Description About the Financial Product

Discuss about the Financial Product Sales Strategy.

In the recent times, it is expected that the number of people over the age of 65 will increase by seventy five percent in Australia over the next twenty years. The figure of 3.3 million of 2012 will be projected to increase by 5.8 million in 2032. As a result, the nation is also expecting the post-retirement assets that likely to grow from around $300bn current to $1.3trn by 2032. Though these statistics unfolds a challenge, but the anticipated volume of post-retirement investments also considers an opportunity for innovation.

Different financial products or services can meet a specific goal and needs (Beshears et al 2015). Investing in specific financial products, thus, is an important fact to consider. In this assignment, the retirement saving accounts is being considered as the main marketing product. The main purpose of the assignment is to develop an effective approach to selling retirement savings accounts in the market of Australia.

The retirement savings account is one of the rising options among other financial services and products like securities, debentures, foreign exchange, debenture and many others. This kind of retire accounts can be used for transferring client’s super fund into once while all conditions are met under The Retirement Savings and Related Legislation Amendment regulation 2013. Interestingly, majority of the Australian people are more interested for setting their money aside to be spent after retirement. A series of retirement plans and programs are offered by many of financial institutes of Australia such as Commonwealth Bank of Australia, Queensland Country Credit Union, Police Financial Services Limited, Defence Bank Limited and Heritage Bank Limited and many others. All these providers allow individual to contribute a limited yearly sum towards the retirement whereas taxes on the interest earned in the account are deferred.  It is interestingly observe that the average growing pool of assets flowing into the retirement space and innovation is occurring with certain funds across both services and products offerings; the retirement saving accounts are one of them. In short, the current trend roughly indicates that half the financial industry presently busy with the development of the post-retirement investment strategy and that is predominantly attained through the adjustment to the defensive split/overall growth. However, a lot of encouragement needs to be provided by the providers of retirement savings accounts in the market of Australia to make more investments into these retirement accounts.

Sales Goals

There are only 15% of total funds that adopts lifecycle offerings across Australia in the current phase of individual retirement field (Entrop et al 2016). By selling more retirement saving accounts, the goal is to increase the rate of superannuation savings (at least 20%-25%) into an adequate and sustainable income stream in retirement within 2 years. The sales goal is also incorporate to increase the level of interest to invest in retirement saving accounts by offering competitive interest rates.

Several tactics are available to selling retirement savings account in the market of Australia such as selling direct-to-customer through the official website (Koposko et al 2016). In this case, the product provider will be sold their retire savings account in the same manner because it would be cost effective. Furthermore, it could be easy to popularize this proposed product among the target customers by selling it through online and offline as well (Bateman et al 2014). However, selling through online would be more emphasized by the company because majority of Australian people are make their financial investment through online as per recent trend. In this way, the potential consumers of retirement saving accounts could resolve their queries instant and thus, the financial service provider can deliver the best service over others.

Savings for house, vacation, college are in highest priority among Australian, whereas saving for retirement can seem like the last priority to them (Worthington & Devlin 2013). Unfortunately, half of workers are participating in workplace retirement plans as per the recent survey results. By changing these perceptions gradually among Australian, several financial institutions are offers higher interest compare to other saving or retail accounts in Australia. Different types of target retirement savings accounts are available in the market such as traditional plans featuring pre-tax contributions and Roth plans offering after-tax contributions.

Table 1: Target Accounts

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Table 2: Timeline

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The methodological approach need to be followed for making an effective marketing strategy (Agnew 2013). To sell more retirement savings accounts across the Australian market, a proper plan needs to be developed. Individuals belonging to the service sector will be targeted first because both earnings and uncertainties are high. However, it is important to make an effort to realize that it is significant to plan for retirement regardless of how individual foresee that part of the life because present’s income and time are the two biggest things need going for individual. The marketing strategy will highlight the key benefits that may be perceived by the targeted customers of the financial service providers. Generally, the feature of higher competitive rate of interests and superannuation regulations will be promoted.  However, the tax saving benefits and higher accumulated interest after the retirement features can be marketed as the biggest advantage for retirement savings accounts. The selling efforts should be given towards an ease that make a smooth value transition into retirement of individuals. Providing higher regular income to individuals at the retirement would be the differentiated features for this proposed financial product (Speelman et al 2013). All these marketing efforts will be promoted by the marketing staff of the financial institution.

Sales Activities

Table 3: Revenue Sources

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Selling products or services to the potential market is the main activity to make the plan for an effective financial product sales strategy (Entrop et al 2016). Considering the market trends and functionalists of the other similar service providers, the RSA will be sold out to the target market. In the context, the product will be sold out through the official website. All promotional activities will be conducted by the marketing experts of the service provider along with featuring key product benefits and differentiated factors. This proposed sales strategy is quite justifiable over others like retail, distributor and agent because it would be cost effective. Furthermore, this selling approach would be suitable because the direct-to –customer relationship can easily be established through their website.

The competitor’s prices will be considered for developing the price for RSA. To provide higher rate of interest, the company will majorly sell other existing saving and current accounts (Burnett et al 2014). While many retail funds have started with lower fees than before, the RSA will be promoted by charging no fees. The final price also provides an adequate insurance coverage to individuals. Charging no joining fees and ongoing account keeping fees, administration fees, the pricing will be developed for retirement savings accounts. In this way, the buyer can control the price while investing into this financial product.

The promotional activities will be practiced in the marketplace through website and internet marketing. The marketing experts on behalf of the company will highlight the key benefits and competitive advantages in their website. A clear rules and regulations to open retirement saving accounts will be highlighted. The low cost basic option and capital assurance guarantee and tax saving features will be promoted with flash messages.

Conclusion:

The favorable environmental factors are quite sufficient to promote sales strategy for RSA. The website marketing approach will be adopted and key product benefits will be promoted effectively to engross more people into the financial investment.

References:

Agnew, J. (2013). Australia’s retirement system: Strengths, weaknesses, and reforms. Center for Retirement Research Issue Brief, 13-5.

Bateman, H., Eckert, C., Geweke, J., Louviere, J., Satchell, S., & Thorp, S. (2014). Financial competence, risk presentation and retirement portfolio preferences. Journal of Pension Economics and Finance, 13(01), 27-61.

Beshears, J., Choi, J. J., Hurwitz, J., Laibson, D., & Madrian, B. C. (2015). Liquidity in retirement savings systems: an international comparison. The American economic review, 105(5), 420-425.

Burnett, J., Davis, K. T., Murawski, C., Wilkins, R., & Wilkinson, N. (2014). Measuring adequacy of retirement savings.

Entrop, O., McKenzie, M., Wilkens, M., & Winkler, C. (2016). The performance of individual investors in structured financial products. Review of Quantitative Finance and Accounting, 46(3), 569-604.

Koposko, J. L., Kiso, H., Hershey, D. A., & Gerrans, P. (2016). Perceptions of retirement savings relative to peers. Work, Aging and Retirement, 2(1), 65-72.

Speelman, C. P., Clark-Murphy, M., & Gerrans, P. (2013). Decision making clusters in retirement savings: Gender differences dominate. Journal of family and economic issues, 34(3), 329-339.

Worthington, S., & Devlin, J. (2013). Fairness and financial services in Australia and the United Kingdom. International Journal of Bank Marketing, 31(4), 289-304.