Practice Management Insights from the Kehrer Group Benchmarking Surveys
Directors of investment services and wealth management in credit unions have access to a dizzying amount of data, be it from their broker dealer, their credit union, or third-party consultants like Kehrer Group. To be effective, they need to understand which KPIs they should focus on, how to educate their credit union on the importance of those metrics, and the key actions that will improve performance.
From the perspective of credit union management, particularly CFOs, the most important KPI is profit margin. Last year, the 57 credit unions in the Kehrer Group annual benchmarking survey had net income contribution margin— net income from investment services before corporate G&A allocation as a percent of investment services revenue—of 27%. That is s 23% improvement over 2024.
Financial institutions want to manage their investment units on profit margin, believing that cost control is key to squeezing increased profitability out of the business. But firms with top quartile profit margins have:
- Thinner advisor coverage;
- Thinner revenue penetration;
- Slower revenue growth; and
- Smaller total profit contribution
relative to institutions with lower profit margins.
Examining total profit contribution provides a different view of the contribution of investment services to the credit union. Last year, credit unions averaged $476 in net income contribution from investment services per million in share deposits, a robust 29% improvement year over year.
Profit contribution per million shares gives us a way to assess the relative dollars of profit generated by the investment services business. Like share revenue penetration, contribution increases exponentially with the addition of advisors against a set deposit base, because the process of “making space” for the new advisors creates the environment for the existing advisors to become more efficient and more productive.
Would your credit union rather have greater profit contribution or wider profit margin?
Credit unions want to grow non-interest income to hedge against an uncertain interest rate outlook. The wealth management unit is a significant source of non-interest income for the typical credit union. And fee income derived from advisory fees is a steady, and growing stream of fee income.
What share of your credit union’s non-interest income is derived from the investment services unit?
But more important than the contribution of investment services to non interest income, credit-union based advisors drive significant growth in core banking revenue. Investment services clients use more core banking products and services compared to the typical member. And they keep a larger share of their household assets at the institution, maintain higher account balances, and remain customers longer
We can estimate the additional income to the institution attributable to the existence of investment services. For a credit union with 100,000 credit union member households, investment services contributes more than $13 million in banking income than if the credit union does not provide investment services.
Source: BISA Smart Investment: Evaluating the Total Return on Investment Services on the Banking Enterprise
These estimates are based on common industry pricing, which of course varies over time and across credit unions. The reader can calculate the contribution of investment services to their credit union by using your credit union’s pricing.
Another way to use these estimates is to calculate how much an increase in investment services penetration of members would contribute to the banking income of the credit union. Growing the share of the institution’s customers with an investment relationship by 1% increases the income from deposits and loans by 14% above the current contribution.
What can a director of credit-union based advisors do to shift the credit union’s focus from profit margin to profit contribution?
- Know what share of your credit union’s non-interest income is generated by the wealth management unit.
- Track (or estimate) the additional loan and deposit business won by your advisors
About the Kehrer Group Credit Union Investment Services Study
Since 2005 Kehrer Group has analyzed data provided by the credit unions in our annual benchmarking survey of investment services in banks and credit unions for the Credit Union Investment Services Study. Cetera Financial Institutions is the sponsor of the 2025-2026 Kehrer Group Credit Union Investment Services Dashboard, which provides benchmarks on over 50 metrics from 57 credit unions and their 589 financial advisors.
About Cetera Financial Institutions
Cetera Investment Services, marketed as Cetera Financial Institutions, helps banks and credit unions to build and grow wealth management programs that fit their brand, operating model and member experience. Cetera brings financial institution expertise, flexible affiliation options, integrated technology, compliance support and personalized growth resources to help institutions scale while preserving the trusted relationships they have built with members.
For credit unions, a well-integrated wealth program can strengthen member relationships, expand access to financial planning and investment guidance, support financial wellness and diversify non-interest income. Cetera helps connect institutional strategy with advisor productivity, member engagement and measurable growth so the wealth program can contribute more fully to the credit union’s mission and long-term performance.
Cetera Financial Institutions is a marketing name of Cetera Investment Services LLC, member FINRA/SIPC. 400 First Street South, Suite 300. St Cloud, MN 56301
Visit Cetera Financial Institutions for more information.
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About Kehrer Group
Kehrer Group is the bank and credit union financial advice community’s trusted partner for original thought leadership, insight based on data, and strategies that drive success. Kehrer Group’s legacy of research and analysis has advanced the delivery of investment services in banks and credit unions and shaped the industry into what it is today. Kehrer Group’s principals meld the wisdom gained from its long history in the industry with cutting-edge analytics, data that is robust and diverse, and a deep understanding of the key drivers of performance.
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