White PaPer

the NeeDS OF the
CSC Wealth MaNaGeMeNt White PaPer

1. iNtrODuCtiON                                                            ...
CSC Wealth MaNaGeMeNt White PaPer

2. ChaNGeS iN PerSONal SaviNGS aND PeNSiONS

For the first time in history, populati...
CSC Wealth MaNaGeMeNt White PaPer

3. iMPaCt ON eMPlOyerS

Employers are right at the centre of the      What the resea...
CSC Wealth MaNaGeMeNt White PaPer

4. OPPOrtuNitieS FOr eMPlOyerS thrOuGh Wealth MaNaGeMeNt

For employees wanting more...
CSC Wealth MaNaGeMeNt White PaPer

5. Where the OPPOrtuNitieS lie

The growing wealth management              3	ifferen...
CSC Wealth MaNaGeMeNt White PaPer

7. the helP yOu NeeD iS availaBle

CSC can bridge between employer and       Where C...
Worldwide CSC headquarters

the americas
3170 Fairview Park Drive
Falls Church, Virginia 22042
United States
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Meeting the Needs of the Modern Workforce


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Meeting the Needs of the Modern Workforce

  1. 1. White PaPer MeetiNG the NeeDS OF the MODerN WOrKFOrCe
  2. 2. CSC Wealth MaNaGeMeNt White PaPer CONteNtS 1. iNtrODuCtiON 2 2. ChaNGeS iN PerSONal SaviNGS aND PeNSiONS 3 3. iMPaCt ON eMPlOyerS 4 Attracting and retaining talent 4 Effects on business performance 4 4. OPPOrtuNitieS FOr eMPlOyerS thrOuGh Wealth MaNaGeMeNt 5 Meeting corporate HR objectives 5 Cost effective solution 5 5. Where the OPPOrtuNitieS lie 6 6. BeNeFitS FOr eMPlOyeeS 6 7. the helP yOu NeeD iS availaBle 7 1. iNtrODuCtiON Across an ageing western world, Corporate employers have a major This Paper assesses the benefits the pensions and savings landscape interest in this developing industry. of attractive and effective wealth is changing dramatically. Financial Wealth management offers them management services - to the risks and responsibilities are significant opportunities to deliver employee and the employer. shifting inexorably to employees, as staffing objectives cost-effectively, It explains the role of wealth Governments encourage individuals enhance brand values, and make management providers, their to plan for their own futures. real savings direct to the bottom operational challenges, and the kind line. of service models that are becoming The wealth management industry most popular. is set to grow spectacularly as it To achieve those benefits, responds to the burgeoning needs employers must engage early with It describes how CSC, with long of a wider audience for personal employees to determine what experience and deep expertise in asset management and advice - services they want and how they the sector, can create partnership from a £40bn business today, to an want them provided. Employers links between employers and estimated £240bn business in just must work closely with wealth providers, and provide a unique CSC two years time. management providers and advisers partner solution. to understand what offerings Following the lead of the US, Wealth management is a business are available, and to make sure European insurers, banks and on the move. Now is the time to propositions are tailored to the intermediaries are launching move with it. specific needs of their employees as wealth management services well as meeting their own corporate offering individual clients and their objectives. advisers powerful, fast, easy to use and guided help with investment decisions; and the ability to transact, view and manage different wealth assets, within different tax wrappers, in one place, via a technology platform. P2 CSC White Paper
  3. 3. CSC Wealth MaNaGeMeNt White PaPer 2. ChaNGeS iN PerSONal SaviNGS aND PeNSiONS For the first time in history, population In most engagements with financial A recent MetLife Study of Employee pyramids are inverting. In many parts and retail organisations, consumers Benefits Trends in the US found that of the world, birth rates are declining, are demanding more value for money, employees are increasingly looking life expectancy is increasing, and the greater choice and personalisation of to employers as a place to purchase working population is ageing. offerings, improved service quality, and protection, investment and advisory- the ability to self-serve to save time in related products - conveniently and This means a smaller number of their busy lives. The Internet helps the cost-effectively. Roughly one-third active workers and taxpayers will be process, providing many more instant (34%) of all employees would like their struggling to support growing numbers consumer support services than have employers to offer more voluntary of retired people. It also means retirees ever existed before. benefits to purchase and pay for on expected in the past to survive perhaps their own. ten years of pension payments will now However, employees do not necessarily require funding for 20, 30, or even 40 realise or appreciate that they now It is a plea to which not all employers years of retirement. State and private carry the financial risk. In addition, are responding, however. When asked pensions and benefit schemes are evidence suggests that many people to rank senior management’s top straining to breaking point. are not taking their new responsibilities benefits-related concerns, only 14% seriously at present. In the UK for of employers in the study identified Many western governments recognise example, the Association of British “helping employees make better the effects of these demographic Insurers (ABI) claims that in 2007/8 benefits decisions” as most important. changes, but their scope for counter less than half the working population action is limited. The only workable (45%, or 12.6 million people) are making policy is to encourage more personal adequate savings. A further 13% (or 3.7 responsibility for saving, by reforming million people) are certainly saving for legislation to create more taxable their retirement, but at a contribution Many people have simply not accepted incentives and removing restrictions rate that is unlikely to provide an the shift in responsibilities from on tax free amounts that can be saved adequate retirement income. Most their employers, and still expect the annually, while allowing more flexibility worryingly, 32% of the UK working workplace to help them to save. in how retirement income is taken. population (9 million people) is not Backed by regulatory change, saving anything at all in a pension – employers have taken action although it is recognised that some themselves to encourage more savings people may be using alternative responsibility within the workforce. vehicles. Many employers are now moving to The ABI points to a glaring problem: more flexible Defined Contributions a clear mismatch between what funds (DC) schemes. In the US, for example, people feel they will need in retirement it is estimated that DC plans grew by and what they can expect to receive. over 160% in the ten years to 2005 Only 3% of those surveyed felt very compared to only 40% growth in DB confident that they would have enough plans over the same period. money to live comfortably in retirement, On the face of it, this encouragement to and only 29% felt even fairly confident take greater individual responsibility for - so over two-thirds (68%) of people savings and pensions decisions seems expect their retirement to fail to reach appropriate to our climate of increasing their hopes and aspirations. consumer independence. It is clear that one of the reasons why savings records are inadequate is that many people have simply not accepted the shift in responsibilities from their employers, and still expect the workplace to help them to save. CSC White Paper P3
  4. 4. CSC Wealth MaNaGeMeNt White PaPer 3. iMPaCt ON eMPlOyerS Employers are right at the centre of the What the research also makes clear is “Employers who stay ahead of the changing savings and pensions scene. that life stage and choice are highly curve will reap the benefits of more There are two consequent issues that significant to today’s workforce in how profits through better employee affect many organisations today: they assess their employers’ benefits productivity, lower absenteeism, less • How to attract and retain talented staff provision, and their attitudes towards work time wasted dealing with financial the organisation. The message is that concerns, lower turnover and better • How to mitigate the effects on business employers will enhance their brand, and employee health,” FLP believes. “As the performance of employees with serious help to retain talent, if they are flexible financial realm gets more confusing money worries. enough to target benefits according and volatile, it is more imperative to the very different requirements of than ever to put in place a financial attraCtiNG aND retaiNiNG employees at different stages of their education system that will benefit taleNt working lives. employees and the employer alike.” Changing demographics are causing With so many employees looking to talent shortages in many industry eFFeCtS ON BuSiNeSS employers as a place to purchase sectors. The growth of outsourcing and PerFOrMaNCe protection and savings products, off shoring of back office operations according to the MetLife Study of Employees’ inadequate savings records, is just one example of the solutions Employee Benefits Trends, employers and the worries that they have about considered. According to the MetLife offering access to guidance and current and future finances are rising Study of Employee Benefits, nearly independent advice will be knocking at steeply. Financial Literacy Partners three-quarters of employers believe an open door. (FLP), a US consultancy specialising that the competition for talent will in employee benefits, first reported in intensify over the next 18 months. As a major contributor to staff morale 1979 that 10% of working adults in the and individual performance, guidance The talent crunch is made worse USA said that they routinely experience should also be aimed specifically at by an increasingly knowledge personal financial difficulties. Today employees with Defined Contribution based economy, which depends on that number is up to 25%, and financial schemes, who may find that the funds creativity to deliver success. However, stress is frequently listed as the top available to them are inadequate for more traditional industries, such as source of all stress experienced by their requirements – especially when automotive and energy sectors, are also employees. compared to Direct Benefit pensions of suffering badly from perceptions that the past. According to FLP, that personal they are unglamorous or unexciting. financial stress has a direct impact Branding is critical to encouraging upon corporate performance. It has young people to view an industry as estimated that ‘a silent epidemic’ challenging and offering a rewarding afflicts 30 million workers in the career path. A key brand value is a USA, with a direct negative effect on company’s reputation for benefits and business at a rate of $15,000 a year per remuneration. employee. According to the MetLife Study of With such a major drag on the bottom Employee Benefits Trends, nearly one- line, it is imperative that employers third (31%) of today’s employees say engage with employees. FLP proposes benefits are an important reason why a much greater focus on financial they came to work for their employer. education. There is little point, for In terms of retention, nearly four in example in having an employee ten (38%) full-time employees say assistance programme in place to the benefits offered to them are an deal with employee stress when the important reason why they remain with underlying problem is financial related. their employer. P4 CSC White Paper
  5. 5. CSC Wealth MaNaGeMeNt White PaPer 4. OPPOrtuNitieS FOr eMPlOyerS thrOuGh Wealth MaNaGeMeNt For employees wanting more If left unsupported during the early There is also the potential to broaden engagement from their employers, this stages of their lives, these employees services to employees. The Single presents a situation that offers unique - many of whom are under the age of Euro Payments Area emerging across opportunities for employers to play 40 - are at risk of under-protecting Europe in the next few years is likely a supporting role in facilitating the their income throughout their careers to free up additional cash flow that generation and management of their and outliving their nest eggs once they could be used for employee benefits wealth: retire. They need help, and they will such as cheap loans (with repayments respond positively if it is provided. deducted directly from payroll): an Meeting corporate HR objectives 3 increasing area of demand as the credit Wealth management will also help squeeze takes hold. Cost effectively. 3 to maintain morale across the organisation. It will position the Information and decision support MeetiNG COrPOrate hr employer as truly aligned with the should have a positive effect upon OBjeCtiveS needs of a modern workforce. financial stress in the workplace, with a potential boost to productivity. Competitive wealth management COSt eFFeCtive SOlutiON Employers will also be secure in packages offer a major point of their compliance measures if a differentiation for the diminishing pool A properly integrated wealth comprehensive service is introduced, of potential employee talent. Employers management solution is likely to result with full information. who tailor their benefits packages in a benefits package that maximises to meet their workers’ life-stage and return on expenditure, to a much retirement needs are likely to reap greater degree than a piecemeal significant advantages. approach to benefits selection. It also When it comes to making benefits provides the potential to consolidate choices, and staying with the same existing pension schemes and therefore Employers who tailor their benefits employers, life stage clearly matters. reduce overall costs. packages to meet their workers’ life- Customising benefits provision In addition, it presents a unique stage and retirement needs are likely to according to the major life-stage opportunity to offer employees reap significant advantages. segments - Singles, Young Families, increased remuneration, and releases Baby Boomers and Pre-retirees – funds otherwise earmarked for cash provides a platform for an effective HR payments. strategy to attract and retain the most valuable employees. Research shows that Singles and Young Families demonstrate the strongest need for benefits education and financial advice, for example. More than two-thirds of these employees, a large percentage of whom have limited savings for retirement and difficulty managing their finances, admit they have trouble understanding which employee benefits are most appropriate for them. CSC White Paper P5
  6. 6. CSC Wealth MaNaGeMeNt White PaPer 5. Where the OPPOrtuNitieS lie The growing wealth management 3 ifferentiation of the offering in order D sector offers a wide range of solution to attract and retain employees Technology can support large numbers choices for employers to present to of employees, offering one place to their workforce. 3 iving employees access to the G view and manage all client wealth channels they want – including assets, no matter what the source. Technology can support large numbers Internet self-service of employees, offering one place to view and manage all client wealth Integrating channels (eg web, 3 assets, no matter what the source. telephone, face to face) to ensure a seamless link to individual client Employers can tailor propositions accounts creatively with the right partner, offering the channels that employees 3 ccess to quality service delivery A like to use. Nevertheless, there are Provision of high quality and 3 range of issues and challenges that comprehensive guidance where face employers need to consider in order to to face advice is in short supply and deliver a successful proposition: access to independent advice that is 3 evelopment of propositions tailored D compliant across a tangled web of to different employer segments and products and services life events Secure delivery over the Internet, 3 3 bility to accommodate changing A which will be key for employees employee needs and meet increased wishing to use the service for non- expectations for the level and breadth employer sponsored products and of services offered, and investment services. returns 6. BeNeFitS FOr eMPlOyeeS Wealth management, offered by a Properly tailored propositions can The provider also aggregates provider or number of providers, can deliver employer sponsored products information on the employee’s give employees access to a wider range and services that are of high value corporate portfolio and administration of products and services, from many to different employee segments. For of the individual products. different suppliers. The key is that the example, employees in their 20s are technology platform enables employee often more interested in paying off Wealth management providers can also clients to buy, view and manage all student loans and getting on the deliver worksite communication via the products and services from all sources housing ladder than thinking about employer. Employees are likely to be in one place. pensions. able to access their benefits account via both employer Intranet and the By their employer’s partnering Individual choice can enable investment Internet. There is also potential in the arrangements, employees can receive in ISAs rather than a pension, with a future to link information about state a privileged premium service, available view to dumping savings into a pension benefits with personal accounts, to at a discount to less integrated retail wrapper at a later date during the provide individuals with a complete alternatives. Although the services may working career. picture of their future retirement pot. be arranged through one employer, the kind of partnerships with wealth One of the biggest benefits of providers now being created ensure partnering an effective provider or that the employee is able to stay with providers is access to guidance about the provider even if he or she changes selection of specific benefits, and employer. enabling informed decisions. Part of the wealth provider support is provision of all necessary product wrappers. P6 CSC White Paper
  7. 7. CSC Wealth MaNaGeMeNt White PaPer 7. the helP yOu NeeD iS availaBle CSC can bridge between employer and Where CSC is involved in technology the wealth management provider to platform management, we can ensure We work with thousands of companies advise on a number of different aspects that employees are able to access their across the world, and this experience in relation to wealth management benefits account via both Intranet enables us to understand the demands provision. and Internet, hosting the desktop and of one of the most vibrant markets providing the integration link between for wealth management propositions: CSC is taking its own medicine – the provider and CSC. Employers can surveying its own employees’ wealth employers and their employees. benefit from CSC support by enabling: Examples of our work with wealth management needs with a view to developing a resulting wealth 3 powerful tool for attracting and A providers: management provision methodology retaining quality staff, and boosting for employers to implement. Our productivity Merrill Lynch created a service to link support in this area includes: financial consultants and clients, offering Employees to get access to guidance 3 online access to account information, Research and proposition 3 and advice, and freedom to make market research data, electronic bill development for your different their own decisions payment service, Internet access and employee segments e-mail communication. The service had Financially attractive propositions, 3 to be robust and reliable, user friendly Business case build to assess 3 particularly to young employees who and sophisticated in functionality. the costs and benefits of current may be more concerned to save for a employer provision with a corporate mortgage deposit than a pension CSC worked with the company to create wealth proposition 3 ith lower cost to employers, W a customer self-service web roadmap Communications advice that assists 3 representing a benefit to employees and successfully implemented it. CSC with employee education about of much greater perceived value provided project management, business wealth, protection and future spend, compared with some other benefits process design, technical architecture and encourages saving where currently offered and implementation assistance, and appropriate technology planning and testing Employer positioning as an innovative 3 activities. 3 elivery of the proposition through D organisation in the market place the use of technology portals and The Internet channel enhanced Merrill channels 3 pportunities to offer increased O Lynch’s customer intimate value remuneration (via wealth proposition. Merrill Lynch enrolled Leveraging our global experience, 3 management) instead of having to 250,000 on-line clients and all of the advice on the overall proposition increase cash payment. firm’s 13,000 financial consultants. An requirements that provide employees Wealth management offers employers accelerated product launch saved $60m with the right level of support, to an important key to recruiting and for the entire project. enable them to make informed decisions and understand the impact retaining valuable talent for the of selecting different benefit options workforce, and alleviating financial CSC has supported AAA rated John and different wealth management worries amongst employees that in Hancock Wealth Management’s solutions. turn hit the bottom line hard. It can annuity products since 1987, enabling be delivered with a strong return on the company to focus on product investment, and presents opportunities development and distribution. CSC for future cost savings to the employers provides applications and infrastructure own business CSC can help you to support for administration of more than design, develop and implement the one million fixed and variable annuity right offering. policies. Services include applications development and maintenance, Please contact Joanna Hall on mainframe infrastructure support, 07903819077 or Jhall56@csc.com 24x7 help desk support, and network to find out more. connectivity. “As John Hancock continues to introduce innovative retirement products, we want to ensure our systems are competently supported and meeting the needs of our customers. Our relationship with CSC gives us that peace of mind.” jim Boyle, President of john hancock Wealth Management CSC White Paper P7
  8. 8. Worldwide CSC headquarters the americas 3170 Fairview Park Drive Falls Church, Virginia 22042 United States +1.703.876.1000 europe, Middle east, africa Royal Pavilion Wellesley Road Aldershot, Hampshire GU11 1PZ United Kingdom +44(0)1252.534000 australia 26 Talavera Road Macquarie Park, NSW 2113 Australia +61(0)29034.3000 asia 139 Cecil Street #06-00 Cecil House Singapore 069539 Republic of Singapore +65.6221.9095 about CSC The mission of CSC is to be a global leader in providing technology enabled business solutions and services. With the broadest range of capabilities, CSC offers clients the solutions they need to manage complexity, focus on core businesses, collaborate with partners and clients, and improve operations. CSC makes a special point of understanding its clients and provides experts with real-world experience to work with them. CSC is vendor-independent, delivering solutions that best meet each client’s unique requirements. For more than 45 years, clients in industries and governments worldwide have trusted CSC with their business process and information systems outsourcing, systems integration and consulting needs. The company trades on the New York Stock Exchange under the symbol “CSC.” Copyright © 2008 Computer Sciences Corporation. All rights reserved.