Financial Services Industry Looks to Develop the Workplace into a Major Distribution Channel for its Products

London, England, June 02, 2003 � According to new research from actuarial and management consultant Tillinghast – Towers Perrin, over the next two years there is going to be a dramatic increase in worksite marketing � the sale of financial services products through the workplace.

The research, which was carried out among leading financial services companies, revealed that around half currently generate up to 5% of their new business sales through some form of worksite marketing. By 2005, four out of ten estimate they will be generating more than 25% of their new income through this channel.

Vaughan Jenkins, senior consultant, Tillinghast – Towers Perrin said: “In the USA, worksite marketing is a major distribution channel but in the UK (and much of the rest of Europe) it has yet to really take off. However, our research suggests this is set to change and that for many people, purchasing a financial product or accessing financial advice through the workplace will become far more common.”

Of those financial services companies interviewed, 10% said worksite marketing had exceeded their expectations while 14% said that they had mastered the worksite marketing tools and techniques to allow for further expansion. Over 40% said that they had experimented in this area or were considering worksite marketing opportunities. Just 5% said that they had no experience of this distribution channel and no plans to develop in this area.

Tillinghast – Towers Perrin highlights a number of factors fuelling the growth of worksite marketing. These include:

  • The relatively low customer acquisition costs of the channel in an increasingly low margin environment
  • The increasing interest in flexible benefit schemes on the part of employers as they look to reduce their costs while adding choice. The vast majority of financial services companies interviewed said that the growing demand for flexible benefits will have a significant impact on their product and service offerings. As a result of this, one in three believe they will need to partner with flex providers and 14% said that they will have to develop their own flex platforms.
  • The continued attention from the Government on finding ways to reduce the retirement savings gap and to educate consumers on financial issues
  • The potential demise of occupational pension schemes in favour of individual stakeholder plans

Tillinghast�s research revealed that simple product propositions that lend themselves to traditional direct marketing methods have predominated. According to the respondents, the main growth product areas over the next two years are expected to be critical illness/PHI, health insurance and banking products such as personal loans, credit cards and mortgages.

In terms of what financial services companies identify as being the most important factors in driving sales through the worksite, the biggest issue is the employer�s attitude to staff benefit provision. This is followed by their ability to develop a direct relationship with the employer, and the economic and socio demographic profile of the staff. Employee access to (and their proficiency in) technology is also an important factor.

According to the research, the main challenges they face in making a success of the worksite as a distribution channel are developing the necessary sales tools and techniques and a strong understanding of employee motivation for taking out financial products and services through their workplace. Many recognise, however, that they have some fundamental questions to answer on where and how to play in the market � designing and implementing a market entry or development programme and internal organisation were highlighted as key factors. Hardly any, however, could see the benefit of commissioning work on overseas markets and role models, surprisingly perhaps given the relatively immaturity of the UK market.

Vaughan Jenkins said: “Financial services companies are increasingly seeing the worksite as a retail environment but for many, there is still a range of complex, organisational challenges which they need to tackle regardless of whether they intend to approach the market directly or through intermediaries. Given that market share is still very much up for grabs � when asked respondents to the survey failed to identify any clear market leaders – they should look to act before they are shut out by more adaptable competitors.”

About Tillinghast � Towers Perrin

Tillinghast provides actuarial and management consulting to financial services companies and advises other organizations on their self-insurance programs. Tillinghast is a premier independent advisor to the insurance industry; its major clients include most of the world’s top insurers. It operates as one global business, through a network of 42 offices in 20 countries. Tillinghast is a division of Towers Perrin, one of world’s largest management and human resource consulting firms. The Towers Perrin family of businesses also includes Towers Perrin Reinsurance, a leading global reinsurance intermediary. Together, these three businesses have over 9,000 employees in 23 countries. More information about Tillinghast is available at