Turning up heat on retirement savings
Bank of America seeks edge in booming IRA market with $35m blitz
Bank of America Corp. plans to launch on Sunday a $35 million advertising campaign to promote its retirement savings accounts, as the Charlotte, N.C., bank stakes its claim in one of the fastest-growing areas of financial services.
"We're in this to win," said Jeff Carney, the bank's chief of retirement products. About 54 million households have a relationship with the bank, but it manages individual retirement accounts for just 1.5 million people. Next year the print and online campaign may expand from IRAs to include the bank's 401(k) retirement savings plans and similar products. "People realize that 401(k)s and IRAs are the two most important vehicles for you to save for yourself," Carney said.
The bank's spending would dwarf the $11.6 million that all banks collectively laid out last year to promote retirement products, according to New York data firm Competitrack. It also starts to approach the allocations of mutual fund companies that traditionally have dominated the retirement market and collectively spent $104 million promoting retirement products last year.
But the lines between the banks and fund companies are blurring rapidly. Fund giants Fidelity Investments and Charles Schwab Corp. began offering no-fee checking accounts that reimburse customers for ATM fees this year, trying to lure away the banks' traditional customers. And Bank of America last year eliminated fees on some stock trades in a bid to draw customers to its brokerage services.
Investors are piling into retirement accounts partly out of concern for the long-term stability of Social Security, said Jim Bacharach, a vice president at Manulife Financial Corp.'s John Hancock unit in Boston, and partly in the expectation they will live longer after retirement and need more assets. Hancock itself is in the midst of a $30 million campaign promoting products like variable annuities for retirement that includes television spots showing people stating life goals like caring for parents or switching careers.
Samantha C. Wreaks, publisher of The Journal of Financial Advertising & Marketing, a quarterly publication in New York, said another reason for the growth of retirement vehicles is that individual investors scared by the technology-stock bubble and concerned about the markets' current gyrations see retirement as a "safe" investment area.
"With the dollar down and oil prices and the markets fluctuating, people are nervous," she said. Dan Sondheim, a partner at SunStar, a marketing consulting firm in Virginia, said spending to promote retirement products also tends to increase at the end of the year around fourth-quarter bonuses and to meet year-end tax deadlines on the accounts. "There's a lot of money in motion this time of year," he said.
The new ads are among several steps underway by Bank of America's wealth management arm in Boston, which also is running campaigns around its U.S. Trust private client unit and its Columbia mutual funds division. Advertising and marketing for the bank as a whole is now overseen by Anne Finucane, one of the last former FleetBoston Financial Corp. executives to remain in a leadership role after the bank was bought by Bank of America in 2004.
The ads also mark an aggressive early step by Carney, hired in July from Fidelity where he had overseen similar business areas.
Carney said increasing the number of IRAs is an obvious goal for Bank of America, whose IRA customer base is growing slower than the national average of 11 percent.
The newest ads were created by Boston advertising agency Hill Holliday, which also created television spots for Hancock. It represents a return engagement for the agency, which lost its FleetBoston account after the 2004 purchase. Finucane is a former senior executive at Hill Holliday.
The Bank of America ads aim to "demystify" the process of creating and sustaining an IRA, Carney said. Some of the ads will run in three consecutive pages of newspapers and magazines with large red letters spelling out I-R-A surrounded by text that poses a question such as "The I in IRA stands for: a) Individual b) Indecipherable c) I give up".
"We're trying to decode the jargon of the industry," said Hill Holliday president Karen Kaplan. "All the research we did showed people are confused, anxious, and overwhelmed when it comes to the subject of planning for retirement."
Ross Kerber can be reached at kerber@globe.com.
