With an investment coordinator and a wealth associate both assigned directly to him, Kevin McDermott, the wealth advisor at Citadel Federal Credit Union in Chester County, Pa., is an anomaly in his world.

Advisors today often make do with just one assistant, at most, who is shared among a team of people. That's if they haven't cut that position for a software set-up.

McDermott, with almost $2 million in gross dealer concessions in 2012, fully understands that hiring people can cut into revenue at his credit union. But he's also seen the rewards for both himself—and for his firm.

When he chats with advisors at other credit unions, they're impressed by his work situation. "They say, 'You have two full-time people?" says McDermott, a 22-year veteran. "You don't hear about that [kind of support] a lot. Maybe in the short run it's a little more expensive. But in the long run, we had zero drop-off when the market crashed because we weren't hiding from anyone. And we could respond to every one of our clients."

At a time when firms are running fairly lean, and replacing staff with apps and cloud-based technology, a pledge to old-fashioned customer service seems novel, if not revolutionary. Investors today are more likely to meet an online screen than a flesh-and-blood advisor when requesting details about their accounts. And the "personal" connection may come through an email.

The pledge from Citadel to give McDermott, and the other four advisors at the credit union, two full-time support people each is an expensive promise—one that he is grateful to have. He's also watched his and Citadel's revenue and profits grow through the process, even with staff salaries and medical insurance packages.

The entire team at Citadel had $3.3 million in production last year. If that weren't enough, there have been zero complaints from customers and no compliance pings, which he takes as further indication that the team approach is paying off.

An investment coordinator is on the front lines alongside him dealing with clients, while also keeping the back-office moving seamlessly. And a wealth associate handles trades and brings an expertise with his CFP and CLU to help the practice focus on issues like long-term care. The two also ensure that about 99% of calls get answered by a person instead of a voice mail message.

"A lot of credit unions are afraid to [hire staff] because it takes time away from the net," he says. "They think, 'Do we really want to pay for assistant staff?' But that has separated us from the rest of the competition."

Getting Help
McDermott came to Citadel in 2004, after it merged with Atlantic Credit Union. McDermott brought with him two full-time staff people.

Citadel's senior vice president at the time decided that to make a financial services team work well at the newly merged credit union, advisors would be better served by focusing less on day-to-day administrative work so she agreed to mirror the set-up that McDermott had brought from Atlantic.

McDermott credits her with giving the same support to each new advisor brought on board—four in total in the past nine years. And so far, each advisor has hired two staff people of their own as well.

Credit union members are often mass market investors. So building a large advisor practice can take time, skill and a competitive advantage.

Often times customer service is a crucial element, which can get lost when an advisor is juggling account details, office management needs and client concerns simultaneously.

Today, McDermott has time to contact each of his clients 10 to 12 times a year, plus is able to host several events as well. He recently invited older clients to a tour and lunch at Longwood Gardens, a woodland park in Kennett Square, Pa.

He also has an annual movie screening. This year he rented a local movie theater to show "The Wizard of Oz" in 3D, inviting families to bring children and grandchildren. People sent dozens of thank-you emails, he says, noting that it wouldn't be possible without his team.

That extra time spent focused on his clients and their specific needs can also uncover additional revenue for the firm as well—outside of the asset management business.

McDermott recently put together a client survey and found 65 people who lacked a will, as they had some discomfort with long-term estate planning. Using that information, he put together a seminar to address those concerns.

He was also able to identify other business lines, including bringing in about $6 million in mortgage business last year.

Ability to Say No
Even with the extra help, though, McDermott's plan is not to load up on clients. He see the extra time not as a green light to grow his list—but instead to give extra attention to the investors he already has in hand.

While 99% of his clients originally came through as customers of the credit union, or through some tangential connection—most today come through referrals. And that's if he's able to take them on as clients. In recent years he has made an effort to shed those on his roster, particularly if he feels they're not committed to his practice.

At various times he sends a letter out to certain groups of investors, explaining that unless they are willing to be more involved in their own financial planning—coming in for reviews at least once a year, for example—he will move them to another advisor. At one point McDermott says he had close to 1,000 clients. Today that number is down to about 400.

"Maybe they had given me $100,000 or $200,000 a few years ago and we don't have a deep relationship," says McDermott. "I tell them they're a B-client and I'd like to see them become an A-client. If not, I understand, but they need to come in so I can transition them to another advisor."

That's a tricky prospect at a credit union, where usually the goal is to help everyone. As McDermott notes, someone still does need to serve members who walk through the door seeking help for their retirement savings. But there are times when he has to tell credit union employees—or even prospects themselves—that they may be more appropriate for another outlet. "If it's a smaller account we might tell them they're better served by going directly to Vanguard," he says. "We meet with anyone. But we may not be able to bring everyone in as a client. Everyone is not eligible for a mortgage. It's the same thing with investments."

Everyone Moves Up
Another avenue McDermott uses to streamline his client list is handing them off to his own support staff. That's because there's a trajectory for his sales assistants to become advisors of their own. Each time he's had one of his sales assistants move up, he says he's handed over about 150 to 200 clients.

He is able to transition large swaths of his client list partly because he was promoted in April, from advisor to wealth manager, which brought a higher payout plus a long-term plan to transition his book of business when he is ready to retire.

He says the promotion was one more reason for him not to go independent, which would have included some responsibilities that he, frankly, did not want to take on. "I looked around and thought to myself, I could probably make more money, but I would have all the headaches of hiring my own people… And I didn't want that," he said.

The offer for promotions extends to current advisors as well. And to McDermott, this is the way the situation should be—a credit union should make a commitment not just to its customers, but to those who support them as well.

"The credit union took a chance on me when I wasn't bringing in these kind of numbers," he says. "You can start as a sales assistant, become an advisor and then a wealth manager. And I think that's smart."


Name: Kevin MacDermott
Bank: Citadel Federal Credit Union
Location: Downingtown, Pa.
TPM: CUSO Financial Services
2012 production: $1.8 million
2011 production: $1.3 million
2012 AUM: $117.1 million
2011 AUM: $103.6 million
No. of clients: 400

Register or login for access to this item and much more

All Bank Investment Consultant content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access