Deloitte Finds Baby Boomer Retirement Anxiety Spurring Innovative Retirement Income Programs in Wake of Financial Crisis

      

"Retirees are more concerned than ever about their ability to generate income that will last throughout their retirement, giving insurers an opportunity to develop new products designed to mitigate uncertainty about retirement income. 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.

"The dominant position of the largest mutual fund companies in the defined contribution plan market means this sector has the greatest exposure to asset erosion as the baby boom generation retires. But they are also in a potentially good position to capture rollover assets. Still, mutual fund companies will likely need to reposition and broaden their brands for the retirement income market," said Cary Stier, Deloitte's U.S. head of Asset Management Services.

"Because most people view their banks as their primary financial institution, the industry is uniquely positioned to capitalize on its extensive existing customer network and establish a role in planning and managing retirement income programs," said Jim Reichbach, Deloitte's U.S. head of Banking and Securities.

In the paper, Deloitte offers 10 key actions financial services companies should consider as part of a plan to potentially succeed in the retirement market:

    --  Build your end customer knowledge. 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.
        Start by analyzing information from existing customer interactions and
        transactions and supplement with primary consumer research and external
        consumer databases.
    --  Decide where you want to play. Segment and size the market to identify
        customers, products, services and channels that offer your company the
        greatest opportunity for profitable growth.
    --  Define and communicate your brand. Craft a value proposition -- product
        and customer experience -- that is customized to the needs of your
        target market and that differentiates you from the competition. Develop
        a message and select media that address the distinctive perceptions and
        attitudes of your target segment.
    --  Enhance your product development capabilities. Products need to be
        brought to market more quickly and efficiently in the future. Involve
        customers and distributors up front to test market concepts and
        features. Engage IT, operations, risk management and legal early in the
        development process to prevent downstream problems.
    --  Align sales and distribution channels and incentives. Analyze the cost
        to serve distribution alternatives and understand the sensitivity of
        these economics to changes in such factors as volume, compensation
        structure and consumer acceptance of new media and channels. Evaluate
        independent distributors. Focus on the most profitable channels.
    --  Equip your financial advisors. Ensure that financial advisors who
        represent you have the education, tools and incentives to provide advice
        and service to end consumers that is appropriate and consistent with
        your brand.
    --  Adapt your service delivery model. Start with an audit to assess the
        quality and consistency of your current customer experiences and
        identify gaps with your brand promise. Analyze the cost of alternative
        solutions versus the pricing inherent in your product/value proposition.
    --  Strategically align the IT infrastructure. Resist the pressure to
        respond to changes in business needs with systems and solutions that are
        deployed with tactical objectives as this commonly leads to duplication
        of infrastructure across business units and departments. Focus on a
        long-term portfolio of initiatives that balances short-term benefits
        with sustainable long-term restructuring.
    --  Develop a reinforcing culture. Clearly articulate the vision from
        leadership, understand what capabilities and attributes employees will
        need to deliver it and align recruitment, training, performance
        measurement, incentives and organizational structure to reinforce these
        values.

    --  Measure performance and modify your approach. The retirement income
        market is just emerging and how it evolves will depend in part on how
        financial services companies respond to the challenge. Ensure the
        appropriate "learning loops" are in place to evaluate how consumers are
        responding to the value proposition, and be prepared to modify and adapt
        the approach on an ongoing basis.

A copy of the report is available on Deloitte's website at http://www.deloitte.com/us/insurance.

About Deloitte

As used in this document, "Deloitte" means Deloitte LLP and Deloitte Services LP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries

    Elizabeth Fogerty                 Elizabeth Cheek
    Public Relations                  Hill & Knowlton
    Deloitte                          +1 212 885 0682
    +1 212 436 7179                   Elizabeth.cheek@hillandknowlton.com
    efogerty@deloitte.com

SOURCE Deloitte