Credit unions have become a formidable force in the financial services industry in the past several years. And although some CUs have merged to gain ground, others have put significant efforts into developing their wealth-management businesses.
North Vancouver, B.C.-based North Shore Credit Union is an example of the latter — and it has been busy redesigning its branches to appeal more to the high net-worth crowd.
Says Chris Catliff, the firm’s president and CEO: “We grew up as a blue-collar organization many years ago, in a different lifetime almost, and then woke up in a white-collar world. We now live in one of the most expensive postal codes in Canada. Focusing on the affluent was created out of necessity.”
Although North Shore services about 40,000 members, the CU focuses primarily on a pool of 8,000 — those with at least $100,000 of investible assets. In fact, more than 80% of the CU’s deposits come from this group.
Says Catliff: “Our sweet spot, where most of our clients are, is in the $250,000-$1 million range.”
This approach has helped North Shore grow its assets under administration to $2.5 billion from $1.8 billion in 2005. Furthermore, its wealth-management division saw its assets under management increase to $470 million from $212 million during that same period.
North Shore’s strategy has gained it some admirers, including Doce Tomic, president and CEO of Vancouver-based Credential Financial Inc., the national wealth-management provider for Canada’s CU system. “[North Shore has] had an exceptional segmentation strategy,” says Tomic. “It has built an extremely loyal customer base, and now it’s adding on to what its members are looking for.”
North Shore, to set itself apart from the competition, has made over the interiors of its dozen branches, turning them into “financial spas” in which clients have an intimate, elegant setting for discussing their financial affairs.
“It’s a new, exciting way that creates warmth and trust, with a sort of West Coast feel,” says Catliff. “Our differentiator is the experience, that ‘wow’ factor when you walk in the door.”
Revamped branches feature rock-garden fountains, art galleries, Japanese screen doors and a concierge service offering hot towels and cappuccino.
This makeover is all set to culminate with a new head office in Lonsdale, B.C., which is slated to open in 2014. It will have a grand staircase and a three-storey glass atrium.
“This is the next step in the road for [North Shore],” says Art Chamberlain, media relations manager with Central 1 Credit Union in Vancouver, the central financial facility, payments settlement centre and trade association for credit unions in British Columbia and Ontario. “I’m not aware of any credit unions that have quite gone so far down that road in Canada.”
Tomic agrees, noting that North Shore’s high-end approach will get the CU the recognition it wants from existing and potential clients: “I think [clients and prospects] will respond quite strongly and favourably.”
In fact, Catliff says, word-of-mouth referrals are expected, resulting in an increase in clients.
To service these wealthier clients, North Shore’s staff includes 29 financial advisors who hold a certified financial planner designation. The firm boasts an above-industry average ratio of 375 clients, or about 166 client households, per advisor.
North Shore’s affluent clients are between the ages of 30 and 55 and its household clients, in particular, need help in managing their substantial dual incomes, Catliff says: “They’re planning for retirement, for their kids’ university education. Vancouver is a very high-priced place to buy a house, so disposable income is down. Hence, there’s a massive need for advice.”
CUs in big cities such as Van-couver must find ways to set themselves apart from their larger bank competitors — as North Shore is trying to do with its “financial spa” concept — while still maintaining their traditional ties to the neighbourhoods they serve.
“We support the community and what is important to all of our clients,” says Catliff, noting that North Shore sponsors the regional mountaineer search-and-rescue team and Smart Risk, a charity that offers youth programs on outdoor safety. North Shore also hosts jazz festivals, Scotch whisky tastings and seminars on cycling tours through Europe.
Catliff also points out another factor that differentiates North Shore from its big-bank competitors: “We do not sell any of our own proprietary products, so we’re constantly recommending what’s best of breed. And that engenders trust.”
North Shore’s product provider, Credential, serves more than 380 CUs in Canada and administers approximately $9 billion on its national membership’s behalf. The collective is owned by its member CUs and provides the infrastructure for their wealth-management services.
“All credit unions are our brothers,” Catliff jokes. “In fact, there’s a block on which there’s four of us together. We are highly competitive among each other, but we also call it ‘co-opetition’.”
North Shore isn’t the only CU that’s targeting the wealth-management space in Canada. And Chamberlain says that the long-standing sterling reputation of CUs when it comes to customer service will help these deposit-taking institutions venture into the wealth-management arena further as demand rises.
“Credit union members tend to be older, in general, than the [overall] population,” Chamberlain says. “There’s a large chunk of baby boomers; and, as they’re aging, they have wealth-management issues. In many ways, it’s a natural fit.”
Still, CUs have different cultures, and it’s up to each one to figure out the approach that will work best in targeting high net-worth clients.
Says Tomic: “Each of the credit unions have their own marketplace niche. North Shore has come out very strongly. It’s approached and attacked that market.” IE