After the long and tortuous build-up, stakeholder has finally launched. Given that awareness has long been identified as key to the success of stakeholder, the impact its launch made was always going to be important.
Most of the providers say they were pleasantly surprised with the level of media coverage the launch achieved. The challenge is to maintain this level of interest, says Legal & General business communications manager Mike Smith.
But not all subscribe to this view. Scottish Life head of communications Alasdair Buchanan says: “The launch of stakeholder was always going to be a bit of a fake situation after such a long build-up. It is all a bit of an anti-climax. What really counts is the new business written in the next few months and years.”
However, many of the providers praise the coverage of the stakeholder launch for identifying and examining the problems of reaching out to the stakeholder target audience, the moderate earners.
A few, but certainly not all, were also pleased to see some of the reporting highlighting stakeholder's potential as a tax planning option.
In fact, the coverage of stakeholder was so broad that it managed to eclipse the similar changes also being introduced for personal pensions.
Standard Life assistant general marketing manager Graham Storrie says after the media coverage of stakeholder's launch, its response unit had over 1,000 requests for information packs on its stakeholder product over the first weekend alone.
He says: “There has been a lot of interest. What we need to do is translate this into actual business.”
Other providers, such as Legal & General and CIS, also claim strong online demand for stakeholder since launch.
But CIS communications manager Russ Brady is worried by one aspect of the media coverage. He feels some of the more gimmicky stories could be counter-productive. He singles out one about an online application for a four-month-old baby and another about the loophole whereby a second job, sperm donation, in this case, could entitle high earners for stakeholder.
Brady says: “The concern is that stakeholder is just seen as another pension option and as a tax break for the wealthy, and the average earners at which stakeholder is aimed could be missed.”
The baby in question to benefit from a Standard Life stakeholder pension, India Woodhams, turns out to be the daughter of an IFA. This could lend credence to stakeholder being seen as a tax planning tool, if not necess-arily by the wealthy.
If stakeholder had a fair crack of the whip in the media, there was relatively little in the way of advertising from the providers to take advantage of the fanfares.
Does this reflect a certain reticence on behalf of the providers, an expectation that stakeholder, unlike other pension products, will be bought rather than sold?
Brady suggests the constraints of stakeholder's 1 per cent charging cap are to blame for the absence of big advertising campaigns. Like others, he points out that stakeholder is a long-term proposition and that the rewards both for consumers and providers, will be a long time in coming.
Smith says we should not be surprised by advertisements which are strongly targeted at employers. He points out the only element of compulsion – for the time being anyway – resides with employers.
Buchanan agrees that stakeholder's margins are so tight as to provide little scope for promotional activity. How-ever, he suggests the reason there has been little advertising is a reflection of a more fundamental problem.
According to Buchanan, the mass market of moderate earners, at whom stakeholder is meant to be targeted, simply does not exist. And through the lack of advertising providers are implicitly ack-nowledging this fact. He adds that Scottish Life took the strategic decision not to offer stakeholder to individuals, believing that market to be limited to niche tax planning.
Again, Buchanan agrees it is to employers that providers are looking in order to achieve stakeholder success and that the efforts of intermediaries will be crucial. Rather than mass advertising, IFAs servicing existing corporate clients and following warm leads though professional connections is going to be more appropriate and effective, he claims. Storrie, too, says it is IFAs interacting face to face with employers that will achieve more than any advertising campaign.
But if success depends on employers, this does not mean it will be plain sailing. Smith says the industry has a huge logistical challenge ahead. There are 300,000 businesses that need to designate a stakeholder scheme by October to avoid facing a £50,000 fine.
He says the industry on average would only make arrangements for 30,000 new businesses a year. “This represents an enormous amount of designations that have to take place, and it is up to providers and advisers as much as anyone to ensure this takes place,” says Smith.
While there is anger among the providers about the Government's 11th-hour stakeholder regulations, there is muted praise for its ad campaign to increase awareness. However, some feel the sheep dog ads to be lacking, not on account of the unfortunate coincidence with foot and mouth but because it is not specific enough about stakeholder.
It is clear that providers are expecting more assistance from Government to make this flagship policy a success.
Brady speaks for many when he says: “It will be interesting to see what more the Government will do in the coming months to raise awareness of stakeholder.”
Any public debate on pensions is welcomed as raising awareness of the need for people to make self-provision for retirement. The forthcoming general election will undoubtedly spotlight the issue further.
But it will be some considerable time before the losers and winners of stakeholder emerge. Storrie suggests the criteria for success will be size, brand strength and track record in service support.
In the jockeying for position already taking place, Buchanan sees some meaningless criteria being used to evaluate success – for instance, providers referring to the number of designations received, rather than the actual funds under management and level of contributions coming in.
While stakeholder is a long game, after the October deadline for employer designations, providers' market share will become apparent and the real impact will start to show.