (22) licensed branch employees (LBEs). CUFN has approximately 19,850 investment accounts and generated nearly $5.1 million in Gross Dealer Concession (GDC) and $539 million in assets under management (AUM). CUFN is projecting to generate $6.2 million in GDC in 2012, with many relatively new programs experiencing strong growth.

Credit Union Financial Network, LLC Management Services

Sandra deChastain, CFP®

CUSO Financial Services, LP Serving So. California Credit Unions:

Altura CU, American First CU, California CU, CU of So Cal, Glendale Area Schools

CU, LA Federal CU, SkyOne CU, USC CU, Ventura County CU

• Overview of Sandra’s So. Cal. Region Credit Unions – Total CU assets $5 billion – Total # of Members 463,000 – Branches 38 – Field of Membership Geographical Footprint-California

• Investment Services Programs – Annual level of GDC - $4 million – # of Advisors - 18 – Total AUM, including RIA - $345 million – Total # of Accounts in place – 6,500 – Program Structure – So Calif. Managed by Broker Dealer

Protecting The CU’s Book of Business…

• Generally speaking, the credit union is not at risk when a member of their Retail Sales Force resigns and goes to another credit union or other financial institution.

• Because of how the investment services channel is structured, however, there is a risk to the credit union when an advisor leaves your program to go to another program.

• Your agreements… – Between the CU and your Broker Dealer/3rd Party Program

Manager – Between the CU and your Advisor(s) (especially in a dual

employee program) – Between the Broker Dealer/3rd Party Program Manager and

your Advisor(s)

Agreement Fundamentals…

• ‘Proprietary Interest’ in the member accounts is the CU’s, not the B/D nor the Advisor – How would you differentiate between the ‘ownership

and control’ of the relationship with the member and the ‘ownership and control’ of the account itself?

• When an advisor ‘leaves at the stroke of midnight’ let’s look at: – What has very likely already taken place; and – What will take place in the weeks that follow; and – What the credit union needs to do ASAP.

Proactive Best Practices…

• As we all have experienced the departure of an advisor, let’s describe what that looks like.

• What are some of the preventative best practices that are utilized that can spring into action when an advisor resigns and walks out of the office?

• Does the structure of the program matter and present different challenges (managed, dual employee, etc.)? – ‘Personal’ book of business? – ‘Separate’ advisor number with the B/D?

• How a forensic autopsy of the advisor’s laptop or PC can be your best defense

Proactive Best Practices… • When an advisor has been building an RIA book of

business with the CU’s members, let’s discuss the separate challenges that can present themselves.

• Putting in place an LTR Program (“Long Term Retention”) can diminish the risk of an advisor picking up and leaving.

• Incorporating into the advisor agreement the element that requires that the advisor pay the CU for any member/client that leaves the program to follow the advisor.

• Let’s talk about the extent to which having in place an ‘open and connected relationship’ with your advisor(s) can diminish your risk of losing an advisor.

Recruiting by Other B/D’s and Banks?

• What do they have to offer your advisor? • The financial “deal?” • The approach and support to facilitate the

transfer of your member/clients from your current B/D to the new B/D that the advisor has moved to.

Questions… Discussion… Takeaways….