Banks help customers prepare for retirement

“For customers with assets under management at the bank, we will recommend that they adjust their investment portfolio. To those with most of their money in deposits, we will suggest they invest in assets with higher returns than savings, like mutual funds,” Pakachat Taychaburapanone, executive vice president and head of the affluent customer segment at Siam Commercial Bank, said yesterday.

The bank and SCB Asset Management have launched a pilot programme called “Intelligence Retire” to help younger customers save money for retirement.

According to the National Statistical Office, the average Thai these days can expect to live up to 78. This means if people end their career at 60, they will spend 18 years in retirement. Their savings might not last 18 years if their investment was not started the right way, she said.

The bank has developed a programme to help customers start investing early to get ready for smart retirement by getting them to fill in their age at retirement, estimated life span and estimated monthly expenses post-retirement. If the data show that customers don’t have sufficient funds for retirement, the bank will suggest that they invest more, seek extra income and cut back on unnecessary expenses.

SCB Asset Management has launched a fund to cope with the three life stages of investors to help ease their worries. 

The fund is for customers wanting to shift their capital from savings to mutual funds. They should start investing in this fund when they reach 30. This is the beginning of the first life stage from 30-40, when people can accept high investment risk. 

During the second life stage of investors from 40-50, the fund will adjust its portfolio to medium-risk investment, and during the third life stage from 50-60, the portfolio will turn low-risk.

This fund has been introduced to SCB First customers with Bt10 million to Bt50 million in assets under management (AUM) at the bank.

SCB segmented these customers last year and began using relationship managers, like private bankers, for First customers.

Around 70 per cent of First customers are owners of small or medium-sized enterprises who prefer low-risk investments such as fixed deposits.

Relationship managers play an important role in helping this kind of customer to reallocate assets to high-risk investment with higher returns than deposits.

Last year, investment was 62 per cent in deposits and 38 per cent in non-deposits such as equity funds, but after relationship managers provided other investment choices, non-deposits increased to 40 per cent.

The bank has invested a lot in relationship managers through internal training and recruiting. It will add 150 more relationship managers next year to its current workforce of 100. It will try to upgrade existing customers with AUM below Bt10 million to First customers rather than focus on new customers.

Next year, the bank targets upgrading 7,000-8,000 customers and growing AUM in the First division by 15 per cent from Bt600 billion this year. 

Krungthai Bank offers a lower interest rate for pensioner loans, to 5.375 per cent for the first six months until January 30 for new customers, with an alternative to pay interest only and privilege entry fees when applying for a debit card. 

It will launch a deposit product called “Tung Jai Wai Kasien” with interest at 4.10 per cent paid monthly. 

Chainarong Eursithichai, executive vice president for retail strategy, products and segmentation at the bank, said this year would see more than 31,000 bureaucrats and state-enterprise workers retiring, including early retirees. 

The bank has prepared a special campaign that reduces the interest rate on loans to pensioners by 1 percentage point to 5.375 per cent for the first six months. After that, the rate will be the MLR (minimum lending rate) minus 0.375 percentage point throughout the term of the loan.