Workplace Marketing - UK

Published by: Mintel International Group Ltd.

Published: Oct. 1, 2006 - 127 Pages

Table of Contents

INTRODUCTION AND ABBREVIATIONS

Around half of UK employees were positive about workplace marketing in 2004

Report structure

A more regulated operating environment

More people at work

Increased demand for financial products

Figure 1: Expected demand for financial services savings/investment and borrowing products, Q4 2003/Q1 2004-Q1/Q2 2006

Distribution of products and the buying process are still under scrutiny

Education is the best way to financial success

The workplace is taking a central role in education and distribution

Retirement planning and financial well-being are key drivers of need for workplace financial advice

Technology is playing a key role

Employee benefit packages are a critical factor in developing and retaining staff

The structure of UK industry with thousands of small- and medium-sized businesses is a barrier 6 Figure 2: Number of enterprises and employment in whole UK economy, by number of employees, UK, 2005

ABBREVIATIONS

INSIGHTS AND OPPORTUNITIES

Filling the ‘advice gap’

Health is key for many employees

Consumers need to grasp the opportunities offered

Looking beyond basic pension provision

The ‘Interested’ group provides marketing opportunities

MARKET IN BRIEF

Move from fixed to flexible working patterns is a key driver of workplace marketing

Greater self-reliance and knowledge needed - particularly in personal finance

Pensions and health products head employees’ wish-lists

Worksite marketing works better for products people understand

Future growth will depend on growth in numbers and financial knowledge of employees

Focus on generic advice in workplace financial education initiatives

Supply chain has inhibited past workplace marketing growth

Role of intermediary critical

The move to platform relationships

MARKET BACKGROUND

What is worksite marketing?

Features of worksite marketing

Payroll deductions a key feature of worksite marketing

Key factors in a successful worksite marketing approach

A range of business models

Emergence of the online virtual platform

Education and advice play key roles in worksite marketing

The decline in final salary pension schemes

Rise of the defined contribution model - transfer of financial risk to employee

The introduction of stakeholder pensions

Not just pensions for employees to consider

Extending workplace education - ‘Make the Most of Your Money’

The need for advice

Developments in the provision of generic financial advice

MARKET FACTORS

Favourable rise in employment

Figure 3: Employment, employees and the unemployed, 1996-2006

Employers’ surveys tell a different story

The role of government and government strategy

Government attitudes and actions are crucial for the success of workplace marketing

Pensions at the centre of workplace marketing

Pension funding statements to be sent to scheme members

New NAPF ‘PensionsForce’ initiative wins government backing

The National Pension Savings Scheme (NPSS)

Affordability for employers

Clarity around what the shape of the NPSS will be

Supply process and timing

Regulation

Treating Customers Fairly is at the centre of the FSA’s work in retail financial markets

Distribution reform improves workplace prospects

Technology reinforces the workplace opportunity

Turner could change the thrust of workplace marketing

Consumers - saving more and borrowing less

Figure 4: Spending and saving intentions over next 12 months, January 2003-August 2006

Cashing in life and pension products

Buying patterns are changing

Employers - constrained in the past but now set to enjoy more freedom

The emerging role of the employer as financial product supplier

Employers and the ‘advice gap’

The move from DB to DC pensions

Figure 5: Percentage of workforce with DB occupational pensions, 1996-2005

April 2006 - the final shift in the personalisation of pensions

Greater need for communication and education of employees

More pressure to take out life-cover at work

Trends in the provision of pensions and other employee benefits

Empowering employees

Employee benefits packages poorly communicated to staff

THE SUPPLY STRUCTURE

Overview of the supply chain

Providers benefit from scale

Intermediaries hold the key to success

Employers increasingly embrace workplace marketing

Employees also see significant benefits

Figure 6: Reasons for arranging financial products through employer/place of work, March 2004

Major product and service providers show the way in tough operating environment

The rise of workplace platforms

Impact of stakeholder pensions with a 1% charge cap

youatwork is a good example

Aegon UK develops strong positioning in workplace marketing

Prudential builds workplace services on corporate pensions position

Scottish Life works4you

Banks and building societies sometimes base workplace marketing on sharesave services

Other niche approaches may also succeed

MARKET SIZE AND SCOPE FOR GROWTH

Figure 7: Savings & investment expected activity, workforce, Q2 2004-06

Figure 8: Savings & investment expected activity, workforce, Q3 2006

Over 44 million financial services products sourced through the workplace

Figure 9: Sourcing financial products through the workplace, July 2006

Supply side constraints limit demand potential

Lower benefits in small firms

Age of firm also a factor in financial product provision

Figure 10: Occupational pensions provision according to age of company, 2005

Fall in pension coverage overall

Figure 11: Pension provision by firms in 2003 and 2005 (employee weighted)

Is there a reduction in supply of financial products via the workplace?

THE CONSUMER - PRODUCT OWNERSHIP AND FINANCIAL UNDERSTANDING

Financial product penetration

Figure 12: Product penetration of selected financial products, July 2006

Expected activity of workers

Figure 13: Expected activity in next 6 months, selected products, June 2006

Consumers’ understanding of financial products

Figure 14: Level of understanding of financial products, June 2004 and July 2006

Signs of improvement in financial understanding

Figure 15: Level of understanding of financial products, by gender, age and socio-economic group, July 2006

Improvement in part-time workers’ financial product understanding

Figure 16: Level of understanding of financial products, by working status and gross annual household income, July 2006

Who employees would use for financial advice

Figure 17: Main sources of financial advice, by employee, July 2006

FAVOURED BENEFITS AND PRODUCTS ARRANGED VIA EMPLOYERS

Pensions are the top employee benefit

Figure 18: Products and benefits offered by employer, July 2006

15 million people have access to financial advice at work

Figure 19: Products and benefits offered by employer and equivalent number of consumers with access to these benefits, July 2006

Big differences in benefits received by full- and part-time employees and by TV region

Figure 20: Products and benefits offered by employer, by employee status and household income, July 2006

Those in the North West/Scotland are most likely to receive benefits

Figure 21: Products and benefits offered by employer, by TV region, July 2006

Implications and opportunities

As well as pensions, employees would like greater access to health protection products

Figure 22: Products and benefits that respondents would like their employer to offer, July 2006

25-34-year-olds seek better benefits

Figure 23: Products and benefits that respondents would like their employer to offer, by gender, age and socio-economic group, July 2006

Big demand for more employee benefits in Scotland

Figure 24: Products and benefits that respondents would like their employer to offer, by TV region and age/socio-economic groups, July 2006

Low product take-up - a weakness of worksite marketing

Figure 25: Products already arranged via employer, July 2006

Men, middle-aged groups and ABs most likely to arrange products through employers

Figure 26: Products already arranged via employer, by gender, age and socio-economic group, July 2006

Variations between regions in product arrangements

Figure 27: Products already arranged via employer, by TV region, July 2006

Impact and conclusions

ADVICE AND EDUCATION AT WORK

Some 165 million employees would welcome financial advice in the workplace

Figure 28: Areas that employees would like financial advice/education about in the workplace, July 2006

Less advice sought by C2DEs in areas of pension and retirement planning

Figure 29: Areas that employees would like financial advice/education about in the workplace, by gender, age and socio-economic group, July 2006

Less difference in type of financial advice needed on a regional basis

Figure 30: Areas that employees would like financial advice/education about in the workplace, by TV region and age/socio-economic groups, July 2006

Pre-/no family groups favour pensions advice

Figure 31: Areas that employees would like financial advice/education about in the workplace, by lifestage and Mintel’s Special Groups, July 2006

Employees would prefer one-to-one sessions with IFAs

Figure 32: Preferred format for financial education/advice, July 2006

The more ABC1s among workforce, the greater the demand for independent financial advice

Figure 33: Preferred format for financial education/advice, by gender, age and socio-economic group, July 2006

Greatest demand for one-to-one sessions in the North West

Figure 34: Preferred format for financial education/advice, by TV region, July 2006

One-to-one sessions head preference among employees in main areas of advice/training

Figure 35: Preferred format for financial education/advice by areas that employees would like financial advice/education about in the workplace, July 2006

Employees who would like financial advice/training tend to have average-to-poor understanding of financial products

Figure 36: Areas that employees would like financial advice/education about in the workplace by level of understanding of financial products, July 2006

Implications and opportunities

CONSUMER ATTITUDES TOWARDS WORKPLACE MARKETING

Around a half of employees are positive about workplace marketing

Figure 37: Attitudes towards advice and product provision in the workplace, July 2006

ABs and 18-34-year-olds were most in agreement with receiving advice from an IFA at work

Figure 38: Agreement with statement ‘I would be happy to receive advice from an independent financial adviser who visited my place of work’, by gender, age and socio-economic group, July 2006

Greater belief in workplace being less risky in buying a financial product among C2DEs

Figure 39: Agreement with statement ‘Buying a financial product offered by my employer would be less risky than buying elsewhere’, by gender, age and socio-economic group, July 2006

Convenience of arranging financial products through work is a bigger factor for men than women

Figure 40: Agreement with statement ‘It is more convenient to arrange financial products through my workplace/employer’, by gender, age and socio-economic group, July 2006

Men, under-35s and ABC1s are most keen on learning about financial products on the Internet at work

Figure 41: Agreement with statement ‘I would be happy to find out more about financial products if my employer allowed me to use the Internet to have training’, by gender, age and socio-economic group, July 2006

Some evidence of benefits of workplace marketing to people with poor financial product understanding

Figure 42: Agreement with attitudinal statements by level of understanding of financial products, July 2006

Implications and opportunities

Mixed attitudes towards pensions proposals

The retirement savings gap and the proposed National Pensions Savings Scheme

Figure 43: Attitudes towards pensions/compulsion, July 2006

ABs most in agreement; C2s most in disagreement

Figure 44: Agreement with statement ‘People should be forced to put money into a pension scheme’, by gender, age and socio-economic group, July 2006

Figure 45: Agreement with statement ‘I would not like the idea of an employer automatically enrolling me in a pension scheme’, by gender, age and socio-economic group, July 2006

Implications and opportunities

Around one third are classified as ‘Interested’

Iffy Individualists (37% of respondents)

Interested (30% of respondents)

Uneager (33% of respondents)

Figure 46: Typologies relating to attitudinal statements on workplace marketing, by gender, age and socioeconomic group, July 2006

THE FUTURE

Around half of employees are supportive of workplace marketing

The problems of small firms

Pensions are the top benefit offered and sought

More product self-provision will enhance worksite marketing

Some worries over pension scheme problems will spill over into wider benefits environment

Consumers reject compulsory pension contributions as a fix to the retirement gap

Fixing the advice/communications gap

The challenge for suppliers

The growth of the platform

FORECAST

Scenario 1

Figure 47: Forecast of workplace marketing, scenario 1, 2006-11

Scenario 2

Figure 48: Forecast of workplace marketing, scenario 2, 2006-11

Scenario 3

Figure 49: Forecast of workplace marketing, scenario 3, 2006-11

APPENDIX: RESEARCH METHODOLOGY

Abstract

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