Advisory Service
Frequently Asked Questions
What value is gained by using the Advisory Service?
Securities markets are sophisticated, and credit union ALM requirements are becoming increasingly complex.
Catalyst Strategic Solutions' 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 complement your credit union's loan and deposit structure.
What can the Advisory Service do to boost my credit union's earnings?
First, our ALM service incorporates a key ratio analysis, designed to help you identify areas for improvement with regard to pricing your deposit accounts and loan products.
This analysis also assists you in managing expenses associated with the day-to-day operations of a financial institution.
Second, our advisors review the interest rate risk profile obtained from the ALM analysis to determine the prudent amount of rate risk for your credit union's portfolio. This practice enables
advisors 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
within the current interest rate environment.
How does the Advisory Service help my credit union comply with the NCUA's regulatory requirements?
Our investment professionals stay abreast of all NCUA regulations, revisions, and "letters to credit unions" pertaining to the investment and ALM arenas.
Part of the process is updating our internal systems to meet all reporting requirements set forth by the regulators. Whether you need a number to close your books or
to complete your credit union's call report, our systems generate a report that
will provide it. These procedures ensure that investment recommendations made by our team are
regulatory compliant.
What kind of reporting can I expect?
Monthly, the Advisory Service will make available to you via our website a complete set of "5300
ready" bond accounting reports. These reports, which contain everything your staff will need to close your credit union's books,
are 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
that provide accrual detail and amortization/ accretion details.
Quarterly, your advisor prepares an in-depth investment portfolio and ALM review. This packet includes a detailed ALM 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 ALM policies that suit your credit union's specific needs.
I don't understand the more complicated securities, like CMOs. How can I explain them to my
board?
At the foundation of the Advisory Service is education. Prior to ever executing a trade,
an investment advisor 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
we will discuss the various investment alternatives in detail. After this session, you will
feel not only better educated about the investment alternatives, but also
comfortable about making decisions. This education continues on an ongoing basis. As you experience turnover on various committees or
on the board of directors, you can schedule additional educational sessions or a refresher course.
In addition to the formalized training, your advisor is available to discuss your
portfolio and the related portfolio strategy individually, as necessary.
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
that some credit unions like to be contacted daily, while others may only want to be contacted bi-weekly.
Either way, we'll tailor the relationship to best fit your needs.
What if I don't want to give up control of my investments?
You don't have to! Our team works for you only as an agent. After reviewing your ALM situation and identifying any liquidity concerns, the advisor makes a recommendation
for a security that best fits your credit union's balance sheet. You, or the appropriate staff member, make the final decision
regarding whether the security is purchased. Upon approval, your advisor buys the security in your credit union's 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?
Strategic Solutions' advisory service is fee-based. It is not commission-driven like a brokerage firm. All of our staff members earn salaries and do not receive commissions. This arrangement guarantees
that 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 ALM 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.
For more information about the Advisory Service, contact
Mike McGinnis at 800.301.6196.
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