Last June, Mark Rowlands gave up his position as stakeholder sales and marketing manager at Friends Provident to set up a new company above a fish and chip shop in Dorking.
Leaving a company where he had been for 10 years, had reported directly to the board and was significant in the development of its stakeholder pension to test out an unproven idea was a brave move. But Rowlands was so sure his idea was a winner that he did not hesitate long.
Launching this week, Pensions Treasury is a service which matches IFAs with companies wanting to set up or modify their occupational pension scheme.
Rowlands is aiming to have 10,000 IFAs using the service by the end of the year. He does not believe there is any middle ground, saying it will either be widely successful or a dismal failure.
Given that every company with more than five employees has to offer access to a stakeholder plan by October, Rowlands says the market is ripe for the picking. In addition, he predicts that between 10 and 15 per cent of companies will restructure their schemes over the next few years.
Rowlands is managing director of a team of 12. With further announcements expected later this year, he says there are definite plans to grow the size of the company.
Rowlands says IFAs cannot afford to ignore the proposition offered by Pensions Treasury. With squeezed margins due to the 1 per cent cap imposed by stakeholder, IFAs will have to find new ways to drum up business.
Pensions Treasury removes much of the the legwork necessary to set up sizeable corporate stakeholder business. IFAs who want to take part in the service answer a survey asking them things like the location of their company and the level of employer contributions they are interested in being involved with.
The results are crossreferenced with a list of employers and a match is made. Meetings are then arranged between the employer and the two or three most suitable IFAs. The employer is responsible for choosing which IFA has most to offer.
The service eliminates wasted visits where IFAs spend valuable time talking to companies that may not be interested in doing business with them. “Both the IFA and the company will know what they are going to be talking about is of great interest,” says Rowlands.
There is no fee for employers while IFAs pay £20 to access the service. If they set up a scheme through Pensions Treasury, they pay a further £5 per scheme member up to a ceiling of £500.
He says: “Everything is about costs and efficiencies. Everybody is into benchmarking. This is just another way of accomplishing that, with IFAs benefiting from tremendous cost savings.”
R owlands first had the idea nearly two years ago when he was at Friends Provident. He resigned from the life office last June and started talks with a group of internet venture capitalists who were interested in putting up the necessary start-up capital.
The deal fell apart when Rowlands decided the industry was not ready for an internet-only concept. Pensions Treasury works through all available channels, with IFAs being able to access it by the internet, phone, fax or personal visits.
In the 10 months it has taken to get the project off the ground, Rowlands has been working with Hargreaves Lansdown to set up its internet-based stakeholder offering. The company is one of the backers of Pensions Trea-sury but Rowlands stresses his company is independent and reliant on no one firm.
“It has been a lot of fun but relaxation is not a word I am that familiar with at the moment,” he says.
At Friends Provident, Rowlands was a key figure in the pension sales process. He helped design its pre-stakeholder pension and was involved in the establishment of what is considered to be one of the first stakeholder-friendly schemes, set up through the Amalgamated Engineering and Electrical Union in 1998.
Through his dealings with IFAs, he began to realise the key challenge to their continued success was going to be distribution. He believes Pensions Treasury goes a long way to resolving the difficulty.
Rowlands says: “It occurred to me that with stakeholder the distribution channels IFAs have traditionally used would come under attack.
“But companies will still require skilled professionals to sit down with them and advise them on the way forward. Pensions Treasury matches the two together.”