Last Updated May 23, 2024

When a financial professional is affiliated with a bank or credit union (a financial institution), there are certain nuances to the relationship that you, as an investor, should be aware of. If you’re currently working with CFS financial professional located at Columbia Credit Union (or you’re considering doing so), we’ve provided some information on this relationship and what it means for you.

How are CFS and Columbia Credit Union different?

Columbia Credit Union is a depository institutions that offer products such as checking and savings accounts, money market accounts, and certificates of deposits. Credit unions are typically not registered as broker-dealers or investment advisors.

CUSO Financial Services, L.P. (CFS) is a registered broker-dealer and registered investment advisor in the business of buying and selling securities like stocks, bonds, mutual funds, certain other investment products, and insurance products, as well as offering investment management (or “advisory”) services (the CFS Investment & Insurance Group). CFS and its financial professionals offer the CFS Investments & Insurance Group on and off the premises of Columbia Credit Union (referred hereafter as the “the credit union”). CFS is a separate entity from, and is not an affiliate of, the credit union.

If you decide to work with a financial professional as part of the CFS Investments & Insurance Group, the investment products and services are being offered by CFS and not the credit union. The products and services offered by CFS are not obligations of, and are not guaranteed by, the credit union, its affiliates, or any federal or state government agency.

What is the relationship between CFS and Columbia Credit Union?

The credit union and CFS are not affiliates, but instead have entered into an agreement that:

• Allows CFS and its financial professionals to provide investment products (and, if applicable, advisory services) on or off the premises of the credit union
• Establishes a referral program through which the credit union may refer a customer or member to the CFS financial professional’s office (again, on or off the premises of the credit union)
• Allows CFS to compensate the credit union for the use of its facilities, technology, marketing services, office supplies, and also for client referrals.

In some cases, the CFS financial professionals are employed by the credit union. However, when the CFS financial professionals are offering products and services through the CFS Investments & Insurance Group, they are registered with CFS for the purpose of offering those investment and insurance products and services. Your CFS financial professional is compensated directly or indirectly by CFS for the products and services offered through the CFS Investments & Insurance Group.

More on the referral program:

The agreement between CFS and the credit union allows CFS to pay you’re the credit union* (in cash or non-cash) for referring members to the CFS Investments & Insurance Group. That creates a conflict of interest and an incentive for the credit union to recommend the CFS Investments & Insurance Group. This client referral compensation varies, but in situations where the financial professional is employed by the the credit union, your credit union typically receives more than 75% of brokerage commissions and advisory fees earned on such products and services. This referral arrangement does not result in any increase in the fees or commissions you pay to CFS. The credit union is paid directly by CFS for the referral.

In addition to this direct payment arrangement, CFS may provide other forms of compensation to the credit union, such as bonuses, awards, or other things of value (gift cards, etc.). These payments may be more than your credit union would get paid if you had a separate relationship with CFS.

How do investment products and services through the CFS Investments & Insurance Group differ from depository products?

• Purchasing investment products and services involves investment risk, including the possible loss of principal and market value.
• The value of the investment products may fluctuate, and the performance of the investment is not guaranteed.
• The investment products offered by CFS are not obligations of the credit union, and are not endorsed, recommended, or guaranteed by the credit union.
• The investment products offered by CFS are not insured by the FDIC, NCUA, or any federal or state government agency, except for certain certificates of deposit and cash sweep accounts.
• CFS is a member of the Securities Investor Protection Corporation (SIPC). The CFS SIPC Membership provides account protection up to a maximum of $500,000 per customer, of which $250,000 may be claims for cash. An explanatory brochure is available at sipc.org. The account protection applies when an SIPC member firm fails financially and is unable to meet obligations to securities clients, but it does not protect against losses from the rise and fall in the market value of investments.

If you have any additional questions or concerns about working with a financial professional who is associated with Columbia Credit Union, please contact CFS at (800) 686-4724.

This material has been prepared by CUSO Financial Services, L.P.