UK -- Retiring and retired individuals in Europe represent a huge opportunity for any player which really decides to focus on the market, according to management consultants McKinsey in a recent report.

“Capturing the golden opportunity in the European retirement market” says that these groups form the wealthiest segments of the population and will be significant drivers of profitable growth for banks, insurers and asset managers over the next five to 15 years.

Yet many retiring and retired individuals in Europe feel that financial services companies are not adequately addressing their needs. Already, however,retirement-related products make up nearly half the European profit pool for retail financial services, and these profit pools are projected to grow by up to 10% annually.

However, according to the report, most providers have so far not made a systematic approach to this market.

It says: “Too many banks, insurers and asset managers have lacked both the skill and will to win over hesitant consumers.
No significant banking player seems to be targeting the retirement market as a strategic priority, and the opportunity is so substantial that non-banking players (insurers, asset managers, distributors) will continue to control significant market share”.

The report says that the retirement market is arguably tailor-made for financial services companies that can offer new hybrid products and bundled propositions. This could include, for example, combining protection, accumulation and structured products with payment access products such as current accounts and credit cards.

It continues: “Universal banks may be well placed to develop such products, but it could also be an opportunity for a more focused company, such as an asset manager who then outsources the provision of payments products to a bank.”

The report says that innovation in particular will be rewarded: “The retirement market offers a golden opportunity for European financial services players to achieve a sustained competitive advantage and create value. Major demographic changes and declining pension provisions by European governments mean that consumers are increasingly being forced to assume more risk for their retirement.”

The report is based on an in-depth survey of 500 individuals each from Germany, Italy and the UK, with at least €100,000 in investable assets.

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