HELPING CRECIT UNION MEMBERS
'CLIMB THE RETIREMENT MOUNTAIN'
Feature Article
Andrew Singer

A LOT OF investment salespeople are focusing these days on the mass-affluent segment. Chip Hutchison is not one of them.

Hutchison, who runs the investment program at Family Trust Credit Union (Rock Hill, SC), works with school teachers and former textile workers.

Admittedly, many of them have just come into sizable sums of money. But they are a far cry from the business owners, corporate executives, and highly compensated professionals that so many reps are pursuing.

Rock Hill was once a thriving textile center, and many of Hutchison's current clients are textile workers and former industry employees, as well as government workers and school teachers who have 401(k) plans that are rolling over.

"It's an oddball thing for them.…I help them get control of those dollars," he says.

His typical client is 50 to 65 years old. It's too early for them to retire, but they have retirement decisions to make, particularly with regard to that retirement lump sum that is coming their way. They have lived frugally, their house has been paid off, and they have little debt. Often they are female. (South Carolina has a teacher incentive retirement program in which many Family Trust CU members partake.)

Often they "blink when they get this piece of paper that says they have $400,000 all of a sudden," reports Hutchison.

Advising clients near retirement

He calls it "climbing the retirement mountain," and he tries to get them when they're on the "snow cap of the mountain." He is advising clients near retirement—and at the peak of their accumulations—that they have to be careful to not slide backward financially in retirement.

"Qualified money is my bread and butter," explains Hutchison, who has an assistant and a recently hired junior broker—but otherwise, he works solo. The credit union has about 75 employees and $200 million in assets.

Variable annuities (VAs) with living benefits account for most of his business. His clients want to be financially safe, but they also want their assets to keep growing. Many have four or five years to go until retirement. Hutchison sells no fixed annuities.

This year, Hutchison expects to generate about $750,000 in gross revenues. He's aiming at $1 million for next year.

Setting the stage

When Hutchison deals with new clients, "I assume that everyone I see knows absolutely nothing" about VAs. He sets the stage: This money is already long-term money. It's not just a pot of money that is going into your pocket.

He tells them: "You can spend money, but in moderation." This is really a unique sum of money, he suggests.

What is the biggest selling point with VAs? The income is guaranteed, and they have a steady income, "but at the same time, they're in the game." There's an upside, in other words. A bank certificate of deposit pays guaranteed income—five percent, say—but you will never make more than five percent—unlike a variable annuity, whose performance is often tied to the stock market. And you probably have to do better than five percent these days to beat inflation.

Often they 'blink when they get this piece of paper that says they have $400,000 all of a sudden.'

—Chip Hutchison, Family Trust CU

VAs account for most of Hutchison's large-ticket sales and 60-70 percent of his overall business. Another 30 percent of sales are in asset-allocation mutual funds. Hutchison also sells some life insurance—and he should sell even more with his new junior broker, who was formerly a captive agent with Prudential.

Among his VA carriers are Jackson National, Prudential, Pacific Life, TransAmerica, John Hancock, and Sun Life. Mutual fund suppliers include Putnam, Pacific Funds, and TransAmerica.

The credit union endures

Family Trust Credit Union (CU) was formed in 1957 in the 'heart of textile country' by seven employees of the Rock Hill Printing and Finishing Company. The textile industry has since moved on, and Rock Hill Printing was sold in 1985, but the credit union endures. It has essentially become the main community bank of York County, South Carolina.

Hutchison began his banking career with NationsBank (now Bank of America), where he was a branch manager in Rock Hill. He wanted to try something different professionally, though, and in 1993, he answered an advertisement seeking reps with NationsSecurities, the bank's brokerage unit.

In 1997, Hutchison went to work for a local broker who was handling the credit union's investments business, working as a junior broker, and focusing on the CU. "It was good timing. I got to stay in the community [Rock Hill]," he says, at a time when NationsSecurities was undergoing some changes.

In 1999, the local broker severed his ties to the credit union, and Hutchison took over the credit union business himself, working as an individual contractor. Today he is based in the credit union, although he is not an employee of the CU.

Seeking referrals

How does he find leads? Hutchison's sales assistant develops referrals campaigns and appears before groups of CU employees. She discusses the credit union's mission statement—helping citizens achieve financial success—and emphasizes the need for them to invest outside the credit union in order to beat inflation. She visits the CU's seven branches regularly, often arriving five minutes before the doors open to meet employees.

Member service reps (i.e., CSRs) and tellers earn $10 for qualified referrals, which means supplying a name and telephone number, from which the sales rep eventually has a 'meaningful conversation.'

Hutchison has embraced Ron Carson's referral system with its emphasis on drawing referrals from one's existing top clients. (Carson is author of Tested in the Trenches: A 9-Step Plan for Building and Sustaining a Million-Dollar Financial Services Practice.) About 30 percent of his production now comes from such referrals, although Hutchison would like to get that figure to 70 percent, eventually.

When his junior broker comes up to speed, Hutchison will focus on the larger accounts and let his assistant deal with the smaller, less-complex accounts.

What about life insurance? "I see a tremendous need for long-term-care (LTC) insurance," says Hutchison. "That's the one thing that can blow up what I'm doing." (A nursing-home stay can devastate a client's financial plans.)

On dealing with new clients: 'I assume that everyone I see knows absolutely nothing' about variable annuities.

Hutchison's uses Invest Financial's virtual sales-assistant program, which provides office services for smaller operations like his own. When he's out of the office, for instance, the service answers his telephone calls from Invest's Tampa, Florida offices.

"I can't place a value on my relationship with Family Trust. The credit union pushes me."

The credit union recently suggested to Hutchison that he might be focusing his marketing efforts too narrowly. He might look beyond qualified money. That's where Hutchison's new junior broker comes in. He'll be looking to build up the non-qualified business.

In the end, though, it comes down to relationships. What Hutchison wants is for his clients to say, "Chip's good at what he does, and I trust him."