CUES Podcast

Connie Miller recalls an episode of late-night TV when the house band didn’t have a drummer. The host appealed to the audience asking, “Hey, do we have any drummers in the audience?” One man raised his hand, came up on stage, played really well and so launched his career as a professional musician.
 
“I often wonder how many other drummers were in the audience that talked themselves out of raising their hand rather than stepping into an amazing opportunity,” says Miller, president/CEO of $342 million Icon Credit Union, in the Boise, Idaho, area, and author of Don’t Sabotage Your Career: 11 Power-Filled Steps to Succeed.

In this episode, Miller says her passion is helping people grow. She wrote her book at the encouragement of friends and people in her professional network who had come to her as a 22-year veteran of credit union leadership for advice on their own careers. Miller says some of the advice she gives has to do with helping people change their bad habits.

“I have seen people grow from teller to executive,” Miller explains. “I’ve also seen many employees with expertise, smarts and education but they get passed up for a promotion or other leadership responsibilities because it would be a poor decision to move them into a leadership role” because of poor behavior traits or lack of communication skills. 

In this episode, Miller describes several unconscious habits people have that can get in the way of career growth. Here are just two of them:

They’re not fully committed to the organization’s mission. Instead, people who want to grow their careers need to live and breathe what the company stands for. “Unless it is something that is unethical, illegal or immoral,” she says, “you have an obligation to your company to both fulfill its mission and truly be in alignment with your supervisor or your board. When employees try to dig their heels in … because of their personal preferences, it doesn’t bode well in building trust with the leadership and building your career. I am talking about trying to reach the North Star, the same ‘why’ as your leadership. It really sabotages yourself when you’re not striving to be in alignment.”

They avoid difficult but needed conversations. “When you can … build your leadership mantra of creating a culture of open communication, it truly does build trust and accountable teams,” she explains in the show. “And you become very respected, however, most people avoid this. Those same people will the ones who pair off with another employee and gossip. What they don’t realize is that it really hurts their personal brand and it really breaks down trust. You will make a terrible supervisor if you don’t have the courage to talk to your employees about how they can grow.”

The show also gets into:

• Miller’s career growth in the credit union industry
• How the pandemic has shown people how resilient they can be
• The value of reflection for leaders—and prospective book authors
• Tips to help organizational leaders think of you when considering who to choose for a promotion

The Setting Every Community Up for Retirement Enhancement Act or “SECURE” Act that became law on Dec. 20, 2019, includes “many provisions to encourage employers to adopt new (retirement) plans or enhance their current plans and to provide more savings opportunities for employees,” according to Sharon Severson, CPC, consultant with CUESolutions Platinum provider CUNA Mutual Group, Madison, Wisconsin. The act is the largest package of retirement system changes in more than a decade.

Severson says she’s most excited about some of the changes to individual retirement accounts that became effective Jan. 1, 2020, and open multiple-employer plans options that will become effective Jan. 1, 2021.

“The rules governing IRAs impact most individuals at one time or another during their careers,” Severson explains. “Most of us have heard along the way about the age 70.5 or the required minimum distributions. Now those distributions must begin at age 72 instead of age 70.5 if the individual has not already turned 70.5 by 12/31/2019.” 

The upshot is that people who want to can save longer—and that’s a big benefit to people who keep working even in retirement. “This may be helpful for credit unions when assisting their members with their questions about IRAs or for credit unions that offer investment services to members,” Severson notes.

Multiple-employer plans have been around for a long time, but the act creates the opportunity to form a new kind of MEP. “The Act allows for the formation of a 401(k) plan that includes two or more unrelated employers and this plan type is now being referred to as a ‘PEP’, a pooled employer plan,” Severson says, “and hopefully this will allow smaller employers to obtain an economy of scale that can lower both employer and employee costs.”

In the show, Severson says she is glad that the Act expands retirement savings options for certain long-term part-time employees. She also thinks credit unions will also want to learn more about the Act’s changes to the minimum employer contributions for safe harbor plans.

The new Act also provides a pathway for plan participants to receive an annual disclosure of projected monthly income from their retirement savings plan. According to Severson, this disclosure has “been on the Department of Labor’s to-do list” since 2006 and will still take some time to implement. The Department of Labor needs to provide a model disclosure and a set of uniform assumptions that can be used to generate these projections “so that if you move from a plan provider to another plan provider, those projections are relatively stable.”

“Many people don’t know how much (money) they need” for retirement, she explains in the show. “They’re surprised when they get to retirement that their nest egg isn’t really what they needed after they stopped working. The illustration would help participants make adjustments in that savings plan with this information in hand.” 

The show also gets into:

• More details about the new pooled employer plans
• More details about what long-term part-time employees may now participate in retirement savings plans
• More details about the changes to the rules for employer contributions and other aspects of safe harbor 401(k) plans
• Increases in retirement plan penalties
• Suggestions for how to learn more about the SECURE Act
• More details about when the various changes take effect

 When people think about marketing departments, they often think about a group of people that create ads and brochures. But, according to Amy Herbig, the marketing department is, at its core, the “key communicator” for a credit union. And that is a very central and very important role as credit unions respond to the COVID-19 pandemic.

“Everything that is going on right now is being channeled through marketing,” says Herbig, CEO of The BA Group, Northfield, Minnesota, in the show. While every role at the credit union is especially busy right now, “marketing is the catalyst for all that information to be disseminated to the member and to the community at large.”

What’s the key message marketers need to be promoting to the credit union’s stakeholders at present? “We are still a strong, solid financial institution.”

Marketers are also becoming de facto public relations reps, Herbig says, as they manage all of a credit union’s communications channels—from email to social media to the website.

Marketing is always important but it’s currently more critical than ever she says, as it takes care to ensure your information is perceived correctly and to manage any misinformation that is presented to your audience.

Most marketing plans and budgets were approved in December 2019 or January 2020. Then marketing had “two good months of really starting to get off the ground” before everything came to a halt due to the pandemic, Herbig says.

Rather than following their original plan, marketers are “having to now act more on the fly,” she explains. “A good marketer is more proactive than reactive but ready to be reactive when called upon. Currently we’re in a constant state of reactive.”

Indeed, she says that whatever was planned for the marketing focus for a particular month may have to change based on the new landscape. Herbig cites the example of a $210 million credit union that’s managing $7 million coming in from federal stimulus checks. How will that impact its upcoming audit? How will that affect its lending?

A credit union’s top marketers need to be brought into the high-level meetings that consider all of these kinds of issues so they are best positioned to get appropriate messages out to members and the community, Herbig emphasizes.

The show also gets into:

• Considerations for copyrighting during this uncertain time
• The importance of making sure the credit union is prepared to deliver on any messages put out to members or the community
• Examples of what credit unions are currently doing to reach out to members
• The current effectiveness of the CU philosophy “people helping people”

When Tim Green first heard—back in January—the news about the spread of COVID-19 overseas, he decided to lead his credit union to prepare for a scenario in which the disease would shut down the whole county where his credit union is located. 

He says he thought at the time that if the situation turned out to be less dire, his team would still benefit from the exercise. When Los Angeles County, California, did in fact close down, Tim and his team at $1.8 billion F&A Federal Credit Union in Monterey Park were more ready than most businesses.

Having antennae out to market signals and being open to responding to them is a hallmark of great leadership. And yet Green is most humble in this show. CEO for just about 13 months, he is grateful to his board for their support of this initiative. He’s grateful to other financial institutions for the ideas he “stole” from them and adapted to best suit his credit union. 

Green explains in the show that one of the first things he started working on when he joined the credit union was operational readiness—determining what was effective and what wasn’t in terms of people, systems and processes. A key thing he found was that “we were very adept at disaster recovery, but what also became pretty apparent was that our business continuity planning was not where we wanted it to be.”

In January, when the focus narrowed to preparing for the closure scenario, “we really went through it in a sequential way. We ordered a bunch of equipment. … The processes were tested. We tested in our training environment, then we moved people remotely. By the time we got to the first week in March, we were really ready to handle this and operate 90% of the core credit union functions remotely. 

“Once we had operational readiness,” he continues, “… the first thing we needed to do was think, ‘How are we doing to take care of our members?’” Among other programs, the CU offers members financially affected by COVID-19 enhanced skip-a-pay and a short-term assistance loan.

A third leg of the stool was employees. “We were able to move about 75% of our back-office staff out of the building (the CU has two branches) and about 70%” of all staff, he explains. “We gave everybody on the team below vice president a free week of PTO … and immediately the goodwill started to flow back from our employees." 

The CU closed its headquarters branch to walk-in traffic to better protect staff. The other branch has a bandit barrier between staff and members. The credit union also is paying branch workers a short-term 30% raise and catering lunch daily, so staff don’t have to leave the building to pick up food.

“Because we were ready to serve operationally, we were then able to really reach out and provide tangible benefit to our membership, simultaneously demonstrating a commitment to our employees that had carried us through thus far.”

The show also gets into:

• How Green’s risk management background informed his credit union’s response
• The thing that has worked best for F&A FCU in its pandemic response 
• How F&A FCU’s response reflected its values--what its leadership thought was the right thing to do
• What F&A FCU might do next in its pandemic response effort
• Green’s concerns about the economic recovery and helping members through that 

Early on in this show, Nick Coleman explains why he’s passionate about his work as the director of strategic relationships for Children’s Miracle Network Hospitals. He also describes the longtime support credit unions have offered CMNH. While those stories alone are compelling enough reasons to listen to this show, this episode of the CUES Podcast also goes on to talk very practically “cause marketing” and how charitable donation accounts can support it.

Coleman defines “cause marketing” as the way an organization directs its marketing efforts both to ramp up and to highlight the good it’s doing in its community. As an example, he tells a story about a credit union in the Midwest that’s rallying youth hockey players in its community to do fundraising to support kids with disabilities and complex medical needs.

Cause marketing “is a great strategy to build affinity with both members and employees,” Coleman says. “Plus, it showcases to non-members and your community the value that a credit union brings.” He cites a figure that 79% of consumers expect an organization they do business with to actively strive to do more to support their local communities. In addition, he says, 74% of people say their job is more fulfilling when they are provided an opportunity to make a positive impact. 

In this episode, Bruce Bauer, executive benefits specialist from CUESolutions provider CUNA Mutual Group, describes his participation in an advisory committee meeting for Credit Unions for Kids, a credit union industry organization that supports Children’s Miracle Network Hospitals. He presented to that group’s Orange County, California, chapter about how charitable donation accounts could be used by each of the participating credit unions to possibly add additional donations to their efforts.

More specifically, Bauer told the advisory group, and explains in the show, the National Credit Union Administration allows credit unions to expand their investment opportunities to help their charitable giving when they use charitable donation accounts as the vehicle. CUs can invest up to 5% of their net worth into a wide range of investments that are permissible with a CDA. 

“When they do that investment and they get earnings from that investment, 51% of those earnings, of that total return, have to go back into a 501(c)3 charity,” Bauer says. “That’s where CUs for Kids falls into place. The remaining 49% of that investment’s earnings can stay right with the credit union.

“We’ve seen enormous growth with this opportunity—about 127% growth in the last year in investments into CDAs. Interestingly enough … more than half the contributions of those earnings from CDAs we have out there go to CUs for Kids. … So if we can find a way to enhance their investment portfolio to earn some additional dollars through this regulation it’s going to provide additional dollars that CUs for Kids and other charitable organizations can benefit from.”

The show also gets into:

• What credit unions are eligible to do CDAs (all federal credit unions and state-chartered organizations; some need approval from the state)
• The kinds of investments credit unions can use with a CDA
• Some examples of how CDAs have been used by credit unions
• The impact of current market volatility due to coronavirus on CDAs
• How supporting 501(c)3 organizations will be increasingly important as the world tries to find a new normal in the wake of the COVID-19 pandemic
• Tips for doing cause marketing 

Being able to demonstrate a member-centric culture at your credit union during a crisis like the current coronavirus pandemic is evidence that you are customer-centric, Carrie Stapp says to lead off this episode.

It’s “not just 'Are we friendly?' and 'Do we have the right technology?' but 'Are we really set up as an industry to help our members and to help our communities adapt in these times of uncertainty and to be able to do as much of their business as usual?'” says Stapp, SVP/product management for the marketing services division of CUES Supplier member Harland Clarke, San Antonio, Texas, the sponsor of this show.

Stapp’s colleague, Jeff Hassemer, SVP/marketing, adds: “If we define being member-centric as 1) being always on, 2) staying at the top of your members’ minds and 3) delivering a positive personalized experience everywhere every time, in a sense, the thing that changes in a crisis like this is the message. It’s not necessarily about how you contact them or what you say or what apps you use…, it really is about you being able to understand what the mindset of the member is right now and delivering the right message to them and the right story that needs to be told.”

Crises aside, Hassemer recommends taking using data-driven techniques to deploy information across all of a credit union’s channels to enable speaking to members in a relevant and meaningful way. 

Stapp reminds listeners in this episode that a truly holistic approach to customer experience looks at consumers even before they ever become members. This is “not just about the account opening experience but really breaking it down and looking at the consumer and bringing that holistic view” into everything the credit union does. 

There’s a lot of buzz about customer and member experience in the financial services world today. Hassemer says that’s because we’re entering a world in which customer experience is the only true differentiator.

“You can try and compete on products and services, although I think it’s very difficult in the financial services industry to do that. Most of that becomes very commoditized. There’s only so much free checking or toasters that you can give away to get people in the door. Your product differentiation is kind of gone.

“We’re also facing an unprecedented amount of competition in financial services. Not only are we getting competition from …  the mortgage lenders or the auto lenders, … but we also have just as much competition coming in from the technology organizations, these new fintech startups that are coming through. 

“The only way to stave that off is to have a uniquely strong customer experience to your members and make sure that relationship you’ve built with them withstands that test of all these other organizations trying to come in and steal them away from you.” 

The show also gets into:

• Examples of what a person’s first interaction with a credit union might look like
• What expectations other companies are setting for customer experience
• Steps for putting a superior customer experience in place
• How credit unions can assess where they are with their customer experience efforts
• Areas of customer experience in which credit unions excel—plus where they can improve
• How to measure the “return on experience”
• The future of customer experience

$4.8 billion MSU Federal Credit Union, E. Lansing, Michigan, hires about 10 new staff members a month. The first question these employees tend to ask the organization’s president/CEO is, “When is everyone going to stop saying ‘hi’ to me?” or “When is it going to be real?”

That president/CEO, CUES member April Clobes, explains in this episode of the CUES Podcast how she responds to such questions: “I tell them, ‘Nope, that’s the daily real. It continues if you continue it. How will you greet the next group of new employees?”

Clobes says the credit union makes a concerted effort to have a stand-out culture—one that will both attract and retain employees. Something must be working because, in February, MSU FCU was named as one of the top 100 workplaces for women by Fortune magazine for the third consecutive year. It also has received numerous other awards for being a great place to work and its community involvement.

“I get a lot of questions from employees about our culture and worrying that it’s going to change,” Clobes says in this episode. “Our culture continues to exist because we all add value to it. My role isn’t to be the full owner of the culture. But my role is to ensure that the culture and the values we set for our organization remain intact. I may have the hard job of saying, ‘We can’t do this,’ because it doesn’t reflect on our values and add to our culture. I have to ensure that we don’t let the edges erode.”

In the episode, Clobes emphasizes that she believes MSU FCU is a great workplace for women because it is—by design—a great workplace for everyone. 

For example, MSU FCU supports resource groups for various populations among the staff, including African-Americans, members of the LGBTQIA community and working moms. 

“Those groups come together under employee leadership to make sure that we have programs and processes that are supportive of every person at the organization—so make sure we’re using clarifying language that is not skewed for one gender or another or one background or another or one ethnic group or another,” Clobes explains. “We really work with the employees to have diversity and inclusion be very important to our organization.

“I think that translates in terms of being recognized as a great place to work for women,” she adds. “In my time working at the credit union, there’s always been more women employees here. I think the nature of the credit union industry attracts women for employment. Maybe what’s different at our organization … is that we have for a large credit union a reasonably high number of women in leadership positions. That comes from a philosophy of the board and my predecessor and myself that each person has an equal opportunity to be successful, so women have always been included. They’ve always been elevated to leadership. They’ve always been promoted. I think that translates to having more women in leadership and visibly shows employees that you also can achieve that role and success.”

The show also gets into:

• The work involved in continuously cultivating a great culture
• MSU FCU’s attractive-to-employees compensation and benefits programs
• Why Clobes thinks the credit union industry as a whole is a great place to work
• A book Clobes recommends
• The value of reflection in leadership

CUES partnered with CUES Supplier member Currency to offer the annual CUES Next Top Credit Union Exec contest for almost a decade.

But last year CUES and Currency took a year-long pause to make sure the program was keeping pace with CUES and how the organization is living out its mission to educate and develop credit union CEOs, executives, directors and future leaders.

“We had a fantastic nine-year run,” says Tim McAlpine, president and creative director of Currency, Chilliwack, British Columbia of the Next Top Credit Union Exec contest. “But just like any good business…, it’s worthwhile to stop and say, ‘What could we improve?’ And rather than doing a minor tweak we, including CUES, Currency and especially John Pembroke your CEO, said … ‘We’ve changed so much at CUES this program should keep step with what we’re doing.’”

McAlpine describes in this podcast how some participants in the Next Top Credit Union Exec contest would say they were looking forward to taking advantage of CUES professional development offerings after the contest was over—they were just too busy with contest items to do so right away. In their revamping of the offering, CUES and Currency looked to put education and development up front—and CUES Emerge does just that.

CUES Emerge will be accepting applications through March 10, McAlpine notes. From those applications, 30 participants will be chosen. Participants will be signed up for three CUES Elite Access courses and three “mastermind” sessions, through which they’ll develop a business case submission and become eligible to earn the Certified Credit Union Manager (CCM) designation.

If they wish, participants can ask to enter their developed cases into the competition phase of the program—which comes after this education phase, McAlpine explains. Five finalists will be selected, given coaching and mentorship. Three will be selected to win the prize of attendance at CUES School of Applied Strategic Management™,  April 27-30 in Orlando, which awards the Certified Senior Executive (CSE) designation to its graduates. Finally, the ultimate winner will be selected and will win the prize of attendance at CEO/Executive Team Network Nov. 2-4 in Austin, Texas.

The show also gets into:

• Specifics of the highly relevant topics and the outstanding instructors that will lead the CUES Elite Access courses that are part of the CUES Emerge program
• Details about the mastermind courses included in the CUES Emerge program
• How participation in the CUES Emerge program is not limited by age 
• Currency’s “It’s a Money Thing” offering
• The history of the Next Top Credit Union Exec contest, the precursor to CUES Emerge 

Credit union boards are becoming more interested in whether their composition mirrors that of their memberships. And their memberships are becoming more diverse with time. 

So, it’s not surprising that more than half of the respondents to the survey for the new State of Credit Union Governance 2020 report said they’re looking for demographic diversity. This and many other governance topics are discussed in this most recent episode of the CUES Podcast.

“This signals a bit of a shift,” says Michael Daigneault, CCD, founder and president of CUES strategic provider for governance Quantum Governance, Herndon, Virginia, and a co-author of the study. “Traditionally, we’d often hear financial literacy, ability to understand the financials …. Of course, some kind of specific operational expertise and financial expertise or professional services expertise can be quite handy. But this year we heard something that we think is very important ... the No. 1 response from folks all across the country was that they were looking for demographic diversity. Fifty-three percent of folks said when they’re looking for board members that’s what they’re looking for. And 51% said that they’re looking for the ability to focus on the future.”

“Both of these were higher than financial literacy and the various different types of specific operational or professional services expertise that people traditionally look for,” adds Daigneault, who will present at the 2020 Execu/Summit, March 8-13, Park City, Utah, and at the 2020 Director Development Seminar, July 15-17, Montreal, QC. 

Report co-author Matt Fullbrook, manager of the David & Sharon Johnston Centre for Corporate Governance Innovation at the University of Toronto’s Rotman School of Management underscored this idea that boards are now looking for a new set of skills in their new directors.

“When we look at, on the one hand, the question of ‘What are credit union boards focusing on when recruiting,’ we often find … ‘resume skills,’” says Fullbrook, a faculty member at CUES Governance Leadership Institute™, June 7-10, Toronto, and lead presenter for Board Chair Development Seminar, July 13-14, Montreal, QC. By “resume skills,” Fullbrook means hard, measurable abilities. “But when we compare those to what actually make a director useful or valuable once they step in the board room, the skills look a little bit different. 

“In fact, we see a much stronger focus on soft skills or interpersonal skills,” he explains. “So, what floated to the top was, in fact, an ability to focus on the future. Following that was independent-mindedness that we defined as ‘not being afraid to go against the crowd, a lack of groupthink.’ 

“Behind that, we have financial literacy and a strong understanding of the membership, both of which, of course, are not surprising to anyone who would sit in a credit union board room,” he notes. “Following that we have consensus-building.

“So, it’s a really strong emphasis when we’re asking about what makes directors effective. The emphasis is on soft interpersonal skills and the ability to help lead your team toward effective decision-making.”

The show also gets into:

• Elements of renewal your board may be getting wrong
• The role of the chair and the spectrum of training chairs undertake
• Confidence the CEO and the board have in the board’s work

The National Credit Union Administration allows credit unions to make certain “otherwise impermissible,” potentially higher-yielding investments that carry additional risk when credit unions set up certain kinds of programs, including the following:

• total benefits pre-funding—which helps credit unions offset the rising cost of staff benefits;
• charitable donation accounts—which require that 51% of the earnings on an investment of up to 5% of the CU’s net worth go to 501(c)3 charities; 
• and 457(f) plans—which are retirement programs than can help CUs recruit, incent and retain key employees. 

“When we build those plans, open those … accounts, we need funding vehicles,” says Bruce Bauer, executive benefits specialist with CUESolutions platinum provider CUNA Mutual Group, Madison, Wisconsin, in the early part of this show. “One of the funding vehicles we use is City National Rochdale and their managed portfolios.” The company has become “a very strong partner for us. I believe we have over $1.2 billion with them right now.”

Matthew Peron, chief investment officer, City National Rochdale, New York, says his firm is a boutique investment manager known for handling specialized and complex cases for high net worth investors and institutions. The firm manages assets of more than $40 billion. 

“Our investment posture is a little different, Peron says in the show. “We’re very attuned to crafting investment allocations, solutions if you will, for the needs of our clients who can be very different. … Our solutions that we provide … are able to tailor to the specific needs of clients.”

When City National Rochdale works with a credit union, it starts by understanding the plan that CUNA Mutual has put in place and also partners with the credit union’s executive team and sometimes its board to understand how they’re running the business and what might be unique to that credit union’s situation.

“All of our portfolios are customized,” explains Russell Martin, portfolio manager with City National Rochdale. “We do not use model portfolios. Each asset allocation or the individual instruments that we use in those portfolios may vary across all of the credit unions that we manage money for.” 

But generally speaking, these plans can be grouped into two broad categories, Martin adds: 

1. Total benefit prefunding accounts and the charitable donation accounts tend to be a little more conservative in their investment strategies, with fewer equity investments (stocks) and more fixed-income investments (bonds). The stock component tends to include more conservative, less volatile, high dividend stocks that get their return through cash flow and don’t rely as heavily on price appreciation as do many of the growth stocks in the market.

2. Investments for 457 plans tend to be more balanced between equity and fixed income. These tend to have a blend of the high dividend stocks and the growth stocks.

“The overlay on all of this is understanding the financial statements and the accounting methods that each credit union uses,” he notes. 

The show also gets into: 

• How credit unions are working with the new accounting rules regarding how their investment portfolios impact their income statements and balance sheets
• The state of the current economy in the United States
• What credit unions might be able to do to expand investment options in this low interest-rate environment