Marketing Retirement Investments to Small Businesses.

• Author: Gervino, Joan

Problem:

Bankers want to find out about new ways to serve the financial needs of their small- and medium-sized business customers. Should they consider marketing a variety of investment services as retirement planning packages for the employees of these small-business firms? What kinds of products are most popular with these customers? Are there any success stories or examples of what worked at other banks? What are the best techniques for reaching out and selling these services within the small-business market?

Solution:

To meet the growing demand for retirement services and planning, banks and other financial institutions have found small businesses are an excellent market for expanding retirement investment services and further solidifying the bank's relationships with these customers. Underscoring the need for these retirement programs are the 76 million baby boomers who are approaching retirement age. These "boomers" are growing concerned that Social Security wilt not be sufficient to support them in their accustomed lifestyles without being supplemented by ample savings and investments.

According to a survey by Spectrem Group in Windsor, Conn., of the more than 7.5 million U.S. companies with less than 100 employees, just 20 percent presently offer a retirement plan. Thus, there is a tremendous market opportunity for banks. Some banks have been addressing these needs via partnership relationships with mutual fund companies and other providers to share the risks, while locking in profitable customer relationships. Many small businesses already offer some benefits, such as health plans and sick and vacation leave, but believe they are not big enough to offer the sophisticated retirement plans offered by larger companies. Changing that mind-set is key to getting these smaller companies as clients. Small businesses give banks overall high marks for customer service and accurate, timely record keeping. Less positive fur banks, small businesses also perceive mutual fund companies as more cost effective. They also perceive insurance companies as providing more tailored programs with specialized gu idance and employee communication.

Though the survey suggests insurance companies may have an edge, it also portrays business owners as relying heavily on their accountants for implementing new retirement programs. Thus, banks may find it particularly helpful to concentrate their marketing efforts on accountants and CPA firms for referrals, in...