Advisors in credit unions are bringing in the dough.

In 2012, they generated an average of $262,972 in revenue, beating advisors in similar-sized banks that partner with third-party broker-dealers. Advisors in banks produced an average of $244,412, or 7.6% less, according to a new report from Kehrer Saltzman & Associates.

Credit union advisors, however, lagged behind large banks with their own broker-dealer operations. The average advisor at a large bank generated $400,266, 34% more than what the average advisor in a credit union produced.

To catch up to their larger rivals, credit unions need to employ more advisors, the report argues.

“Credit unions deploy significantly fewer advisors relative to their member households and deposits than do banks, and this, more than anything else, explains the gap that exists between banks and credit unions in penetration of their opportunity,” the authors of the report write. 

The report shows that an investment program’s contribution to the financial institution’s bottom line—or the “net income penetration of share deposits—increases with the number of financial advisors. Credit unions with less than four advisors contributed an average of $217 in net income per million in deposits, 15% below the average $256 contributed by all credit unions. Those with more than 12 advisors contributed $357, or 39% more than the average, according to the report.

“Smaller institutions can gain access to the same product offerings and technology as the large banks by partnering with third-party broker-dealers, but they can’t overcome the advantage that large banks have of spreading overhead costs over vastly more investment consultants,” Kenneth Kehrer, a principal of Kehrer Saltzman, said in an email.

The credit unions in the study deployed an average of one financial advisor for every $446 million in share deposits, substantially less than the coverage ratio at larger banks. According to the report, credit unions would have to increase the number of advisors by 39% to have the same coverage ratio at banks that use third-party broker-dealers and even more to achieve the $311 million in consumer deposits per advisor that is the average in large banks.

The average credit union surveyed in the study had established an investment account with 2.7% of its members, produced almost $21 in investment services revenue per member household, and generated $1,033 in investment services revenue per million in member share deposits.

The 2012-2013 Kehrer Saltzman Credit Union Investment Services Benchmarking Study drew on data from 798 credit unions with investment services offerings and an in-depth survey of a sample of 45 credit unions about the workings of their investment services businesses.

Read More: Investment Programs Gain Ground at Banks, Credit Unions


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