FOLIOfn Partners With Credit Unions To Provide Custom Baskets

June 13, 2002, 1:00 a.m. EDT 2 Min Read

As of the end of May, more than 500 credit unions have signed on to FOLIOfn's Member Folio Investing program since it was first offered a year ago.

Going forward, FOLIO fn plans on marketing to consumers and educating them about the program. "We think that our product is something that can meet the needs of any investor, whether they're just starting out or have been in the market for some time," said Rich Hagen, vice president of FOLIO fn Investments. Hagen added that credit union members are an extremely loyal group that once satisfied with a product, will stick with it.

Credit unions value the program because it is an additional way for them to keep assets in-house.

Navy Federal Financial, established in April of 2000, has a total of 9,700 investment accounts and $96 million in assets under management. The company began offering the service about a year ago and at the end of May it had 1,729 memberships within the Members Folio program.

As the investors get more sophisticated, Yee said the credit union would try to drive them towards more advice-oriented relationships. Yet one issue of concern for the Navy credit union is that many customers are not stationed in areas near a credit union branch and so they do not have access to face-to-face relationships.

"We did the due diligence on it. We think that it's relatively easy to walk through some of the wizards and get a good diversified portfolio without a whole lot of experience," Yee said.

For third party vendors that do enter into agreements with credit unions to provide additional advice services, strict advertising and promoting rules are enforced, a spokeswoman said.

"We recognize that in order for federal credit unions to serve as their members' primary financial institutions theyve got to be able to offer a range of member services," said Molly Schar, a spokeswoman for the NCUA. "So while they can't directly offer these kinds of investment services, by introducing them to an agent that can -- thats certainly a way that the institution is expanding the member services."

According to the

National Credit Union Administration

, employees at credit unions do not offer specific recommendations -- nor are they allowed to be certified to do so -- but they do assist consumers in tax preparation services, estate and retirement planning, as well as debt counseling. Credit union financial counselors are required to be federally and state licensed. "We know there are some self-directed investors and if we didn't provide some online vehicle they'd be going elsewhere," said Tom Yee, vice president of investment services at Navy Federal Financial Group, a subsidiary of

Navy Federal Credit Union

in Vienna, Va. The Vienna, Virginia-based

Foliofn

, provides the credit unions with marketing materials as well as assistance in co-branding a Web site for consumer use. Using online tools, credit union consumers have the option to create their own portfolios either through pre-selected baskets of securities or by customizing their own. The program has built-in risk tolerance and investment goal questionnaires into the system, which recommends an asset allocation model for consumers to start with.