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Professional Financial Advice for Consumers: Implications for Credit Unions

The purpose of the research reported here is to determine the extent of consumers’ desire for information and advice on savings and investments and their preferences for how to obtain it.

  • Jinkook Lee PhD, Professor of Consumer Science and Research Associate at the Center for Human Resources Research at Ohio State University
  • William Kelly Center for Credit Union Research at University of Wisconsin-Madison

Executive Summary

The research reported here seeks to determine the extent of consumers' desire for information and advice on savings and investments, and their preferences for how to obtain information and advice. To our knowledge, no publicly available research has done this. Our research is based on data from a mail survey of 3,780 nationally representative households, made available to us through the cooperation of the Consumer Finance Division of SRI Consulting and the CUNA Mutual Group.

What is the Research About?

This research addresses three questions: 1) To what extent do households feel they need information and advice about investments? 2) How would households like to obtain such advice? 3) What implications do the answers to these questions have for credit unions? These questions are important because ordinary households have substantial assets in investments outside depository institutions: stocks, bonds, mutual funds, and 401(k) plans.

What Are the Credit Union Implications?

The best approach for credit unions appears to be to serve the membership by choosing an investment firm as a partner with the ability to retain the trust and confidence of clients in good markets and bad. However, positioning the credit union's role as central to financial planning and investments may be inconsistent with the culture required to handle its traditional functions effectively.