Serving the Mass Affluent Customer Collaborating with Your Retail Banking Partners to Increase Penetration and Cross-Sell Moderator: Bill Hippensteel, BAI Panelists: Bruce Hagemann Patrick Scotto di Luzio David Greene Diplomat Ballroom 4 10:15-11:15 a.m.
Mass Affluent Customers are an extremely attractive segment The mass affluent represents the largest pool of liquid deposits United States, 2007 $536 B Mass Market $984 B Mass Affluent $550 B Affluent $160 B High Net Worth $65,957 Mass Market Average Credit Balances, United States, 2007 $131,977 Mass Affluent $303,208 Affluent Mass Market = $0 - $99,999 in Investable Assets Mass Affluent = $100,000 - $999,999 in Investable Assets Affluent = $1MM - $3MM in Investable Assets High-Net-Worth = > $3MM in Investable Assets $507,315 High Net Worth 2 The Mass Affluent is Becoming Wealthier Household Financials by Age, United States, 2004 Household Income Household Income
Financial Institutions still struggling to serve this market Despite this segment s attractiveness: The Mass Affluent segment continues to be the most underserved customers and many will outlive their money Few are confident and their retirement plans and many are retiring later than planned Only half are satisfied with their current allocation of funds Financial institutions currently do not meet all of the financial needs of this segment 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Few confident in their retirement plans 39% 43% 18% Mass Affluent 53% 38% 9% Emerging Affluent Confident Somewhat Confident Not Confident FIs only somewhat meets their investment needs 33% 44% 45% 36% 23% 19% Mass Affluent Emerging Affluent Financial institution meeting needs Financial institutions somewhat meeting needs Financial institution not meeting needs Source: Novantas research. Proprietary and Confidential to Novantas and Informa
Mass Affluent Customers Having an Impact on Retailers Not so Good
Mass Affluent Customers Having an Impact on Retailers Not so Good Doing Well
The Mass Affluent Market is Comprised of Four Sub-Segments: Young Professionals (Looking to simplify their lives) Attract: Need attraction strategies for this group. They value products that make their life simple. Is tech savvy and tends to be self directed. High use of investment & credit products. Established Professionals (Assuming More Responsibilities) Cross-sell: Combination of attraction & cross sell. Group leads active lifestyle. Concern for paying off debt and saving for education. Pre-Retirees (Planning for Retirement) Expand: Primary focus is paying for retirement. They prefer to buy from recognized and trusted entities. Looks for advice. Retirees (Preserve Wealth) Maintain: Generally looking to preserve wealth, rather than grow assets. Preserve assets and manage major events. Tends to consolidate assets among institutions. 6
Customer Relationship Focused: Mass Affluent Customer Segments Customer Needs Product / Channels Strategic Framework Key Initiatives Among the Mass Affluent, we have created four distinct customer behavioral subsegments Young Professionals Building a foundation Established Professionals & Families Assuming more responsibilities Pre-Retirees Seriously planning for retirement Retirees Managing retirement... and listened to what they want from their bank... A partner to help me achieve my goals A differentiated customer experience A personal relationship and advisory capabilities...resulting in customercentric principles we will follow to deliver on these needs Simple, reliable, banking Know Me and my unique needs Bank when and how I want Value Me and My Relationship Fair Pricing I Understand... through all products... Deposits Payments Investments Insurance Mortgage / Loans and channels... Branch On-line ATM Mobile Phone to develop key strategies. Develop an integrated, customer-centric, multichannel, value proposition Apply superior knowledge of the customer to develop relevant solutions Uniquely meet customer needs by understanding that people use rational processes to satisfy emotional needs Utilize value to cost principles to differentiate value proposition in key areas: Product, Price, Advice, Service Experience and executive critical initiatives. Segmentation Portfolios Marketing Tactical Programs Customer Experience LOB Integration New Preferred Client Program Product Development Branch Location Focus
Integrating the Investment Group with the Banking Group Banking Group Value Propositions Service Experience Bringing it Together Investment Group Young Professionals (Looking to simplify their lives) Established Professionals (Assuming More Responsibilities) Pre-Retirees (Planning for Retirement) Manage Retirees (Preserve Wealth) Connect Discover Incent Pay Reward
Panelists Moderator: Bill Hippensteel Chief Content Officer BAI Bruce Hagemann CEO BBVA Securities, Inc. Patrick R. Scotto di Luzio Head, Personal Segment Management BMO Harris Bank David Greene Managing Partner Greene Consulting
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