The digital era is well and truly upon us but could the internet revolution really make the difference between success and failure in the stakeholder market?
The fascination with everything “e” seems relentless. It cuts across almost every aspect of our lives. Some pundits are predicting that companies not using internet technologies will not survive into the future. In financial services, with the advent of stakeholder pensions, is that future now?
Already, the internet has made tremendous inroads into financial services. More and more IFAs have their own websites and some have direct links to providers' systems. IFA portals are proving to be a valuable source of information and resources – so much so that some advisers are already used to electronic trading of one form or another.
Most providers are keen to encourage the use of e-commerce, especially when it comes to stakeholder. It is worth remembering the legendary 1 per cent charging cap has to include sales, manu-facture and aftersales service. In other words, it applies to IFAs and providers alike.
For stakeholder to work profitably, everyone needs to adopt a more efficient way of working. End-to-end electronic processing is one of the most effective ways of doing this. But not all e-commerce solutions will be the boon they promise, either because they will not fit with the way you work or because the particular system is not as useful as you might hope.
Whether or not you choose an e-commerce route, you will probably have some key decisions to make about your working practice. The likelihood is you will have to work more efficiently to make stakeholder work for you.
Given all manner of constraints on your time – and your bottom line – you will need to establish how much work you can take on, how much you expect the provider to do and what your client can handle. Basically, you need to make the most of your time.
This can be done simply by cutting out the repetitive elements of administration such as data entry, ensuring that time is not wasted collecting redundant information and reducing errors. It can also be done by maximising the wealth of information at your disposal and using this for cross-selling and worksite marketing.
By working smarter, you can use your time to concentrate on winning new business, leaving the housekeeping to administrators or the client. But the danger here is that you effectively cut yourself out of the relationship or create more work by having to spend time reacquainting yourself with a client.
Information entered once for an illustration need not be retyped for the application. If both the IFA and provider can reuse that data time and time again, the savings in time could be significant. In many instances, the majority of the information should already be available through the employer's payroll system.
When information is only entered once and then reused, the chances of errors occurring are greatly reduced. If data was correct when it was entered, it will be correct every time it is used.
Once information has been captured electronically, it can be used in a variety of ways to ensure you are maximising cross-selling opportunities. For example, data could be collected on those employees nearing retirement and approaches made to explore the client's post-retirement needs.
The contribution behaviour of clients can also be examined. Who has increased contributions? Who has stopped? These events may lead to valuable worksite marketing opportunities. Traditionally, keeping track of these patterns has been labour intensive. It should now be possible to ask the provider to supply you with information about certain key events proactively.
Not only are you kept fully aware of what is happening with your client but you are able to maximise all the opportunities within your client base.
But while the labour-intensive elements of client care can be removed, it could come at a cost. If you step out of the loop, leaving the client to deal directly with the provider, there are two main dangers:
l You miss the valuable worksite marketing opportunities.
l The client stops future dealings with you in preference of going direct.
In the first instance, you should be looking to the provider to send you details of your clients' activities as and when you require them. The second pitfall can be avoided by working with a provider which will keep you informed of everything that happens within the scheme. Good and timely communication should ensure your clients do not know your level of involvement with the day-to-day running of the scheme.
This is not to say that any IFA who does not work this way will inevitably go out of business – it is entirely possible to carry on the way you have. But if you decide e-commerce is not suitable for you, you may find it harder than necessary to conduct business efficiently. Of course, the knock-on effect to this is that you will find it increasingly difficult to service your clients to the level they may have come to expect.
If you decide e-commerce is the way forward, you should consider your options carefully. Before embarking on the e-path to business transactions, you should talk in detail to the providers you are considering using. Look at the systems they are using and ask questions to help you determine whether they will be able to support you through what could potentially become a difficult time.
These are a few of the key questions you ought to bear in mind when considering a product provider for stakeholder.
Does the provider offer end-to-end electronic processing or will someone be rekeying the data?
Does the solution have a proven track record?
Can other people, such as employers and admin staff, access this solution?
Can you set the level of involvement you have in a scheme or is it all or nothing?
Will the provider automatically update you when certain events occur? If so, how? If not, how do you get the information you need?
Will training be provided to all those who need it?
Internet technologies may not make the difference of survival or going under in the new pension market but they may well determine your level of success.
This new channel offers the ideal opportunity for you to examine the way you currently work and, hopefully, presents a viable option for you to work in a new, smarter way.