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Chris Catliff, CEO of Vancouver-based North Shore Credit Union, poses for a portrait in North Vancouver, October 17, 2011.
Chris Catliff, CEO of Vancouver-based North Shore Credit Union, poses for a portrait in North Vancouver, October 17, 2011.

Investment

Credit unions increase their appeal Add to ...

Customers who walk into North Shore Credit Union’s new branch in Vancouver’s Kitsilano neighbourhood might be confused.

With a granite rock-garden fountain, glass walls, a fireplace, a concierge with wet towel service and cappuccinos, and a kids’ zone, it doesn’t exactly illicit the same sense of purpose as walking into a bank branch does. But that’s exactly the point.

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Canadian credit unions, which have long differentiated themselves from their stodgier rivals, are going to even more extreme lengths these days to set themselves apart. Ironically, they are doing so as they delve into a broader array of business and wealth management services in an effort to bring their product suites more inline with those of the banks.

The force behind this push is the desire to capitalize on what credit unions see as a window of opportunity to make large inroads in the fight for customers. Major players argue that the financial crisis created a degree of frustration with banks among small business owners and wealthy individuals, as well as a new willingness to shop around for financial services.

That, coupled with new regulations that are expected to give a jolt to the credit union movement, has prompted a number of credit unions to step up their game either by offering new products, hiring more qualified talent, designing new branches, or launching new advertising campaigns.

The country’s financial services players are all jostling a little more these days, in a bid to attract the baby boomers, who are increasing the demand for services such as succession planning as well as basic wealth management. The aim of credit unions is to bolster their market share and to do so, they are placing more emphasis on demonstrating to their customers that they are capable of offering a full lineup of products and services, including managing their wealth.

“Without a doubt, credit unions are increasing their wealth management assets at the expense of the banks,” says Chris Catliff, the CEO of Vancouver-based North Shore Credit Union.

Part of the reason for that, he says, is actually due to the banks’ strategy of making financial planning and investment advice a more accessible service within normal branches, rather than a private banking or brokerage offering. Because Canadians are now used to being able to walk into a branch and talk about mutual funds or succession planning, they are comfortable broaching such topics in credit union locations, he says.

As that has been happening, credit unions - which have typically lagged far behind the banks in terms of wealth management expertise - have been hiring more certified financial planners, insurance advisers, and other professionals to add to their capabilities. And they say they are trying to set themselves apart by offering more personal attention and seeking to maintain lower staff turnover. North Shore, for instance, boasts that it has a much higher financial planner-to-asset ratio (at about one to $10-million of assets under management) than a typical financial institution.

“It’s very competitive for small business out there,” said Frank Kennes, vice-president of credit at Libro Financial Group, a credit union in southwestern Ontario. “What we’re trying to put a big emphasis on is succession planning for small business, and that involves both the wealth management side and small business banking. “So we have coaches that are familiar with the operation of small businesses, but also people who help business owners plan for their future on the wealth management side - either planning for passing the business on to the next generation, or preparing themselves for retirement when they want to get out of the business.”

Credit Unions say they are stretching themselves to keep up with the increasingly complex requirements of business owners.

“Credit unions across Canada have built very solid foundations in the traditional lines of business, but I think they’re recognizing the tremendous importance of being in this space as demographics change and as it grows,” said John Finnie, director of investments and insurance at Meridian Credit Union. Meridian, Ontario’s largest credit union, has 63 branches and 8 commercial business centres serving 263,000 members and more than 15,000 businesses. Mr. Finnie says that growth in wealth management sales and assets, which were stagnant at Meridian four or five years ago, are now running well above 20 per cent per year.

With the baby boomers aging and Canada’s wealth set not only to grow but to be transferred to a new generation, “the urgency is definitely accelerating everybody’s efforts to ensure that we make full offers available to the membership,” Mr. Finnie said.

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