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

3 Simple Steps to Help Ensure a Smooth 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 that provide high payouts, and transition support dollars to the credit union while providing low-cost high-tech solutions that elevate the Member 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.  Contract buyouts can actually net the credit union more money faster depending on the terms.
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” may not prove successful moving 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.  Offering members access to the Schwab and Fidelity platforms should not carry exorbitant BD access fees. 

Much like financial advisors, credit union executives also have a fiduciary responsibility to do what is in their members’ best interests. It is wise to make an informed decision on your terms rather than under a rush notice from a broker-dealer.

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 executives 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 and advisor practices to their next level. For more information, visit Pfgteam.com, call 800.405.8850 or contact Mike directly at Priorm@pfgteam.com.