Fiduciary Responsibility: a Golden Credit Union Opportunity

Fiduciary Responsibility: a Golden Credit Union Opportunity

Fiduciary Responsibility: a Golden Credit Union Opportunity

By Glen Sarvady

People helping people.

It’s a fundamental premise of the credit union movement, and one that received plenty of attention at CUNA’s annual Governmental Affairs Conference in Washington DC this February. There was no shortage of examples of community engagement, financial literacy efforts, and chartable initiatives on both the grassroots and national levels. Make that international- I challenge anyone to listen to Derreck Kayongo’s tale of founding the Global Soap Project to save lives and advance education in Africa via used hotel soap, and not come away feeling inspired.

Problem is, “people helping people” can begin to sound like a platitude, falling into that “motherhood and apple pie” bucket. After all, who doesn’t want to help people? Most major banks have well-funded media campaigns trumpeting the benefits they bring to communities. Raise hands, all ready to advocate for “not helping people.”

This is what makes the latest big bank maneuver so mind-boggling. Though less publicized than its ordered review of the Dodd-Frank Act, in early February the Trump Administration also sidetracked this month’s scheduled implementation of the “fiduciary rule,” which would have required retirement account advisers to work in the best interests of their clients.

The logic behind this Obama-era regulation was straightforward. Most Americans are woefully under-investing toward their retirement. It’s well-documented that high plan fees can pose a serious impediment to capital appreciation. The fiduciary rule sought to prevent conflicts in which brokers/advisers could earn higher commissions by steering consumers into retirement plans not necessarily in their best interests.

To be clear, there are substantive reasons for providers to object to the fiduciary rule. Depending on interpretation, it could fuel lawsuits for investments that go wrong for reasons other than malfeasance. I recently got a firsthand view of its unintended consequences when I learned one of my primary contacts at an area bank had been let go- apparently he lacked some of the securities licensing credentials his employer deemed necessary to comply with the pending guidelines.

The fiduciary about-face is part of the administration’s broader efforts to curtail cumbersome regulations- and this one had been opposed by a wide swath of the financial services industry. It risked adding another layer of bureaucracy to address a problem that might be handled more efficiently. I’m not entirely buying another of the industry’s key talking points, however- that it could limit consumer choice as brokers, wary of future repercussions, might opt to promote only the most vanilla plans.

Still, is this really a cause on which the banking industry chooses to hang its hat? Despite the fine print, it boils down to taking a stand opposing “working in the best interest of clients.” It’ll take a whole lot of marketing spin to overcome those types of headlines. In fact, several big-name players including Morgan Stanley and AIG have announced their intent to proceed with planned operational changes regardless of whether the fiduciary rule becomes a formal mandate.

If you’ve been looking for an opportunity to differentiate your credit union from its bank competition, this is it. First, confirm that none of your CU incentive plans or promotions (third party offers, for instance) might run afoul of the fiduciary rule’s spirit- it’s unlikely, but worth a quick check. In reality, the current dust-up has little direct impact on CUs. Most aren’t involved with retirement plans, and most financial advisors already owe a fiduciary duty to their clients. The rule in question is specific to retirement plans. Nonetheless, the message is a powerful one. Consider adding “member’s best interest” language to your CU’s mission statement, if it isn’t there already.

A disturbing percentage of Americans- members and non-members alike- are unaware that credit unions are member-owned, or that they operate as nonprofits. If banks take the dumbfounding step of opposing “client’s best interests” rules, credit unions should be perched on the street corner with megaphones to embrace such principles. This can serve as the beginning of a beautiful conversation about member ownership, financial responsibility- and people helping people.


  • 5 April 2017
  • Author: Glen Sarvady
  • Number of views: 1357
  • Comments: 1
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1 comments on article "Fiduciary Responsibility: a Golden Credit Union Opportunity"


5/9/2017 12:38 PM

Interestingly enough, I didn't understand the reasoning behind opposing the law, now I see that it has become a liability from a legal standpoint, but I do agree with you, the optics of it are not good and the news story represented a great opportunity for the CU world to capitalize on the messaging.

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About BIGcast Network

Credit Union Industry Experts, John Best, Founder of Best Innovation Group (BIG), Glen Sarvady, Managing Principal at 154 Advisors and Anne Legg, Founder of THRIVE Strategic Services have teamed-up to offer a new podcast series to form the BIGcast Network. The BIGcast will become a twice weekly podcast and will be offering financial news and thought leadership in the areas of Business Strategy, Innovation, Payments and Leadership to financial institutions globally. Meet the BIGCast Network Team:

John Best is recognized as a thought leader and visionary of technology advancements and financial application development within the credit union industry. Requests for speaking engagements include Symitar national and regional conferences, Information Technologies Credit Union Association annual conference, and CUNA Technology Council, CUNA Marketing Council, CUNA lending Council Filene Water Cooler Annual Symposium and Correlation annual meeting as a keynote speaker.
Anne Legg is founder of THRIVE Strategic Services. THRIVE leads organizations to goal attainment via data translation resulting in innovative and transformational business strategies. Anne is a recognized credit union expert and thought leader with an MBA thesis on the credit union business model as well as two internationally published whitepapers on credit union business strategy. She has served as an SME for CUNA and National University and has instructed at several CUNA schools.
John Janclaes has more than thirty years of experience in the financial services industry, spanning retail banking, brokerage, and insurance. He joined Partners Federal Credit Union in June 2004 as President and Chief Executive Officer. With eleven branches located primarily in California and Florida, Partners serves employees of The Walt Disney Company, currently numbering more than 140,000 members with$1.6 billion in assets under management.

John is founder of The CEO Corner, an online forum to help business leaders and their organizations thrive ( In recognition of John’s commitment to leadership development, proceeds from the sale of his leadership book, "Doing What Matters" will be donated to support scholarships for business leaders in training.
Glen Sarvady’s episodes of the BIGCast will focus on top-of-mind topics impacting the payments world, analysis of recent product launches, acquisitions, partnerships and innovations, and on-site reporting and interviews from industry venues like Finovate, Money 20/20 and NACHA Payments. Interviews will be brief and to-the-point, emphasizing substance and avoiding informercial territory. As with other BIGCast Network offerings credit unions receive added attention, but the discussions will be relevant and entertaining for strategic thinkers across the financial services spectrum, particularly those interested in consumer and small business experience and the real-world effects of breakthrough payment innovations.

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