Banks focusing attention on the mass affluent market

Recent news and presentations from leading banks show a widespread desire to grow the mass affluent segments. Some examples:

  • At its recent Investor Day, Bank of America highlighted mass affluent as a key customer segment as it aims to achieve its objective of leveraging the franchise–driving closer relationships between different business units in order to grow share of customer wallet.  Earlier this year, the bank launched Merrill Edge, a new integrated banking and investment platform, for mass affluent clients.
  • Citi reorganized its U.S. credit card and retail banking units, with each unit creating segments dedicated to affluent customers.  It also recently launched a range of premium cards (ThankYou Preferred, ThankYou Premium and ThankYou Prestige) for affluent cardholders.
  • At a recent Citigroup Financial Services Conference, SunTrust highlighted mass affluent as a targeted growth area.
  • This month, Capital One introduced the “Match My Miles Challenge” promotion to attract new customers to its high-end Venture Card.
  • Chase radically simplified its credit card product portfolio, with cards now dedicated to specific customer segments, including the Freedom card, which is targeted at the mass affluent segment.

To reach and serve this segment, banks first need to conduct comprehensive research into the characteristics, financial needs and behaviors of mass affluents, as well as into the competitive environment.  Insights from this research feed into: new products and services; advertising and branch merchandising; pricing decisions; level of online and offline service provision; as well as training and ongoing support for branch and call center personnel.  It is also imperative that the bank’s organizational structure, processes and systems to support, rather than inhibit, targeting efforts.

Let’s rename social media

Social media is misnamed. Media are channels advertisers use to communicate one-way messages to target audiences. The real power of social networks is in the creation of the virtual community and the sharing and messaging it enables. Brands that use social networks simply as a media outlet are missing the point, and will alienate prospects and customers rather than engaging them.

Cheese, Financial Advisors, and Tipping Points

Professionals today in the Retirement Industry operate in a market characterized by seismic change and turmoil.   With global stock markets almost back to pre-recession levels and moderately re-surgent developed-market economies (albeit through life-support stimuli from central banks and treasury departments), some Retirement Industry professionals may think their cheese has come back to where it was pre-2007.

In a recent Retirement Intelligence Report, Campbell Edlund and I make a case that someone has indeed moved the industry’s cheese…and it’s not coming back.   Job insecurity (blue and white collar) driven by accelerated global competition(e.g. India, China, Brazil, South Korea, Singapore)  and Americans’ un-sustainably poor savings behavior,  have collided with long-term trends in rising dependency ratios (ratio of working to non-working population) and longevity, and the gradual decline of the defined benefit system that ensures continued income for many households when their work activity declines and eventually stops (retirement).

These macro-trends are now magnified and perhaps hard-coded in the consumer’s  and the advisor’s psyche by the recent Great Recession.  The current financial crisis is un- precedented and represents a traumatic experience for the baby boom generation.  And after exposure to this and the dot-com bust, many financial advisors and consumers who survived the last ten years may have a mild case of post-traumatic stress disorder – a state that will influence  future advisor  behavior with clients and the behavior of their clients.  And this is the key point.  The dynamics of the market that financial advisors serve – the end-consumer – have changed.  Some of these changes are emotional in nature, and some mirror long-term demographic trends that create “tipping points”.  But make no mistake – we do not believe these changes are cyclical in nature.

To defend and grow market share in the future, manufacturers of insurance,  investment and retirement products must align their product and marketing strategies with the changes their distribution and intermediary channel are witnessing from the end-consumer.  The good news: advisors, Plan Sponsors, and consumers want your help in demystifying the path foward.  They want a trusted source that can solve what is in most cases a retirement income problem.

For more on marketing  best practices for adapting to these changes and capturing your share of this $5 Trillion opportunity, send me an email at and request a copy of our just published Intelligence Report on helping retirement professionals capture $5 trillion in motion.