SEATTLE–There is a significant opportunity for credit unions among mid-market households seeking wealth management services.
Indeed, some 28% of investors in mid-market households—defined as those with between $30,000 and $100,000 in annual income—are currently looking for advice right now, according to Ben Rogers of the Filene Research Institute.
Ben Rogers speaking to credit union audience.
In remarks to CUNA’s America’s Credit Union Conference here, Rogers said Filene findings follow an effort to get to know better a group that is often understudied when it comes to financial services.
What the Data Show
Filene’s research found within this same market 56% have college degrees, they are primarily middle-aged (but one-in-four are 29 or younger), and 59% are married with children;
When the portion of this market that has an advisor was asked how often they speak with that advisor, it is a few times per year, or less often.
“They are not high maintenance, but they do like the human touch, but they want to do most of their management digitally,” said Rogers. “Digital should cover most of their basic needs, much like banking.”
For those without financial advisors, when asked how likely are you to seek out financial advice in the coming year, approximately one-third said either very likely or likely. “The opportunity is very good that they could be ready to have a credit union investment conversation,” said Rogers.
What Drives Choices Made
When Filene polled mid-market consumers and asked, “How did you choose and advisor?”, it found most turn to family and friends first. Younger investors are more likely to rely on online resources and social media. The research found investors are also likely to turn to their current financial institution for advice.
“Investors want love and attention, and communication is important, especially face to face,” according to Filene’s findings, with Rogers saying “communication” was rated highly by all age demographics.
Rogers said one response in the survey related to when consumers choose a financial advisor included, “It felt like it was time,” which he said is promising for credit unions, “because that means they can be affected by the right message from the credit union,” said Rogers.
But what drives investors’ choices when deciding which provider to select when it comes to managing investments?
According to Rogers, when investors were given four types of options for advice-digital remote advisor, a national firm, a local independent, or digital/no advisor—they said big national firms were too expense, digital advisors too expensive, and robo-advisors too cheap.
The Top Choice
“Their top choice was someone who is local an independent, if priced right, and that is true across all age demos,” said Rogers.
What can credit unions do to leverage that finding?
“Embrace technology, avoid complexity and deliver a personal experience,” recommended Rogers. “There is a strong preference among middle-income investors for the types of services that credit unions can deliver. These are people with pretty straightforward needs, who are predisposed to listening to friends and family, and predisposed to getting advice from the place they are already doing their banking. We can make it easier for them to get ahead, and the fact we line up so well makes it easier to do.”