Five Fraud-Fighting Tips for Credit Unions

Originally posted on

Guest post written by Jay Slagel, President and CEO, Allied Solutions.

Allied Solutions is the NAFCU Services Preferred Partner for Insurance—Bond, Creditor Placed (CPI), Guaranteed Auto Protection (GAP), and Mechanical Breakdown (MBP); iSolutions; rateGenius.

It is not surprising that fraud in the workplace increases during an economic crisis or recession and small businesses (including large and small credit unions) may be vulnerable. Internal fraud typically occurs when someone has an incentive, such as a financial or economic hardship, plus the opportunity. National statistics show that it typically takes two years from the time fraud begins to the time of discovery. As a result, while some entities have already discovered fraud born of the recession, many more are likely to uncover problems in the coming years.

Management staff may be wearing multiple hats to keep up with more work, giving them less time to monitor employees, keep an eye on expenses and oversee their internal operation. During these periods, there might be the potential for a credit union to drop the ball in areas of oversight. Below are several ways to help fight fraud:

Establish fraud controls. Conduct a quick assessment of your fraud controls and determine who is responsible for fraud detection and reported misconduct. Credit unions should clearly establish this oversight which could be assigned to a senior manager, an internal auditor or the supervisory committee. Basically, this individual or group would perform periodic reviews of employee accounts and other areas where fraud might occur so as to detect and act early if a problem surfaces.

Read more

Shifting to a Practice of Creativity and Innovation in 2012

Guest post by Deedee Myers, founder and CEO of DDJ Myers, Ltd.

Personal Reflection

As 2011 has come to a close, I am reflecting on the commitment and hard work I witnessed throughout the year. The past few years have been a struggle and challenge which produced a sense of hyper-alertness. With so many of us in a constant state of alertness, we have worked hard to sustain the health of our organizations.

The external environment is calling us to encourage and promote creativity and innovation−which is problematic, yet necessary for long-term sustainability−in a tough economic environment. Moving into the 2011 4th Quarter, I noticed an increase in the number of organizations that, in building their 2012 budgets and capital resources, shifted awareness and attention to reframe problems as productive challenges. This shift of attention is a good thing. Actively challenging our assumptions is much more sustainable than being constantly in a hyper-alert and reactive state.

Organizations that start to peel back the covers and look under the surface have so many more resources readily available. I believe the most precious resource in an organization is the individual who comes to work every day. Understanding what motivates the individual and creating an environment where each person makes a difference automatically encourages creativity and innovation−a must for us as an industry, as a country, as a global economy.

Commitment and hard work is evident in individuals, teams, and organizations that challenge established methods and protocols and actively sought ways in 2011 to modify existing models and designs. Why is this so important? It is time to shift from hyper-alertness to embodied creativity and innovation. This, I believe, is a practice we can all give more attention as we move into 2012. This practice does not need a line item in our budget; it happens in conversations involving individuals and teams.

Michael Michalko, in Tinker Toys: A Handbook of Creative-Thinking Techniques, writes that anyone can learn to pay attention. Richard Strozzi-Heckler, in The Leadership Dojo: Building Your Foundation as an Exemplary Leader writes that learning starts with awareness. An awakening that invites awareness to what is and what matters is the start of learning. I borrowed from Michalko, Strozzi-Heckler, and our custom leadership programs to provide the following simple, no cost practices you and your leadership team can activate over the next couple of weeks as preparation for moving into 2012 with a commitment to encourage creativity and innovation.

Read more

Does your credit union do prospective employee testing?

I just watched NAFCU’s live webcast, “Implementing an Effective Employee Assessment Program,” presented by our good friends at Human Capital Solutions Group and Andrews Federal Credit Union.

There are many benefits to testing new hire candidates and current employees (applying for new roles) on things like cognitive ability, integrity, job knowledge, and personality. In fact, it has been determined that cognitive ability tests are three times more predictive of a candidate’s ability than experience in the job and four times more predictive than education. Yikes.

Read more

Is The Fox Guarding the Henhouse Cheating Your Employees With Hidden and High 401(k) Fees?

I know that employee benefits can be complex and hard to understand, but I wanted to flag an issue that may be needlessly costing your employees as much as 50 basis points on transfer and between 20 and 25 basis points a year on their 401(k) investments.

It is not uncommon for credit unions without the requisite in-house expertise to hire a consultant to look at outside options for their employer-sponsored 401(k) plans. Usually the process involves an RFP, an evaluation of the responses, and presentations to the credit union leadership by the finalists.  Credit union managers think they have gone through an impartial and unbiased assessment of what is best for the credit union.

But appearances can be deceiving.  Often the consultant that the credit union turns to will receive hefty initial and ongoing fees directly from the 401(k) provider.  These fees can be substantial – for a credit union with $20 million in its employer-sponsored 401(k), first year fees to consultants can run $125,000 or more, and ongoing fees can run $25,000 or more, depending on who the business is placed with.

Read more