UK Workplace Marketing 2010

UK Workplace Marketing 2010 published by Datamonitor in February, 2010. This report consists of Pages: 55 and the price starts from US $ 4495.

Introduction

Abstract

Introduction

Recent developments in the financial services industry from the economic turmoil has caused consumer behaviors to change with regards to how financial products are sold to them. Attention is now focused to a greater degree on the workplace as a potentially lucrative channel for the distribution of financial service products.

Scope of this research

• Sizes the UK worksite market and identifies the key drivers within the market.
• Comprehensive analyses of the provision of advice in the workplace and its efficiency.
• Identifies opportunities to provide those operating within the market a competitive advantage.

Research and analysis highlights

Unspectacular stock market performance and economic volatility of the past year has heightened concerns and awareness of effective financial investment. Employees are increasingly looking for reassurance that their benefit selection is prudent, and some consider their employer to be one source of such reassurance.

These changing consumer behaviors coupled with regulatory proposals are an opportunity for providers to ignite the workplace as a trustworthy alternative distribution channel for financial services.

Key reasons to purchase this research

• Comprehensive analyses of the key growth drivers of worksite marketing and the relative impact each is likely to have.
• Understand challenges to the growth of the market & provide a competitive edge to incumbents & potential market entrants looking to gain an advantage.
• Identifies key steps to success and draws attention to profit maximizing opportunities within the market.

Table of Contents

OVERVIEW

• Catalyst
• Summary

EXECUTIVE SUMMARY

INTRODUCTION TO WORKPLACE MARKETING

• Workplace marketing distributes financial products via the workplace
• Standard, flexible and voluntary benefits are usually offered in the workplace
  • Standard benefits cover an array of retail financial products
  • Flexible benefits allows employees to choose the extent of provision
  • Voluntary benefits place a larger role of responsibility on the employee to arrange the service
  • Life and pensions products are offered under workplace marketing
  • Other products offered include private medical insurance and retail banking perks
  • Companies' benefit strategy hinges on employee demand

• Workplace marketing benefits financial service providers, employers and employees
• Provider opportunities lie in proactively encouraging companies to set up financial benefit schemes
  • The most common channel for establishing a worksite partnership is through direct negotiation between provider and client
  • Employee benefit consultants are widely used by companies as a strategic management tool to help recruit and retain talent
  • IFAs provide a unique selling point of being able to research and advise on all available products
  • Direct partnering with a financial institution is a method that eliminates the need to employ a benefits consultant or IFA

KEY DRIVERS FOR ESTABLISHING WORKPLACE MARKETING

• Changing workplace structure: The UK labor market is offering the opportunity to establish workplace marketing
  • The UK employee market is vastly underserved
  • Industrial variations in size of business need to be taken in account before establishing workplace operations
  • The number of employees per site is important in assessing how to service the employee base

• Changing consumer priorities: A workplace channel will meet the requirements of today' s consumer priorities
  • Consumers' trust in financial service institutions are lower than ever and it is to the workplace they need to turn to
  • Workplace marketing provides an opportunity to meet consumers' short-term priorities
  • The workplace can facilitate consumers' search for more financial information
  • Consumers' trust in financial service institutions are lower than ever and it is to the workplace they need to turn to

• Pensions reform: The introduction of NESTs will change the UK pension product landscape
  • NESTs will provide a pool of 10 million employees who are currently not saving enough for retirement
  • The UK government is reforming workplace pension provision from 2012 to make saving for retirement the norm
  • Employees need to grasp the opportunity offered from workplace marketing as the move from DB to DC pensions transfer financial risk onto them
  • Prior to NESTS, the introduction of stakeholder pensions in 2001 had failed to produce the expected take-up results
  • However, policy must also place emphasis on financial education among young people to increase financial responsibility

• Distribution reform: The Retail Distribution Review will change the pattern of distribution in the market
  • The RDR produces key challenges for IFAs who will now need to capture opportunities within workplace marketing
  • A basic and generic advice model in the workplace will promote employees to have a holistic approach to financial planning
  • The type of advice on offer will affect employee take-up rates
  • The RDR demonstrates clarity of offering and value to customers

THE STEPS TO SUCCESS

• Employers must allow for flexibility of benefits to match current labor and workplace trends
  • Flexible benefits need to be offered to match the wider labor market move towards a more flexible working environment
  • Flexible and innovative reward systems will foster employee loyalty and increase staff retention
  • Motivating employees is vital in order to enable successful implementation of workplace marketing
  • Businesses must engage their employees the same way as they expect to engage their consumers

• The right targeting, effective education and correct levels of service are essential for a successful workplace operation
  • Providers must target the right industries and consider the level of access they are able to achieve within each company
  • When choosing targets, providers should take into consideration the level of access that they are able to achieve within each company or industry that they are targeting, as well as the socio-economic profile of the employees. It is possible to broadly split both industries, and individual companies if necessary, into one of two categories dependent on how easy it is to use the variety of communication methods that providers have at their disposal.
  • Some industries may typically not have a high enough level of IT access to support high levels of e-Workplace marketing, have a low number of people per site making site visits less effective or may tend to have lower levels of pay making them less profitable to target. Such industries or companies could typically be classed as ‘high costs/low access' and are the more unprofitable businesses to target.
  • At the other end of the scale are businesses such as IT firms which typically have high levels of IT access, large numbers of people per site and average or above average levels of pay. These can typically be classed as ‘low cost/high access' and are among the most profitable to be targeted.
  • Workplace communication and marketing is of high importance to enable employees to appreciate the personal value of a benefit
  • As the workplace market becomes increasingly saturated the main driver of growth is going to increasingly focus on ways of maximizing profits. One of the key ways this will come about is through the cross-selling of products through the workplace. Another key way is to offer innovative solutions that meet the changing priorities of today' s consumers.
  • Opportunities like in offering total-product suites in the workplace
  • There are also several steps that can be taken to increase take-up rates leading to potentially larger profits. While face-to-face meetings lead to higher take-up rates, providers should also push for the increased use of pension auto-enrollment or opt-out schemes as standard rather than the opt-in method that is more commonly used. Employers should also be pushed to make a contribution wherever possible and the importance that this contribution can have on take-up rates and staff retention should be highlighted.
  • Benefits offered need to suit the flexibility required to meet consumers' short-term anxieties
  • TCF is at the center of the FSA' s work in retail financial markets
  • Technology reinforces the workplace opportunity

• The move to platform relationshipsProvider opportunities lie in proactively encouraging companies to set up financial benefit schemes
  • The most common channel for establishing a workplace partnership is through direct negotiation between provider and client
  • Employee benefit consultants are widely used by companies as a strategic management tool to help recruit and retain talent
  • IFAs provide a unique selling point of being able to research and advise on all available products
  • Direct partnering with a financial institution is a method that eliminates the need to employ a benefits consultant or IFA

APPENDIX

• Definitions
  • Single premium policy
  • Regular premium
  • New business
  • Wrap accounts

• Product definitions
  • Life based savings products
  • Life Assurance
  • Single Premium Life
  • With-profit bond
  • Unit-linked bond
  • Income and growth bonds
  • Guaranteed Equity bonds
  • Distribution bonds
  • Purchased Life Annuities
  • Other bonds
  • Annual Premium Life
  • Endowment Policy
  • Whole of Life Insurance
  • Term Assurance
  • Income Protection
  • Critical Illness
  • Collective Life
  • ISAs
  • Personal Pensions
  • Stakeholder Pensions
  • Group personal pensions
  • DSS Rebates
  • Employer Sponsored Stakeholder pension (ESS)
  • SIPPs (Self Invested Personal Pensions)
  • FSAVC (Free-Standing Additional Voluntary Contributions)

• ABI definitions of distribution channels
  • Independent Financial Advisors (IFAs)
  • Direct sales forces
  • Tied agents
  • Multi-tied agents
  • Bancassurance
  • Direct marketing
  • Telesales
  • Other

• Matrix-Data definitions
  • IFA firm types
  • Grossed Annual Aggregate Turnover
  • IFA sales people

• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

TABLES

• Table: UK employment by number of employees per business size
• Table: Yearly earnings (£m) split by industry
• Table: Average number of people per physical site split by industry

FIGURES

• Figure: Distribution within the UK labor market is focused around big companies
• Figure: The construction and education industries have the lowest average number of people per physical site
• Figure: Consumers lack motivation to invest more for the long term in the next six months
• Figure: Consumers fail to look more interested in the financial world in general
• Figure: Although the financial world in general has failed to inspire consumers interests, consumers are paying more attention to FS literature than before the downturn
• Figure: Ten million people are expected to participate in the Personal Accounts scheme in 2012
• Figure: By 2012 it is proposed that employees will have a minimum of 8% of their salary paid into a personal pension scheme
• Figure: The basic state pension forms the foundation of pension provision
• Figure: The RDR creates three key challenges for the IFA model
• Figure: While individual face-to-face advice is the most effective method of communication it is the most expensive to provide
• Figure: The RDR proposes a three way split for advice

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