financial services

Study: There's Money In Boomer Anxiety


Financial services companies should brace for Baby Boomers retiring and moving their assets out of current retirement accounts. However, being attuned to those customers and offering new, income-generating products will help companies capture a share of the "money in motion," according to Deloitte's "Mining the Retirement Income Market" study. Insurance companies, mutual fund providers and banks also could get a piece of the pie.

Retirees are concerned about being able to generate income that will last throughout their retirement. This gives financial companies, particularly those that previously focused on insurance, an opportunity to develop new products -- but they must first address internal issues surrounding operations and products, the study advises.

"Insurers face a critical decision about whether to unbundle insurance coverage from asset management offerings and how best to achieve this because their ability to assume these risks is a core strategic advantage over players in the other sectors," said Rebecca Amoroso, head of Deloitte's U.S. insurance practice, in a statement.



The largest mutual fund companies hold the dominant position in the "defined contribution plan" market, which means they are most affected by Baby Boomer retirement, adds Cary Stier, Deloitte's U.S. head of asset management services. "But they are also in a potentially good position to capture rollover assets," Stier said. "Still, mutual fund companies will likely need to reposition and broaden their brands for the retirement income market."

Most people view their banks as their primary financial institution, Deloitte notes. Banks can capitalize on the relationship they already have with Boomer consumers by establishing a role in planning and managing retirement income programs.

All financial services companies should build end-customer knowledge, Deloitte advises. Insight into consumers' concerns, preferences and behaviors is necessary to determine what is lacking in the current market and to develop creative solutions that fill the gaps. Companies can analyze information from existing customer interactions and transactions and supplement with primary consumer research and external consumer databases.

Companies should segment and size the market in order to identify customers, products, services and channels that offer the greatest opportunity for profitable growth, according to Deloitte. Next, they should define and communicate their brand, including a value proposition -- product and customer experience -- that is customized to the needs of a target market. This includes developing a message and selecting media that address the perceptions and attitudes of the target segment.

All financial services companies should enhance product development capabilities, according to the study. Products must be brought to market more quickly and efficiently in the future, Deloitte says. Involving customers and distributors to test-market concepts and features will speed the process, along with engaging IT, operations, and risk management. Financial advisors need to have the education, tools and incentives to provide advice and service to end consumers.

Finally, financial companies should measure performance, and should not be afraid to modify approach accordingly. "The retirement income market is just emerging and how it evolves will depend in part on how financial services companies respond to the challenge," according to Deloitte.


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