The days of the defined benefit (DB) retirement plan are so over.  In 1998, DB plans, a cornerstone in union heavy industries such as manufacturing and energy, comprised 4.19% of employer payroll costs. Ten years later, that amount dropped to 1.99%. In addition to the rapid shrinking of DB retirement plans, employers have made significant cuts to this benefit overall.  Between 1998 and 2008, retirement benefits  dropped 19%. These reductions, along with the louder warning bells about Social Security funding, mean that financial services providers have a new opportunity to market retirement saving programs to consumers.

According to Towers-Watson,  retirement contributions as a percentage of pay stands at the following levels by industry. (The number in parentheses represent the drop from 1998):

• Retail/Wholesale 3.83% (-33%)
• Manufacturing 6.35% (-29%)
• Energy, Natural Resources 9.23% (-24%)
• Pharmaceuticals 9.27% (-13%)
• High Tech 5.24% (-10%)
• Financial Services  8.28% (-9%)
• Health Care 6.1% (-4%)
• Services 4.3% +3%

Kevin Wagner, senior retirement consultant at Towers Watson points out that “the financial crisis and the Pension Protection Action of 2006 have been factors contributing to employers’ careful examination of their retirement plan strategies.” The new restraint on retirement contributions is additional evidence of a trend – employers are looking to improve their bottom lines and sometimes the need for profitability hits employee benefits. As more consumers take responsibility for planning and funding their own retirement plans, financial planners, banks and similar service providers may increase their marketing campaigns to communicate directly with consumers on this important topic.

[Source:  Retirement Benefits for U.S. Workers Declined. Towers Watson. 22 Jul. 2010. Web. 5 Aug. 2010]

The credit card industry is recovering from serious challenges encountered in the past few years. Too many consumers loaded up on debt before the recession and many are now either working out payment plans or they filed for bankruptcy and need a fresh financial start.  At the same time, the federal government passed sweeping financial reforms designed to prevent credit card companies and consumers from contributing to another economic bubble. These factors mean credit card companies will be marketing to key demographic groups to find new customers.

In total, 68% of consumers have at least 1 credit card. But the rate of credit card ownership, especially for 2+ cards, varies greatly by ethnic group, age group and income group.

Examining the demographics of credit card use can provide insight into which consumers may be targeted by these companies.

Here’s how the numbers break out by ethnic category for consumers who currently have between 2-12 credit or gas cards.

• Asian Americans 64%
• White 55%
• Hispanics 44%
• African American 34%

Consumers with higher incomes also use more credit cards. The percentage of consumers with 2-12 credit or gas cards by income break out as follows:

• Under $25,000 23%
• Between $25,000-$75,000 59%
• Over $75,000 77%

Between 2009 and 2010, the number of consumers holding credit cards  decreased over 10%.  Credit card companies will need to increase marketing campaigns to attract consumers to this convenient payment format in order to restore profitability. By marketing to younger consumers – the average age that younger consumers, under 35, begin using cards is 20.8 years – and Asian Americans, companies in this industry can increase sales.

[Sources:  Financial Capability in the United States. FINRA Investor Education Foundation and Applied Research & Consulting. 1 Dec. 2009. Web. 2 Aug. 2010; Woolsey, Ben and Schulz, Matt. Credit Card Statistics. Creditcard.com. Web. 2 Aug. 2010]

Small business owners have been hit especially hard by the recession. The combined effects of the credit crunch and the drop in business activity have made it difficult for SMBs to compete, especially for top talent. On top of that, many SMBs cannot afford to offer the kinds of employee benefits that their larger counterparts, companies with 500+ employees, do.

A MetLife survey indicates that while only 24% of employees at companies with fewer than 50 employees are very satisfied with benefits, up to 50% of employees at large companies like their benefits. The MetLife study also notes that increased satisfaction about benefits is linked to general employee satisfaction. But there is an upside for SMBs. For decades, health insurance benefits have been an emotional and expensive topic. All that is about to change with the pending nationalized health care program. According to MetLife analysts, SMBs can shift the focus and win employee satisfaction by offering improved benefits in non-health areas.

• Dental – SMBs should review plans and offer specific dental services that employees value. Plans should also focus on preventive services. According to MetLife statistics, more companies (36%) with fewer than 50 employees pay all dental coverage than the 00+ employee companies  (16%) do.
• Disability – MetLife statistics show that SMBs are more likely (45%) to pay the full cost of disability income protection than large companies (27%). However, only 51% of small companies offer this type of coverage while 87% of large companies do. To keep costs down, SMBs could shift to a partial pay model and add this benefit for more employees.
• Wellness – Currently only 27% of SMBs have a wellness program while 36% of large companies do. These programs can include the following low-cost options: discounted gym or fitness class memberships, lunchtime fitness circuit – walking program – for all employees or arranging for healthier options in vending machines and company break rooms.

Insurance companies are actively marketing these alternative benefits programs to SMBs. After the strains of the recession, more employers and employees are interested in a work-life balance that ensures a healthier and more productive workforce.

[Source: Building a Better Benefits Program Without Breaking The Budget. MetLife. 2010. Web. 22 Jul. 2010]

Mintel Comperemedia recently found that 45% of adults with access to the Internet have bypassed their banks’ online bill payment service and go directly to the biller’s website instead. Twenty-two percent of online banking customers have never paid a bill online at all.

The same survey found that 70% of adults who use the Internet use online banking. Another 7% have signed up for the service, but have never used it. Consumers aged 25-44 are slightly more likely than their counterparts to use online banking, with 79% reporting usage. Banks are pushing these services, as approximately 40% of all checking direct mail offers include a mention of online banking.

“Despite the high penetration, banks are still eager to increase the usage of online banking,” says Susan Wolfe, vice president of financial services at Mintel Comperemedia. “It’s no secret that online banking creates deeper relationships between banks and customers, so banks are keen to pull in more users.”

Ninety-three percent of respondents use online banking to check balances, 38% use it to receive account alerts and 65% use it to transfer money. Thirty percent log on to pay their mortgages or credit cards issued by their banks. Consumers, on average, receive 3.5 paperless statements a month from other sources, so Mintel Comperemedia suggests that banks provide eBills* on their sites.

“Offering eBills is a way for banks to ensure that customers continually return to their website and rely on the banks’ services, rather than turning to other third party sources,” adds Susan Wolfe. “Consumers opt to pay bills on the biller’s website because their statement is readily available. If banks provided the same thing, it could potentially increase consumer usage of online bill pay services.”

[Source:  "Consumers use online banking - but not to pay bills."  Mintel Comperemedia.  22 Jul. 2010.  Web.  23 Jul. 2010.]