How a new RIA will bring fee business to credit unions

Register now

A new RIA launched by three industry veterans will serve as a third-party marketer for credit unions.

The new firm, CuVantis, will focus exclusively on fee business, says CEO Keith Weber. Banks and credit unions have lagged much of the rest of the industry in the shift to fee business, although it is often viewed as a major goal of a modern wealth management program. “That’s where the industry is going” Weber says. “It’s better for everyone.”

Weber is the former chief marketing officer of CUSO Financial. The other two executives involved in the new effort are Chief Operating Officer Bob Millington (former chief information officer of CUSO) and Executive Vice President Dodd McGough (compliance consultant and co-founder of consulting firm Strategy Basecamp.)

Potential workers for CuVantis are out there, Weber says. Specifically, he's thinking about CFPs who aren’t fulfilled because their personality isn’t a good fit with their current employer.

“Credit unions have a mission to always put the member first, and yet traditional programs with their commission-based compensation structures sometimes fail to do that,” Weber said in a statement.

To be sure, fee business is a growing focus at many credit unions, says Scott Stathis, managing partner of research and consulting firm Stathis Partners. He says that many credit unions are actively trying to get more involved in this type of business and have the attractive memberships (certain companies and communities) to do so. Although, he notes, many others to do not.

CuVantis has several differentiators that Weber says will help attract credit union and advisors.

First, it will pay advisors more via salary than commission. A typical compensation package for a credit union advisor would include roughly 30% in salary with the rest commission. “We’ll flip those ratios and pay 60% to 70% salary,” he said. This is designed to mollify concerns that an advisor is recommending an investment to receive a commission.

The new RIA also will implement a tiered-service model to help advisors serve all members, not just those with significant assets. This will cover the spectrum from full-service planning to advisor-assisted digital advice — robo advice.

The will help credit unions remain aligned with their mission of being a members-based, community-minded institution, Weber says. Overall, CuVantis’ approach should help credit unions improve profitability, he says, because they’ll be bringing in recurring revenue and have limited compensation expense.

To be sure, the new firm will have a broker-dealer relationship so commission accounts can be moved over and remain so if that’s what the client wants. But for new business, it will be looking exclusively for fee-based.

CuVantis will structure advisors' comp to be 60% to 70% salary.

Another major challenge for the channel — a lack of talented advisors — is not a major concern of Weber’s.

He says the confluence of two trends will help CuVantis overcome this issue: The sheer number of CFPs these days, combined with a newfound desire of younger workers to have purpose in their careers and make a difference.

There are a record 83,000 CFPs today, according to the CFP Board website. CuVantis’ home state of California has by far the most with 9,200. Texas is a distant second with nearly 5,800. Weber also notes that when he got his CFP in the 1990s, there were a half dozen or so firms providing education; now there are over 200.

Weber believes the potential workers for CuVantis are out there — specifically those already working as CFPs who aren’t fulfilled at their jobs because their personality isn’t a good fit with their current employer. “We want the social worker at heart who really wants to help people,” he says.

Indeed, surveys suggest many of today’s younger workers, in all fields, want a career that allows them to help other people and make a difference, he points out.

In fact, Gallup concluded in a report that millennials want their work to be more meaningful than just providing them a paycheck. “For millennials, work must have meaning. They want to work for organizations with a mission and purpose,” according to the report. Further, it said that compensation, while important, is “no longer the driver.”

“We all hear that the talent isn’t out there, but we’ve all been fishing in the same pond,” Weber said. “There are different ponds.”

For now, CuVantis is registered under state securities laws in California, but Weber hopes to have SEC registration — which is required once it hits $100 million in AUM – within a couple of years. It will custody assets at TD Ameritrade, which he called a “leading firm” in fintech innovations. “We have all the tech platforms we need, the contracts are signed,” he says.

For reprint and licensing requests for this article, click here.
Credit unions RIAs Client retention Client relations Workers' compensation Keith Weber