I have written frequently about the correlation between member participation in the credit union investment and insurance sales program and increased revenue. While that may seem intuitive the question remains, "why don't more credit unions make the effort to increase member participation in this time of increased need for revenue?"
According to the recent Ken Kehrer and Callahan Credit Union Investment Program Benchmark Reports, the average member penetration is around 5% compared to 10% for banks. According to Ken Kehrer, one of the reasons for the discrepancy between banks and credit unions could be that banks have offered investment services for about four years longer than credit unions. So they have had a head start on developing household participation in their programs. Another useful benchmark for determining how much attention management should pay to their investment programs is profitability. Many CEOs state that it doesn't make sense to throw more resources at the Program if it isn't profitable. My response is, "well, then let's make it more profitable." Before we can do that we have to gauge the profitability of the program. Let's look at two ways to gauge profitability.

Revenue Margin
This is one of the more universal ways to gauge profitability in the brokerage business. It takes into account gross revenue minus direct and allocated expenses before corporate overhead allocation and taxes as a percent of gross revenue. This is sometimes called contribution to overhead. Since allocations for the investment program vary so much throughout the industry this measurement has become somewhat standard versus comparing income. In the recent Kehrer report the average credit union Program contributed 19% of its gross revenue to the overhead of the credit union.
Brokerage is a volume business which is another reason credit unions need to increase participation to enjoy higher revenue margins. The more the credit union can spread fixed costs over a larger sales force and revenue base the more contribution it can make to the bottom line.

Profit Penetration
This is perhaps a better way to measure the profitability of the Program. According to the Kehrer report, the average credit union Program contributed $444 of pre-tax profit per million of share deposits.
What are the key drivers that will help grow the profitability of Investment ans Insurance Sales Programs? As I have discussed in my previous articles and White Papers there are two factors, credibility and awareness. Ken Kehrer has broken those factors down into four drivers that credit unions need to constantly address to achieve and surpass the 10% member participation threshold.
Key Drivers
Financial Advisor Coverage - this benchmark has been debated for many years. There is no one standard for every Program since geographic and socioeconomic factors of the credit union must be taken into account when determining how many advisors a Program needs to provide optimum service. The numbers range from $150 million in deposits to $350 million. The average credit union in the Kehrer study had one advisor for every $313 million in member deposits. Again, I would not recommend using that as the standard for your credit union. That figure tells me that there is room to increase coverage by adding more advisors and still increase revenue and profitability. Most advisors will resist splitting territories but the Program management has to constantly consider the question, "are our members being optimally served with the current coverage?"
Referrals- This is a good gauge for the effectiveness of the Program. If the branch teams are fully engaged in a robust referral Program then that is a sign that the Program is well integrated into the credit union; a key determinant of Program success. It is difficult to establish a benchmark for this since every Program seems to have a different definition of what counts as a referral. This has to be determined by such things as closing ratios of referrals submitted and cross-sell success i.e. is the credit union receiving referrals from the financial advisors?

Product Mix - What is the mix of products that the Program is selling to its members? Credit unions typically sell less fixed annuities, individual securities and managed money products than their bank counterparts. According to the Kehrer study the difference in fixed annuity sales can be attributed to the fact that credit unions are still struggling to embrace Platform Programs where licensed credit union employees are trained to sell fixed annuities and mutual funds. The Platform reps tend to focus on selling fixed annuities. Credit union advisors have also been somewhat slow to the game of managed money. Historically credit union advisors have been more transaction focused. This is a result of a lack of training and a lack of hiring advisors who are knowledgeable about managed money products. This is changing as members become more concerned with commissions and fees.

Sales Assistants - The proper use of sales assistants can make the Program run more efficiently and profitably. Unfortunately there has been no universal benchmark to determine when a Program needs to add an advisor. Much depends on the individual advisor's organizational skills. I have managed programs where as soon as an advisor reaches $200,000 in GDC they request an assistant while I have had advisors doing over $500,000 in GDC without the benefit of an assistant. As with most situations there is a happy medium. According to the Kehrer study credit unions have been more generous than their bank counterparts on average using one sales assistant for every 2.6 advisors while banks have an assistant cover an average of 3.6 advisors. Again, there are differences in advisor organizational skills but credit union Program managers should be looking to spread the cost of an assistant over as many advisors as makes sense. The process can also be used as a training opportunity. If the assistant is supporting 2 advisors then those advisors should be doing in excess of $500,000 each or you are not getting your money's worth. Perhaps spending time to develop organizational skills may be a better investment.

What Next?
Increasing awareness of the Program and establishing credibility will move the investment and insurance sales program closer to and beyond the hallowed 10% member penetration benchmark. Credit union CEOs tend to focus on the revenue number and then decide whether or not there is merit in throwing more support behind the Program. I contend more attention needs to be placed on the revenue margin and profitability potential of the Program. Sometimes this can be achieved by simply determining what meaningful revenue does the credit union need from the Program? Once that is determined then the credit union should engage outside expertise to help determine if that goal is achievable and how. Once there is agreement of the viability of the Program then it needs to receive a seat at the management table of the credit union, become a core product and receive all the support that any other core product receives. Then and only then will the Program become a significant contributor to the credit union's non- deposit income.
What percentage of your members are taking advantage of this important member service? Is it 10% or more? If not, then why not? Your members deserve to know.

 Source: http://EzineArticles.com/2676641

   When it comes to saving money in a bank account, it would seem that they're all about the same. Most give you a lousy interest rate and a number of fees in exchange for keeping your money with them. Who says you have to use a "bank" for your banking needs? Maybe a credit union would be better for you? Here are the two primary differences between credit unions and banks, to help you determine which one is better for your situation:

1. Credit unions are owned by the members
When you become an account holder through a credit union, you instantly become part owner of the it. Don't expect to receive an executive office or anything, but the idea that you are a partial owner helps the employees of the union treat you like a person when you come in to do your transactions rather than just another profit center, which is often the mentality of banking executives.

2. Banks are "for profit" businesses
The non-profit status of credit unions helps explain how they can offer account holders higher interest rates and fewer fees as compared to banks. When the member-owned institution earns more than they need to run their business, the profits are distributed as dividends to the members (the account holders!) as compared to the banks who seem to create new fees and banking policies regularly in order to keep increasing their profits and giving executives bonuses and higher salaries.
Bank owners have actually spent a lot of money and time trying to get legislation passed that would not allow credit unions - or to make it difficult for people to qualify for credit union membership. They're convinced that credit unions have an unfair advantage as a non-profit, cooperative business structure - which also puts credit unions in the "exempt" category for most federal and state taxes. Many critics and members of credit unions argue that if the banks spent that money on improving their interest rates and lightening their banking fees, they'd have an easier time competing with credit unions. The first credit union began in 1934 - when President Roosevelt signed the Federal Credit Union Act into law and the banks have been fighting against them ever since.
Many people wrongly believe they don't qualify for a union membership. The fact is, almost anyone can belong to a credit union these days, as you can qualify based on where you live, work, or associations to which you belong. Some qualifying associations are so easy to join, people join them just for the ability to become a credit union member!
The Credit Union National Association estimates that members save around $8 billion per year through higher interest rates and lower fees, compared to their banking friends. There are currently about 90 million members belonging to various credit unions around the country.

Credit Union Advantages
Many people apply for loans for their cars for example at their local credit union, because they often can get a much lower interest rate than they could at the dealer. Once they've obtained their loan, they find out how much lower the checking account fees are, or how much lower the interest rates are for credit cards issued through credit union as compared to bank issued credit cards. In addition to lower credit card interest rates, credit union cards rarely charge an annual fee or increase interest rates for a single payment made late. When you overdraft a bank account, you can expect a $39 overdraft fee on average, while credit unions average between $20 and $25 for an overdraft.
When using a union issued debit card, typically the transactions are free at a wide network of ATMs. Sometimes, ATM usage fees will be reimbursed to the account holder up to a certain dollar amount per month, too.

Source: http://EzineArticles.com/2566496

   These days items of not just want, but need, tend to be becoming more and more expensive and with interest rates constantly rising at the banks, credit unions are becoming the more financially attractive alternative.
Credit unions are financial co-operatives owned and controlled by their members who combine savings to offer low-cost and flexible financial products to their members.
Each union has a 'common bond' which determines who can join. A 'common bond' is simply having something in common with the existing members such as living or working in the same area, work colleagues or people who belong to the same association, such as a church or trade union.
If you are not able to save every week or month or have a poor credit record, a credit union may be more sympathetic to your needs than a larger financial institution would be.

   Credit unions welcome irregular savers, and all savers usually get the same percentage dividend on their savings aiming to pay a dividend on savings once a year to all their members. This can be as much as 8% of the amount that people have saved, but is typically 2% or 3% depending on profits.
As mutual societies, credit unions are non-profit organisations and must each year set aside enough money to ensure they remain financially stable. All profits are used to make interest rates as cheap as possible for borrowers and rates of return attractive for savers.

   With a credit union you can save as much or as little as you like, weekly, monthly or as often as you wish. You can pay in at convenient local shops or collection points, or direct from your wages.
You do have to prove you can save before you can take out a loan with a credit union. Once you have satisfied this requirement, the total amount you can borrow from your credit union is based on what you will be able to repay. They can also tailor their services to suit your individual circumstances.
The interest a credit union can charge on a loan is limited to 1% a month. So a loan of £100 costs no more than £1 each month in interest.

   Typical interest rates for loan repayments are just 6% and members can also automatically have free life insurance.
The main act of Parliament governing credit unions was the Credit Unions Act 1979 until 2002 when the FSA (Financial Services Authority) took over as a regulating body. The FSA sets out the objectives of a credit union stating that credit unions must have their accounts audited annually by a qualified auditor and be insured against fraud or theft.

   Credit unions cannot lend all their members' savings or invest the remaining money in risky ventures. Instead they must put it into bank deposit accounts and the most reliable investments, such as government bonds. This enables them to get the money back if they need to.
A few points to keep in mind
o You cannot simply join whichever credit union you think is best. You have to meet the common bond requirements yourself, or be a close family relation to someone who does and is already a member.
o You cannot join a credit union just to get cheaper loans. You usually have to save with them first. The rules on this vary between credit unions.
o You cannot save or borrow in the name of a business you may be running. Only members can borrow from a credit union and borrowing must be in your name even if you want to use the money for a business you run.
o Credit unions typically have few branch offices and few, if any, ATMs.
o Some credit unions don't return cancelled checks to you.
o Your local credit union may not offer you as many services as you can get from the neighborhood bank. Check to see what's offered. You may end up deciding to keep accounts at each, for different purposes.
The UK credit union movement is still relatively small and is restricted by law from gaining size or offering services which could compete with profit-maximising banks.
Check with your local council or citizen's advice bureau for a list of credit unions in your area. If you or your partner is working, the trade's union representative or the people handling the wages should be able to tell you of any credit union's covering the industry.

Source: http://EzineArticles.com/275357

In Raleigh, North Carolina, new homeowners John and Jennifer Hall made a smart decision: instead of choosing a risky mortgage scheme from a bank - a decision that has been catastrophic for so many of their contemporaries, the couple applied for a loan through the North Carolina State Employees' Credit Union (SECU).

The couple did their homework, and concluded that it made better sense to work with a non-profit financial cooperative to purchase their first home. Aside from lower fees and closing costs, SECU did something the others didn't: a credit-union employee sat down with the couple to explain the pros and cons of the various mortgage options. Because credit union employees are non-commissioned, there was no pressure, enabling the couple to see the credit union as a trusted advisor.

"There are so many young folks who don't realize the advantage of going with a co-op," says John, who believes that all North Carolinians benefit from non-profit financial cooperatives that help to keep other financial institutions in check by ensuring citizens remain eligible for competitive rates and fees. "Being a member can make a tremendous difference in your financial life!"
You Belong
Are you are frustrated with your bank? You may be tired of paying endless fees, high interest rates and receiving poor customer service. And in light of the current financial crisis, you may find yourself among those with good credit experiencing trouble getting a car or home loan, the result of tightened lending standards due to the banking industry's own.
Fortunately, you have options.
Credit unions offer are a fresh alternative to corporate banks while providing the same kinds of services. As a credit union member, you can open a checking or savings account, buy a certificate of deposit and get a loan. Some credit unions can even help invest for your retirement or take financial planning courses before you buy your first home.
Credit unions are co-operative businesses, owned by members (depositors) who share something in common, such as where they work, live or go to church. Because credit unions tend to be smaller and cater to a select group of people, you can expect a more personal relationship between the staff and the members.
Unlike commercial banks that generate profits for owners and outside shareholders, credit unions channel profits back to members in the form of lower fees, better interest rates and higher dividends. According to the American Banker/Gallup poll, credit unions consistently rank high among consumers for service and customer satisfaction every year since 1983.
Keep Your Money Safe
Credit unions have emerged as a safe haven for consumers. Because credit unions avoided the risky loans and exotic investments that brought down so many banks, they remain relatively untouched by the recent financial crisis, credit union members have peace of mind knowing their money is safe.
Credit unions are financially solid because they stick to conservative banking practices, such as requiring down payments and income verification on mortgage loans. While many banks were chasing ever more exotic ways to make money, credit unions stuck to the basics.
Many people are leery of putting their funds in the hands of a credit union because they believe the credit union isn't FDIC insured. Nothing could be further from the truth. Like banks and savings institutions, credit unions deposits are insured up to $250,000 by the federal government, providing the same level of protection for investor assets as any banking institution.
Credit Unions Still Lending
Commercial banks have recently curtailed lending, even people with good credit. The result is that many consumers are having trouble getting home and car loans due to tightened lending standards.
This is not the case with credit unions, which continue making loans available to people with good credit histories. In fact, credit unions are now experiencing higher loan volumes as consumers turn to them in greater numbers since the recent banking sector meltdown.
According to the CUNA, credit unions made 36 percent more small business loans in the first half of 2008 than the same period in 2007, a reflection in part of the ability of credit unions to lend while banks horde cash.
Now, as conventional banks avoid lending even to credit worthy buyers, credit unions are poised to take a much larger share of the traditional lending business - including homes, cars and small business loans.
Join a Credit Union Today!
Though once associated with trade unions, hospitals, universities and other large employee groups, credit unions are increasingly open to the general public. There are also "select employee groups" that offer credit union members to a network of affiliated businesses.
You'll find many reasons to join a credit union, including:
- Unlike many commercial banks, credit unions are still lending
- You have access to great products and services.
- Be heard. Your voice counts - your co-op truly cares what you think.
- You'll be part of a values-based organization that puts people ahead of profit.
- Share in the financial success of the organization.
- Contribute to a thriving local economy.
- Invest in a business that is locally owned and democratically controlled.
- Be part of a strong and proud cooperative tradition.
- Help change the way business is conducted in America and around the world.
As of 2005, there are 9,346 credit unions in the United States, which means that just about any consumer can find a credit union they are eligible to join.

Paul Hazen is CEO and President of the National Cooperative Business Association (NCBA), the only cross-sector member association representing all cooperatives in the United States.

  Source: http://EzineArticles.com/2253343

The standard means of obtaining credit has become so widespread that being at the mercy of increasing interest rates and inflated charges on loans and credit cards has become so commonplace that it is easy to believe there is no other option. But there may be an alternative in the form of the little known credit union movement.



   A credit union is a profit sharing, financial co-operative run democratically by the members of the union itself. And by offering a more financially attractive alternative to the standard products offered by banks, the popularity of the credit union movement in the UK is increasing.

   As maximizing profits is not the key goal for a credit union, such an organisation has three main aims:
· To encourage its members to save regularly
· To provide loans and financial assistance to its members at the lowest rates of interest possible
· To offer its members help and support, if required, in the management of their financial affairs

   To enable you to take advantage of the kind of services that a credit union offers, all you have to do is become a member. Not that this is quite as straightforward as you might imagine...
The key to becoming a member of a credit union is what is known as the 'common bond'. The common bond determines whether or not you will be accepted as a member of a credit union and this could be that you reside in a specified area, work for a particular employer or within a particular trade, or that you are a member of a certain club or association.

   Because of this, credit unions welcome everybody from within the common bond regardless of income, employment status or age and also - and perhaps more crucially, regardless of your credit rating or if you are unable to save a regular amount. So whether you have a poor credit rating or not you can still become a member of a credit union and save as little or as much as you like.

   Irregular savers are just as welcome as those people who are able to save money on a regular basis and usually all members, regardless of the amount saved, are paid the same percentage annual dividend on their savings. Whilst generally paid at 2 to 3%, this can be as much as 8% depending on profits.
Using the sum of all members' savings, the credit union is then able to provide low cost financial services to its members. Although each credit union (as all mutual societies) must ensure that enough money is set aside to ensure financial stability, all other profits are used to provide the lowest interest rates for members' loans whilst returning an attractive rate of interest for its savers.

   With an attractive 6% being the typical interest rate on loan repayments (which normally includes insurance at no direct cost), as the rate of interest that a credit union can charge is capped at 1% a month the most interest you would have to pay on a loan of £100 for example would be only £1 a month!
Insofar as government regulation is concerned, the Credit Unions Act 1979 remains the key legislation that regulates the activities of credit unions. As well as setting out the objectives of an individual credit union, it also mandates that all accounts are independently audited on an annual basis and that full insurance is put in place against fraud and theft.

   Also, a given credit union cannot lend all the money saved as loans to its members and cannot invest any residual money in any ventures above a certain level of risk. To reduce the risk of bad investment and to ensure that all savers' money is not tied up for long periods of time, any money in the control of the credit union must be put into bank deposit accounts, government bonds or other reliable investments.
Overall, credit unions offer an easy and convenient way to save and borrow and can provide a focal point for a community by bringing people together, to both help each other and to help the community as a whole. A credit union can also help to revive the economy of a local area as more money stays within the community which has a knock on effect on income for local businesses.
All you have to do is prove that you can save before any loan will be offered but once proven, financial assistance will be offered based on how much you can save or tailored to your individual circumstances. Paying into a credit union is also easy and can be done at local shops, convenient collection points, or can even be taken directly from your salary.

So is becoming a member of a credit union right for everyone? Before considering them it is worthwhile bearing the following points in mind:
· Regardless of which credit union offers you the best option, you cannot simply join whichever credit union you want. You have to fulfill the requirements of the common bond or at the very least, be a close family relation of someone that does and who is already a member.
· Credit unions are not just a means of obtaining cheaper loans. Although there is no fixed rule for all credit unions, generally you have to have saved with them before any assistance is offered and proved yourself to be able to save.
· A credit union does not provide the convenience of the high street banks as an individual union will typically have very few or sometimes no ATMs and few branch offices.
· Credit unions may not offer the range of services that you can get from your local bank so check to see what is on offer before you commit. Other services such as the return of cancelled checks etc. may also not be provided. It may be worth retaining an account at your bank alongside credit union membership.
· All money borrowed from or saved with a credit union must be in the name of a member and as such, no money can be borrowed in the name of your business. Even if you need money for your business you still need to borrow money in the manner of a standard member of the credit union.
If you above points do not preclude you from becoming a member of a credit union then the best way to obtain a list of the credit unions operating in your local area would be from the Citizens Advice Bureau or your local council. Alternatively there may be a credit union covering the particular industry/place of employment where you or your partner work so it may be worthwhile contacting your payroll department or trade union representative.
Although relatively small in size due to legal restrictions in place to prevent unfair competition with banks and other financial institutions, the UK credit union movement is growing in popularity and offers a real alternative to expensive bank loans or credit cards. Even if your credit rating is poor or non-existent, a credit union may be the right option for you.

Article Source: http://EzineArticles.com/243385

What is a credit union?

A credit union is a not-for-profit, cooperative financial institution that is owned and controlled by its members. 

   Credit unions serve people that share something in common such as an employer or place of worship. Credit unions allow members to pool their savings, lend to one another, and have a voice in the governance in the organization. This aspect of credit unions is particularly appealing given the increasing alienation many consumers are feeling from mega banks.

Credit unions are similar to banks in that they offer many of the same services such as check and savings accounts as well as loans. Deposits are also federally insured with credit unions as they are with banks.

Credit unions combine these services with many other benefits such as personal service, generally lower interest rates and higher investment returns.
Steps to take to find a credit union to join.
Contact your employer to see if your company provides this benefit. If not, ask them to consider making the valuable benefit of credit union membership available. If a family or household member is eligible to join a credit union you may be eligible to join because of your relationship. Also, try contacting occupational, fraternal, religious and alumni organizations you are affiliated with to see if they have a credit union you can join. CreditUnionRate.com is also a good source to use when searching for a credit union.

What are benefits of a credit union?
   Because credit unions are democratic, member-owned cooperatives, every member, regardless of account size, has a voice in governance. Each year, your local credit union holds an annual election and meeting where members select candidates for the Board of Directors from among its members to represent them in setting the policies of the credit union. As a member-owner of your credit union, you are entitled to vote on credit union business and elect new board members. You can also serve on your credit union's volunteer board or one of its committees. Credit union elections are based on a one-member, one-vote structure. This structure is unlike the for-profit, public companies where stockholders vote according to the number of shares of stock they own.
   Once you become a member of the credit union you always remain a member - as long as you maintain an account. Even after your discharge from services or relocation you can still be a member of your credit union.
   Again, because you are a member-owner of your not for profit credit union you derive financial benefits that are reserved for stock holders at for profit banks. In other words, you get higher interest rates on basic savings (share) accounts, interest-bearing checking accounts and CDs. Many credit unions also pay "bonus" dividends in especially good years.

Credit unions also offer lower interest rates on credit cards and loans than banks. This comes as a strong point in favor of the credit unions. Many young families who are just starting out have very demanding financial needs and most often they are required to stretch their limited dollars. From credit cards to car loans, credit unions consistently offer lower rates, better terms and lower fees.

This holds true even for mortgage rates and equity loans. Credit unions are known to provide better and competitive mortgage rates and equity loans. Not only are the rates low, but closing costs generally are much lower than those paid through a conventional lender.

Your local credit union helps you make the most of your money. From personalized service to low interest and high returns its easy to see why 89 million members depend on a credit union to meet their banking needs.

Article Source: http://EzineArticles.com/40845