Thanks Nords. Been a member of USAA for 40+ years and have never had an accident claim. They like me.
I find their new website difficult to navigate. Last month tried for an hour to take a vehicle off seasonal storage and add one but finally gave up and called them.
Also, passing through Phoenix I saw huge building with USAA on the side and wondering if they are expanding in this area. Another Taj Mahal?
USAA's Innovation Lab is really trying very hard to get rid of phone service or to replace it with Siri/Alexa tech. They've come a long way on the routine member queries but something like your policy service is still beyond the AI. Even so they'd greatly prefer to handle your request by e-mail or text.
They have an entire lab of human-factors engineers who test member services (both over the phone and over the app/website) and they're constantly updating both the systems used by members as well as the tech used by the member service reps. MSRs can apply to work in the lab (for up to a year) where they do their same job as the call center, but with a bunch of additional beta-testing tools to see what's working and what can be scaled up across all the MSRs.
USAA has actually outgrown their San Antonio campus. (That building is already bigger than the Pentagon.) They're also renting space in downtown San Antonio near Riverwalk... maybe by now they've bought it.
The Phoenix building is a gigantic call center, along with some training and R&D:
https://www.azcentral.com/story/mon...-completes-expansion-phoenix-campus/75923434/
There is an enormous one in Colorado Springs too. I think they just put their presence where they have lots of customers.
And potential employees-- the company has grown to over 23,000 employees to handle the larger membership, and about 30% are veterans and military spouses. Colorado Springs used to be a huge center for CFPs and wealth management (but is taking on other tasks as well). Much of that service is being put online or automated: Skype, Zoom, Facetime, and robo-advisors.
https://www.usaa.com/inet/wc/about_usaa_corporate_overview_locations?akredirect=true
A decade ago (cheap real estate) USAA was ready to expand bricks & mortar to take the business to the military bases and veterans populations. However smartphones and tablets (and bandwidth) have completely disrupted that strategy, and the USAA app has expanded to take over many tasks. Several years ago USAA started shutting down as many member service centers as they could. I'm beginning to think that they'll never open the Oahu office near Schofield Barracks, let alone have a coffee cup there with my name on it...
Meanwhile the ratio of members to employees continues to rise. The biggest challenge is "surge service" where hundreds of member service reps (and claims adjustors, and support staff) have to work on the claims from a named hurricane or a wildfire. That surge is especially bad during the hours after the disaster but the workload continues for weeks.
Nords,
Thanks for the additional information.
The bold (added above) portion was the part I missed. So, USAA isn't entirely jettisoning their investment customers, but they are ridding themselves of the fund management and admin, and have actually sold that function. Now they'll have no control over how the funds are managed/administered and yet they can't fire Victory if things go off the rails. No matter what happens they are the "face" of the product to their USAA customers.
If having two companies splitting the duties like this >saves< money, it does say something about the efficiency of USAA's management/administration of the funds in the past.
I think it's an aspect of how much of the fund industry is in a race to the bottom. There's no way that USAA's small fund size (and assets contracted under wealth management services) can compete with the large firms. The big firms have the lowest fund expenses (despite their expensive infrastructure, it scales) and they have at least 10x-100x more assets under management.
The only reason USAA is in the fund-management business is member convenience and consolidation as well as a good brand reputation. It's a 1960s buggy whip and as the members move on to other companies (or, frankly, as their assets move on through probate) then USAA will continue to outsource it.
It's not just USAA-- it's the entire freakin' industry. Read Michael Kitces' blog "Nerd's Eye View" (
https://www.kitces.com/). If you're in the financial business then it's worth listening to his podcast. People can still make money but you're either very big or very concierge or very niche.
A good friend has watched one of the Big Three fund companies outsource an entire division of their infrastructure (overseas because English-speaking service isn't a part of the job). They were laid off from that company and hired relatively quickly by a competitor to scale up more back-office infrastructure.
I think the only control that USAA will continue to have over their mutual funds will be their licensing of the letters "USAA". Otherwise they might as well spell the names of their funds "VTSAX".
USAA has tried to hire contractors for their mortgage lending process, and that's been a constant revolving door of complaints and new contractors. I've never heard anything one way or the other about whether they're staying in the mortgage business, but I would not be surprised to see that turned into some sort of white-label version of an online lender.
USAA's business checking has also been a total failure, because the service can't pay its expenses. Members (especially military spouses who are online entrepreneurs) want it but they're not willing to pay the actual costs. (Business checking is apparently a loss leader.) Last year USAA started working with a startup that was a leader in that fintech, but the startup is rumored to be unable to scale it. By the time business checking begins to work, entrepreneurs may have moved on to mobile (online) payments.
Interesting. I suspect Colorado is a losing area for them the last couple of years with our multiple hail storms and fires.
And California. We heard quite a bit about wildfires at USAA's Digital MilEx in September.
USAA is still trying to reduce the cost of claims processing, but they're pushing even harder on avoiding the damage in the first place. Out here it's building codes and hurricane tech, and in Tornado Alley it's earlier detection & faster alerts. In wildfire areas it's forestry management as well as getting more firebreaks around neighborhoods. However nobody wants to pay the costs (not even governments or home builders, let alone members) so it's a constant struggle.
Out here when USAA's hurricane concentration risk got too high, they limited their new policies to first-time buyers. USAA members could not add a home (switching from one insurance company to another) and everyone was paying more for hurricane policies. USAA also spent a lot of money on the members for disaster awareness and hurricane prep, while jacking up the premiums and encouraging higher deductibles. Price-sensitive policy holders began to raise their deductibles (as we have) or move to other companies. The net result was that USAA was able to lower their concentration risk while earning about the same amount of margin on their revenue.
I think one of the big reasons that USAA was able to insure more Hawaii homeowners in the last few years has been smartphone tech reducing the expense of the claims process.
