| What value is gained by using the Advisory Service? |
| Securities markets are sophisticated and credit union A/LM requirements are becoming increasingly more complex. Southwest Corporate Investment Services' Investment Advisors employ a comprehensive balance sheet approach to assisting you in the management of your credit union's investment portfolio. The investment recommendations we make compliment your credit union's loan and deposit structure. |
What can the Advisory Service do to boost my credit union's earnings? |
First, our A/LM service incorporates a key ratio analysis designed to help you identify areas for improvement with regard to pricing your deposit accounts and loan products. It also assists you in managing the expenses associated with the day to day operations of a financial institution.
Second, our Advisors review the interest rate risk profile obtained form the A/LM analysis to determine the prudent amount of rate risk for your credit union's portfolio. This practice enables them to target the highest yielding area of the yield curve without exposing your credit union's balance sheet to any undue risk. In a nutshell, it's all about managing risk and return.
Finally, our staff of investment professionals monitors the direction and outlook for interest rates and stays abreast of spreads and yields on the various investment alternatives. These practices enable them to make the most profitable investment recommendation given the current interest rate environment. |
How does the Advisory Service help my credit union comply with the NCUA's regulatory requirements? |
| Our group of professionals stay abreast of all NCUA regulations, revisions thereof, and "letters to credit unions" pertaining to the investment and A/LM arenas. As such, they update our internal systems to meet all reporting requirements set forth by the regulators. Whether you need a number to close your books or complete your credit union's call report, our systems generate a report providing it. This practice, in addition to monitoring updates to credit union investment regulations, ensures all investment recommendations our team makes are compliant. |
What kind of reporting can I expect? |
Monthly, we will make available to you via our web site a complete set of accounting reports. These reports contain everything your staff will need to close your credit union's books and will be available by the close of business on the second business day of the month. To give your accounting department a head start, two days prior to the end of the month we make available a preliminary set of accounting reports providing accrual detail and all amortization/accretion details.
Quarterly, your advisor prepares an in-depth Investment Portfolio and A/LM review. This packet includes a detailed A/LM review and an analysis of the current holdings in the investment portfolio. One of the integral parts of this analysis is a parallel and sustained 300 basis point portfolio shock to satisfy regulatory requirements. The analysis concludes with a formalized investment strategy. |
What if I need help with my policies? |
| In the initial steps of the process we will work with you, your Board of Directors, or any associated committee to develop, and subsequently have approved, a regulatory compliant set of Investment and A/LM policies that suit your credit union's specific needs. |
But I don't understand the more complicated securities like CMOs so how could I ever explain them to my Board? |
At the foundation of the Advisory Service is education. Prior to ever executing a trade one of our Investment Advisors will contact you to schedule an educational session for you, your staff, and any Board members you would like to include. These sessions normally take three or more hours during which you will discuss the various investment alternatives in detail. When our advisor leaves after the session you will be more than educated…you will be comfortable. This education continues on an ongoing basis. As you experience turnover on various committees or the Board of Directors, you can schedule additional educational sessions or refresher course.
In addition to the formalized training, your advisor is available to discuss your portfolio and the related portfolio strategy as need be. |
What type of contact will I have with my investment advisor? |
| The answer to this question depends on your specific needs. Our experience tells us some credit unions like to be contacted daily while others may only want to be contacted bi-weekly. Whichever the case, we'll tailor the relationship to whatever best fits your needs. |
But what if I don't want to give up control of my investments? |
| You don't. Absolutely not. Our team works for you only as an agent. After reviewing your A/LM situation and identifying any liquidity concerns, the advisor makes a recommendation of the security that best fits your credit union's balance sheet. You, or the appropriate staff member, make the final decision whether the security is purchased or not. Upon approval, your advisor buys the security in your credit union name and it is delivered directly to the credit union's safekeeping account versus payment. |
Then what makes the Advisory Service different from a broker? |
| Southwest Corporate's Investment Advisory service is a fee-based service. It is not commission-driven like a brokerage firm. All of our staff members earn salaries and do not receive commissions. This arrangement guarantees we strive hard to do what is in the best interest of the credit union rather than what is in the best interest of our wallets. As an advisor, we live with the recommendations we make, unlike brokers who send out a confirmation and move on to the next trade. |
What specific expertise and experience do the members of the advisory team have? |
| The Investment Advisors and A/LM Analysts have over 120 combined years of credit union and related industry experience. This team of professionals combines this wealth of knowledge with the market analytics available on the Bloomberg Financial Markets system to provide sound investment advice, enabling your credit union to reach its financial goals. |
