Although on shaky ground recently with Wall Street, banks are now serving as the primary source of retirement advice for 43% of Americans, an increase of 2% from a year ago, with gains across all investment product categories, according to two national surveys recently conducted by Hearts & Wallets.
The two surveys provide statistics based on 9,000 responses about specific financial firms as well as exclusive insight on consumer behaviors, attitudes and actions on the finances of Americans. The surveys are The Hearts & Wallets Quantitative Panel 2011 Insight Modules "Mind-Blowing Insights Into Competitive Advantage: What Investors Want and How Competitors Perform and The Distributor Competitive Market in Benchmarks: Market Share Statistics and Firm-Specific Success Measures. Hearts & Wallets LLC is a partnership between two research experts in retirement market trends for the financial services industry, Chris L. Brown of Sway Research and Laura Varas of Mast Hill Consulting.
The survey indicates a growing leadership of banks in the retirement advice area, illustrated by Bank of America's jump from being the primary retirement advice source for 48% of its customers in 2011 compared to 27% in 2010.
"This growth shows Bank of America's efforts to put its retirement messaging in front of so many customers, at ATMs, in branches, and on its Web site, is working," said Chris Brown, Hearts & Wallets principal. "The bank's re-launch of its retirement income calculator in the fourth quarter of 2010 was well done, positively reflecting recent changes in consumer attitudes to retirement."
Banking-channel growth may have come at the expense of market leader Fidelity's historic dominance in the retirement space. Fidelity still holds its No. 1 rank in many categories, such as which firm Americans keep the largest share of their retirement money. However, Fidelity slipped slightly in 2011, with 8% of those surveyed indicating that Fidelity is their primary firm compared to 11% in 2010.
"Fidelity has been very successful in its efforts over the past few years to court investors nearing retirement," said Laura Varas, Hearts & Wallets principal. "It may be that focusing on the mass market, which is the segment that tends to drive these national figures, doesn't make as much sense for the firm as really performing well with older affluent investors."
Another banking trend is designing products that work well together. The bank strategy is to recognize customers with more than one type of account and reward customer loyalty and encourage additional business. USAA emerges as the leader in this area, with the average customer having more than 2.5 account types.
"Banks have attracted customer investment dollars because of their ability to be a one-stop resource, offering checking, mortgage and other products," said Brown. "Banking institutions increased primary relationships with affluent/high-net-worth accumulators, jumping to 30% from 20% in the past year, while self-service brokers and full-service firms decreased share over the same time period."
The survey also examined which firms have done the best job of differentiating their value propositions to appeal to specific groups of customers. Scottrade and UBS performed well in this area by clearly explaining how they earn money to their customers.