Financial institutions are often failing to connect with those who may need retirement planning advice and solutions, particularly via the workplace and among the less affluent, a survey by Deloitte’s Center for Financial Services revealed.
The survey of nearly 4,500 consumers from a wide range of age and income groups found this failure to communicate to be one of five barriers preventing life insurance and annuity companies from more effectively reaching prospects when it comes to retirement planning.
(Our last article on this survey focused on the first of the five barriers — conflicting priorities. Future blogs over the next few weeks will address lack of product awareness, mistrust of financial institutions, and a “do it myself” mentality among consumers.)
Many retirement planning prospects — even those who might be considered more lucrative from an asset-gathering perspective — are not being actively engaged by financial services providers. Six in 10 surveyed by Deloitte say they have not had interactions in the past two years with any financial institution about their retirement savings and income needs, whether via in-person meetings, phone conversations, e-mail communications or seminars. This disengaged percentage rose to about three out of four among those 45 and younger.
Even half of the respondents between ages 56 and 64 — those presumably with the greatest need for assistance given their proximity to retirement — said no one had been in touch with them on this subject. And fewer than one in four with a 401(k) plan said they had been contacted by the plan provider to discuss their retirement needs.
Too much focus on the affluent market?
Not surprisingly, financial institutions appear to be concentrating most of their marketing efforts at the affluent segment. Deloitte’s survey confirmed that the higher one’s household income, the more likely respondents were to say they had been contacted by a financial institution about their retirement needs, particularly among those reporting household incomes above $200,000. That leaves large segments of the population underserved when it comes to retirement services.
Ideally, the workplace is a natural venue to communicate with the widest range of consumers about their retirement needs, given that for many Americans, a work-based 401(k) may be the only “plan” they have in place beyond Social Security to finance their retirement. Indeed, since their introduction in the 1970s, 401(k)s have radically altered the retirement landscape, putting more of the onus on individual savings while making the workplace one of the more important channels for retirement awareness and planning.
In fact, four in 10 between the ages of 26 and 45 surveyed by Deloitte cited affiliation with their employer as one of the reasons for choosing a financial institution to meet their retirement needs. However, it appears that financial services institutions have not been able to fully tap the potential of workplace marketing.
Deloitte’s survey found that nearly half of those with a 401(k) or some other workplace retirement plan were either not being offered retirement advice through their plan provider (28 percent) or didn’t know if such advice was even available (19 percent).