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Human nature

One of the principal challenges for any adviser wanting to operate successfully in the stakeholder market is how to do so profitably.

The paltry levels of commission that can be afforded out of the price-capped product have turned this Government&#39s flagship pension product into something of a Marie Celeste.

However inadequate the direct remuneration may be, all but the smallest firms still have a legal duty to nominate a scheme. If a profitable approach can be found, this may still be a market worth further attention, particularly if the revenue stream to the adviser can be linked more to the number of employees within the business rather than the number that take up a stakeholder pension.

An obvious route is to charge a fee related to the number of employees but in difficult economic times, this may be hard to secure or sustain. Providing the employer with other services that can cut their existing human resources cost and sharing in the revenue from such services may be an option more likely to succeed.

If this can be achieved at a cost saving to existing payroll arrangements, there may be a significant opportunity to generate more goodwill with the client.

Sofa director and Money Marketing columnist Robert Reid recently introduced me to a software provider which is taking this approach. TRG Advantage is an “integrated enterprise management solution” which allows an employer to automate a wide range of essential tasks.

The software is provided on an application service provider basis, meaning the software sits on TRG&#39s servers and is accessed by the users via a web browser.

This reduces the costs of setting up a system, as it can be accessed by any PC with a web browser, and removes the need for employers to worry about maintaining and backing up software on their own computers.

In addition to addressing the necessary issues around payroll, the service also provides the necessary employee handbook, health and safety policy and dispute procedures and provides a staff bulletin board. Other activities that can be recorded include holidays and sickness, accident returns, training logs, employee induction procedures and a disciplinary and warnings log.

It can also track holidays and absences and location transfers and processes all the necessary documentation for a leaving employee. An opt-ional model, costing a further 50p per employee a month, will extend to expense claim and timesheet processing.

All appropriate information is made available to the employee on a self-service basis via an extranet facility. This also provides an ideal platform for linking both the stakeholder pension arrangement and other financial services products from the employer&#39s appointed financial adviser.

For reasons of economy, virtually all life offices offering group stakeholder schemes have developed extra-nets that are the ideal content to sit side by side with a service like this. It can be linked in, giving the employee access to important human resources information at the same time as accessing their pension details.

The quality of different offerings from stakeholder providers and the facilities they offer vary significantly and this is an increasingly important issue when selecting a provider. My organisation is finalising significant research on life offices&#39 various electronic offerings for group pensions and I expect to return to this subject in the near future.

The most attractive of these allows members to sign up on site or even, in the case of Friends Provident, automatically join all employees to a scheme, with individual members notifying them if they want to opt out. These facilities can provide much needed help to advisers in reducing the costs of operating schemes.

Advisers should not, however, limit the extent of the integration they provide to such systems to stakeholder pensions. Links out to the IFA&#39s own site are an obvious addition although for bigger employers, it may be appropriate to provide specific content into their intranet.

At the heart of the system is an Inland Revenue-accredited payroll system with a full range of human resources functions. The Revenue has plans to require all businesses with over 250 employees to file their payroll returns electronically from April 2004. Businesses with over 50 employees have to do so from April 2005, so it may be a good time to flag this issue with clients.

I am told that Simply Biz, Ken Davy&#39s new network alternative, has adopted it for its own members and is now looking at how it can be made available to members&#39 clients.

The software is charged on a pay as you use basis, with an entry cost from £1 per employee per month upwards. The company operates a revenues share arrangement for the lifetime of the software installation, passing anything between 20 per cent to 50 per cent of the software fee to the introducing adviser.

According to Edward Grant, sales and marketing director at TRG Solutions, some advisers are taking the core price and mark up the product, with some employers still finding the product good value for money at £4 per employee per month. By comparison, some specialist payroll bureaux will charge as much as £10 per employee a month.

The advantages to the IFA of providing financial services facilities on an employer&#39s staff intranet are obvious, it is important to create reasons for the employer to want to develop such links if they are to be fully explored. Linking with a human relations package such as this may be an excellent approach.

If introducing the package can achieve significant savings for the client and a revenue stream for the adviser, it could be worthy of serious consideration.

More details on the service and examples of the level of saving that employers can achieve can be found at and


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