In anticipation of Congressional hearings on Enron's failure, last Sunday's
papers were full of stories about the impact on employee retirement savings
plans. The article's focus was the losses suffered in 401K plans. One analysis
listed all the additional companies with concentrations above 75% in the parent
stock in the 401K plans.
How does this issue impact credit unions? There is $1 trillion more in combined
IRA accounts than in all 401K plans. One of the reasons is that many individuals
routinely roll their 401K into a self-managed IRA when they leave or retire
from a company.
One fall out of all these hearings will be to encourage individuals to take
charge of their own funds from the 401K administrators. Credit unions as trusted
advisors can help with these rollovers.
In addition, the new limits make the IRA a meaningful savings plan. These are
just several of the reasons why you will want to make sure your IRA program
is competitive and well marketed. Just one fact from a recent Callahan
& Associates Survey Consortium online survey of over 11,000 credit union
members is that 37% of respondents did not know their credit unions even offered
One factor that makes IRAs such an interesting opportunity for credit unions
is that a large percentage of members will make their retirement contributions
at roughly the same time each year -- during the first quarter, just like clockwork.
This is exactly the type of known financial transaction and relationship that
your marketing department should be educating and encouraging with the member.
Unlike auto loan or Mortgage marketings which depend on the member already looking
to buy a car or house, an IRA marketing at the right time of year with the right
message can have very measurable results.
For most credit unions, however, the opportunity has been treated as a 'B' or
'C' item even in the first quarter of the year when the potential is greatest.
Evidence of this can been seen right now by visiting just the front page of
many credit union's websites. We're half-way through the first quarter. How
prominently are credit unions in your region educating and promoting IRAs?
What is your credit union doing to tap into the IRA potential? Send your
comments and especially your current & planned IRA strategies to firstname.lastname@example.org.
In addition we are also providing interested credit unions with a free
custom IRA portfolio peer group analysis. Just fill out the form below and
we will send it out to you.
Good IRA hunting!