With just two weeks to go before stakeholder finally becomes a reality, one way or another, a milestone in the financial services industry will be passed on April 6.
Where the stakeholder story is at most odds with recent financial services history is perhaps in the involvement the industry has had in its evolution. Rarely has the level of consultation been so great and that is to be welcomed.
That the industry has been given the opportunity to help shape stakeholder has made the whole process of becoming a stakeholder provider easier than without it. Contrast stakeholder with the arrival of personal pension legislation in 1987. Most will be forced to agree that the difficulties of delivering product concepts and systems on the back of legislation which had had no prior airing were significant.
This time there has been much consultation. Product developers have at least had some time to get their acts together and make preparations ahead of final details being available. Some detail arrived late but it was much improved on the personal pension experience, which was helpful to anyone involved in building products.
Consultation is one thing but acting upon it is another. Overall, it looks as if both the legislators and the industry won and lost on various issues. We lost the 1 per cent battle for sure and even now this testing standard is probably still to show its teeth in terms of which companies can sustain such low margins into the long term, particularly given the lengthy payback period for writing new business.
But we won a key victory in having group personal pensions accepted into the fold as prescribed pension alternatives, thereby securing a genuinely good alternative to stakeholder for consumers.
The stakeholder milestone is about to be crossed and it is one the industry will remember for a long time.
It is apparent already that the sub-1 per cent world is where the standard is and before long this will be the recognised charge for nearly all financial products. The real business-winning initiatives will therefore come from value-added services and the way in which companies and advisers deliver the standardised product.
Many IFAs believe stakeholder is not for them. It is worth them reconsidering because stakeholder provides a platform for them to demonstrate their value-added proposition. Stakeholder may be part of the final solution or it might not. But if IFAs ignore it, they lose that opportunity.
It is likely that IFAs will be forced into discussing stakeholder by their clients simply asking about it. So they should get on board quickly if not to be left behind.
Other key issues on which companies and advisers will be able to differentiate include service. New products and legislation means new systems and processes.
The early winners will be those IFAs and providers which can offer service quality in line with other commodity sectors used by stakeholder audiences. Remember, these are not designed to be upmarket investors. IFAs will be compared with Direct Line, Tesco and John Lewis.
This means the bulk of business will go to the first to get a strong service proposition into the market. But will this be best for the long-term client's needs?
IFAs have to face a truly difficult decision – how to identify providers which will offer a good service today against those which will offer it today and tomorrow. Service levels could decline as volume increases. Volume has to be there to make it pay unless providers and IFAs have organised their working practices to deal with it.
Stakeholder may just force this industry into the electronic age, too.
After the initial fuss is over, stakeholder will take its natural place in the market. An obsession with it over the last 18 months has created dangers. The fact is that stakeholder is just one pension variant, nothing more.
It will have its place but there will continue to be more complex needs and more ambitious desires among consumers which stakeholder will not satisfy.
This will include the self-investment market and products which include extra features for extra cost. Again, IFAs are best placed to capitalise on these needs.
The big question of take-up is likely to continue to be the measure of success for stakeholder. Take-up has been heavily argued either way. There are plenty of predictions suggesting a low level of take-up and several opposing views. The simple fact is that we are collectively diving into a market where take-up levels are anybody's guess. IFAs should take part in this if only to be in the running.
Stakeholder is seen to be fine for the one thing it is meant to do but restrictive in almost any other context.
Looking forward, the ambitious 1 per cent target charge for stakeholder at which most companies originally balked has, miraculously, become possible. The Government must take the credit for sticking to its guns and challenging the industry on this.
But there must be a concern that, while 1 per cent is the designated price, is it actually providing the product consumers really need? As long as the Government can be sure that consumers will not find themselves misbuying, then 1 per cent will have been right. But if we do see mis-buying due to the lack of quality financial advice, then 1 per cent will have been too low.
Access to advice was one of the key debates right at the outset of the stakeholder evolutionary period. It will be right at the heart of it in future, too.