Credit Union Wealth Management Execs: You’re on the Clock!

3 Simple Steps to Help Ensure a Better Broker-Dealer Transition

By Mike Prior

With the latest announcements about broker-dealer shutdowns, credit union executives responsible for investment and wealth management departments may find themselves on the clock…today.  Sports fans know that being “on the clock” means you have a short amount of time to make a very big decision—and winning the game depends on it!

Did you know if your broker-dealer decides to sell to another broker-dealer, you may only have 30 to 60 days to accept their offer and make an informed decision? Anyone who has ever made a broker-dealer decision knows that there’s simply not enough time for proper due diligence. This condensed timeline can allow broker-dealers to gain an advantage over retaining a credit union’s assets, making it nearly impossible for credit union leaders to make an educated decision as to what’s in the best interests of their members.

So, how do you protect your credit union and your members from what could turn into a forced transition? Here are 3 Simple Steps to help you control the process regardless of whether you decide to stay with the current broker-dealer or decide to strategically leverage this time to upgrade your wealth management department:

1. Develop Your Contingency Plan. The most prudent thing to do is to establish your contingency plan. If your team is focused on advisory business, now is the time to better understand your broker-dealer and third-party registered investment advisor (TP-RIA) options.  There are options which provide higher payouts and transition support dollars to the CU while providing lower-cost higher-tech solutions designed to elevate your Members’ Experience.
2. Review Your Current Contract. Broker-dealers sometimes have contractual language that’s not credit union friendly and sometimes ignore their own restrictive covenants. If it’s been a while, now is the perfect time to review your broker-dealer networking agreement with a legal professional.  You do not have to feel stuck waiting for a specific contract date in the future.
3. Consider the Right RIA/B-D Platform for Your Employees and Members. Assess your platform and consider new options, as doing things the “same old way” won’t work going forward. For example, younger members and those who are cost-sensitive will only choose your CU, if you have the right platform in place to support their needs.  Today, you can have access to the Schwab and Fidelity platforms and better reporting than what the old legacy systems can deliver. 

Much like financial advisors, credit union executives also have a fiduciary responsibility to do what is in the members’ best interests. You should feel comfortable making an informed decision on your terms rather than under a rush notice from a broker-dealer…the clock is ticking.  

Mike Prior is the CEO of Priority Financial Group (PFG), a third-party registered investment advisor (TP-RIA) serving credit unions and financial advisors. The PFG team has been helping visionary credit union executive make member-centric, strategic decisions for more than 25 years. Mike is a pioneer in introducing the Charles Schwab and Fidelity advisory platforms to credit unions, and a recognized industry expert in implementing a best practices approach to taking credit union investment programs to their next level. For more information, visit www.pfgteam.com, call 800.405.8850, or contact Mike directly at Priorm@pfgteam.com.