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Gareth Marr

The cheapest way of handling stakeholder communication for IFAs is to do nothing. For many, this is probably the best planning at the moment.

Stakeholder should be viewed as two separate and dis-tinct products – an employee benefit arrangement distributed via the employer and a personal financial product for the individual. If your main business is personal client work – and I guess that applies to the majority of IFAs – you should think very seriously before getting involved at all with stakeholder as an employee benefit. Concentrate on the £3,600 product as another tax-advantaged savings vehicle to add to the planning package. This means you can take it easy just now as your deadline is the end of the 2001/02 tax year.

The employee benefit product is an entirely different proposition. If you want to be involved here and have not already started, you are already playing catch-up.

The stakeholder proposition for corporate clients provides three main opportunities for substantial fee income:

l Amending the client&#39s existing scheme. The classic scenario is reducing the eligibility period on a group personal pension from 12 to three months. We are doing this work now.

l Setting up a new stakeholder in 2001/02 for clients who do not wish to extend their existing arrangements.

l Marketing our stakeholder consultancy services to our 600-plus small self-administered scheme and self-invested personal pension clients. The majority of these have no pension arrangements for their employees. This could be a huge market. Some will do the minimum but already we are discussing variable, low-cost e-commerce solutions which look like leading to new exempt 3 per cent schemes.

If you have decided to play in this market, you are probably already well into the client communication process. We formed our stakeholder working party six months ago and I would estimate our spend so far probably exceeds £35,000. After initial brainstorming, the planning cycle developed as follows:

l Client identification. This entailed a lot of internal work, mainly data cleansing, to ensure the client database was robust enough to cope with our communication plans.

l Product research. A massive task to sift from our initial 15 or so providers to a panel of three or four. To ensure best terms, we teamed up with the Accountancy Financial Planning Group. I believe we have now achieved a base product that has to be one of the most competitive in the market.

l Client communication programme. We plan to present to all our corporate clients over a 12-month cycle at their annual renewal. The first meetings are starting now.

l A&B&#39s proposition. We developed our own stakeholder briefing document setting out the main details of the legislation with our own decision tree. It also outlined our services and communication plans. This was mailed to over 1,000 corporate clients and connections last month and the response so far indicates the costs will be repaid many times over.

The marketing and advertising cycle is now almost complete – hence the catch-up comment. The work we are now doing is responding to clients&#39 needs. We are already in the process of setting up pre-stakeholder schemes and extending existing plans. The challenge now is to ensure we have the skilled human resources to tackle the work.

Also think about e-commerce. If the client cannot deal on the net, think carefully about your pricing. There is not much fat in the 1 per cent world. You also need to realise the providers&#39 numbers do not add up. I have heard 12 life offices say they need 10 to 15 per cent of the market to be profitable. This is before the new entrants come in. So beware selling their product and not your service.

Gareth Marr is managing director of Advisory & Brokerage Services


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