WASHINGTON–A quartet of credit union CEOs have shared some strong positions and challenges around financial wellness, including that CUs can’t claim to own the issue without data to support it, that saying “no” to a loan app must be accompanied by an opportunity to later say “yes,” and that inevitably another recession is coming and CUs must be prepared to respond to the communities most affected—because members expect them to.
The comments came during the Underground Tik Tok meeting hosted here by Mitchell Stankovic.
Addressing the meeting were Brett Martinez, president and CEO of Redwood Credit Union in California; Maria Martinez, president and CEO off Border FCU in Texas; Chuck Purvis, president and CEO of Coastal Credit Union in North Carolina, and Maurice Smith, the retired president and CEO of Local Government Employees FCU, also in North Carolina.
Here's what each of them had to say in response to this question from moderator Gerry Singleton of CUNA Mutual Group:
Tell us about your own credit union’s journey toward financial well-being for all? And tell us about your employee journey, as well.
‘Can We Show the Impact We Have’
Brett Martinez: There are 166-million adults in the U.S. who are financially unhealthy; that’s two-thirds of the population. Forty-percent of them make six-figure incomes, so it’s not just about how much money you make but how you handle that money.
Redwood has been on this journey for a very long time. We will never get to be where we want to be. We say we own financial wellness, but there’s no proof. That’s the journey we’re stuck on right now, trying to prove it.
Also, if employees aren’t financially healthy they can’t help our members. We also focus in on mental health and physical health. They all come together.
When you look at our communities, when people say financial education everybody in our community says Redwood Credit Union. But I think our industry gets confused between financial education and financial wellness. You need financial education to help with financial wellness, but they are not the same thing.
We are focused on trying to define our social impact as an organization. Underneath that is financial wellness. The issue is we do tons of stuff and I can go on and on and on about that stuff, but if we really own it, we have to prove it. Do we have the data? Can we show the impact we have? How do we know we are really making a difference?
We have an auto dealership and an insurance agency. We’re not trying to sell cars or make money with insurance. We are trying to put members into cars they can afford, allow them to get good financing, have a good life, and then trade it in someday.
I don’t want Redwood Credit Unions to be known for financial wellness; I want credit unions to be known for financial wellness.
Saying No, With a Goal of Yes
Maria Martinez: It’s now or never. When our members come in and talk to us and want a loan, we (sometimes must) tell them no. A lot of our members live in a really low-income environment. It’s not because they are poor or bad people that they have bad credit, but because they’ don’t know any better. That’s how they grew up. We can deny the loan, or we can say, ‘let us look at it again.’ We concentrate on not saying no. I tell our employees, ‘Try to say yes to every request we get on the table.’ But sometimes saying yes also may not be the right thing, because they don’t know how to manage their credit. Our job is to make their lives better.
We have the power to make someone else’s life better. So, we established a financial counseling (area) 20 years ago. We started putting people through some of those programs. We got one counselor and then another.
I think as credit unions we have to look at what kind of people are we serving. We serve 13 counties, 12 of which are underserved. We are a CDFI. We created a program for our members that if we deny them we put them through to Credit Builder. We have a new program called Save and Score. We are in a border town (Del Rio). In order to get a permit to travel into Mexico you have to have a credit card.
But they also need to save, so we advance $75 and put into a savings account. It has helped a lot, but it’s slow going.
Why Is it Called Checking? And Other Challenges to Traditions
Chuck Purvis: Coastal’s financial wellness journey started 54 years ago. I would contend it’s why we were chartered in the first place. It’s why Congress said in 1934 we need credit unions.
The needs of members and consumers have changed and flowed and technology is disrupting things, and I would argue that the financial world has become much more complex. Thirty or 40 years ago we had members who didn’t understand (finances) when it was just basic shares and loans.
At Coastal, we are an employee-first company. If our employees aren’t healthy—mentally, physically and financially—then what they are they bringing to work every day appears in their interactions with members. We were one of the first in our market to commit to a living wage. Our entry-level pay package today is almost $50,000. We have always been a well-paying company. My view has been that I want the most competent people we can get and I’m going to pay what we have to pay to get them.
The financial crisis in 2016 was very traumatic for Coastal financially. We spent a number of years fixing Coastal. When we had completed the bulk of that work, I knew that many of our members still hadn’t recovered. As I looked at our mission statement, vision statement—bleh—I couldn’t remember it, couldn’t recite it. I said we have to redefine our purpose and we spent a year doing that.
Our mission statement is ‘Bank Better to Live Better.’
Our vision is ‘The most loved and respected financial partner.’ If we’re ignoring financial wellness we have no chance of achieving that vision. We started a renewed emphasis. We aligned with Financial health Network. We started with employees first and then with groups of members. We stood up a financial wellness team. We do a lot with financial education online.
I would argue that we have helped many members, but have we gotten closer to serving the bigger problem? The answer is no. And the reality is it just keeps getting bigger every day.
We are too hung up with banking convention. Why do we call a checking account a checking account? Do Millennials even write checks? Do they care? What are the titles we use with our people? We have to stop thinking in traditional banking (terms). We have to reimagine products. We have to teach all of our front-line people to be financial advisors. We are in the financial advice business.
So, we have some big plans around training development to teach our member-facing folks to be advisors. That journey will never be over. We will only succeed one member at a time. To that member it’s life changing. It’s what inspires our team members to keep doing it every day.
Preaching With an Attitude
Maurice Smith: If it seems I am preaching or I have an attitude, it’s because I am preaching and I have an attitude.
I want you to think about the challenges we have as credit unions and the responsibilities we have to our communities. In 43 years I have seen five recessions, including around housing, dot.coms, an oil embargo and the pandemic. The one thing we understand about trends is another recession is coming. We know who gets hurt in downturns--it’s the same people and the same communities that were hurt in the last recession.
I would be a cotton-picking shame if we go into another recession and the same people and the same communities got hurt and we sat around in rooms like this and we didn’t do anything about it. The next recession is likely to hit in the year 2028. We can wallow in this pandemic and the last recession and lick our wounds and build ROA and net worth from a management standpoint, but the work begins now for the 2028 recession, which is coming sooner or later.
We know who’s going to get hurt. It’s our responsibility to do something about it. Our members expect us to do something about it. There are signals in leading up to that trouble that tells you. Then they say, ‘Mr. Credit Union, I hold you responsible. If I am heading to a waterfall and you see it and you don’t do anything about it, you are responsible for it. You have the data on me.
We in the credit union movement know which of our members are about to get into trouble.