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Rs are to reason why

IFAs should not get trapped in the negative doom and gloom spiral about

declining pension revenue as a result of the introduction of stakeholder.

On the contrary, the welter of changes in pension legislation offer

advisers a myriad of hooks to get in front of businesses and write

lucrative pension contracts and explore other opportunities for financial

products in the corporate market.

All they need to do is remember the three Rs. Getting in front of a

business is a question of stimulating interest in what you have to offer

and many summarise this process as delivering the right message to the

right audience at the right time.

Delivering the right message to the right audience requires targeting and

one of the simplest methods of segmenting business audiences is to deliver

tailored messages to small, medium and big businesses.

Depending on the size of your own practice and the resources you have

available for your own campaign, you may be more comfortable targeting a

specific business segment.

Many argue that a good hook to secure pension contracts with smaller

business owners/directors is a review of the here and now issue of drawing

more money from their business rather than a dreary pension planning


IFAs can put forward a whole host of solutions that give busy business

owners/ directors more cash in their pocket, ranging from paying dividends

instead of salaries to the prospect of setting up a new business to

mitigate tax.

Schemes for business owners to retain more of their cash are underpinned

by different types of pensions and the common motivation of all business

owners and directors to be able to take more cash out or their company is

an excellent route into the corporate pension market.

Building on these pension-based tax mitigation opportunities are the other

benefits of executive-type pension plans such as using a pension

contribution to help buy a commercial property rather than rent.

Medium-sized businesses with five employees or more may or may not be

aware that they will have no option but to provide private pension


IFAs can really add value to these businesses, notifying employers of

their new pension obligations to their workforce and detailing the choices

they face.

The IFA can offer membership of a good group personal pension scheme and,

subject to exempting conditions, allow the employer to ignore stakeholder

and all the inherent issues of offering a new product in a tight timescale.

Not only can group personal pensions encourage collective pension

provision, as they are outside the stakeholder environment, they can also

provide a valuable income stream for the IFA.

Such group schemes allow even employers with only a handful of staff to

offer workers a valuable boost to their salaries through a company pension


The benefits offered may also include group life insurance, income

replacement insurance for the long-term sick and private medical insurance

and economies of scale mean these benefits cost the company only a fraction

of the true value to the employee. At the same time, if relevant, the IFA

can discuss executive pension plans with directors.

For bigger companies with an occupational pension scheme, the option of

partial concurrency which allows members earning less than £30,000 to

hold an individual pension at the same time could offer a more attractive

top-up opton than in-house AVCs.

This is because stakeholder has low admin charges and a quarter tax-free

cashback option, whereas cashback is not available on pre-1987 AVCs and has

never been available for FSAVCs.

Also, this audience can provide a receptive market for other aspects of

financial planning.

Just as the number of angles IFAs could take to get an audience with

corporate clients are legion, so are the ways of making contact and the

choices are widening.

There are the traditional marketing methods of mail-shots, phone

canvassing, seminars, advertising and PR. My own network has a library of

pre-prepared material for members&#39 use.

Consider new media. For example, the use of email is a particularly

appropriate method of approach to high-tech companies. The Direct Marketing

Association (www. can help you source lists.

Another way of reaching businesses is through professional introducers

such as solicitors and accountants. Again, methods of contact are wide, as

are appropriate messages, but these people are increasingly receptive to

ideas for new income streams as more competition for their traditional

services such as willwriting, book-keeping and conveyancing has led to a

decline in bread and butter business.

Financial services and investment business touch on most aspects of legal

and accountancy-based advice.

The opportunities are there for IFAs to discuss the implications of

changes in the pension market with corporate clients or prospects.

In doing so, you can ensure that not only are your clients complying with

the new legislation but that you seize the new business opportunities that


The results might well surprise you. Although there is a lot of noise

about stakeholder arousing curiosity, there are plenty of opportunities to

discuss other products on the back of this latest pension shake-up.

For many IFAs, this year should represent a watershed in terms of client

communication. Not for the first time in recent years, employers are faced

with changes in pension legislation which cannot be ignored (unless the

prospect of a fine from Opra is not an issue) and they have a specific

timescale in which to comply.

Take-up is likely to be poor without any significant employer contribution

and communication to 250 staff could be a labour-intensive process with

little reward for the independent adviser in terms of initial income if

commission is required so product sale becomes crucial to the revenue


This is where an import-ant issue arises for the IFA.If a commission-based

approach is taken, this client poses a high risk in terms of potential

time/reward in the short term.

If a fee-based approach is sought, then this is less of an issue, allowing

the IFA to offer a menu of services based on the level of proactive

involvement sought.

Set this against the background that this may be

an important existing client

whose existing business is of great value and the issue is

really to provide an effective, low-cost solution that meets

the employer&#39s requirements while maximising the potential income stream

from 250 potential new clients.

For this reason, it is clear that, irrespective of the IFA remuneration

route, every opportunity to offer services to these “clients” in other

areas needs to be considered as a means of cross-subsidising time spent on


(in this instance).

While paper-based communications are still effective for many,

increasingly, bigger companies are establishing intranet sites – internal

web- style pages with the ability to provide information to their employees

and, importantly, links out to third-party sites. Working with the employer

to provide stakeholder information via links to either the IFA&#39s website or

direct to the product provider has benefits for all.

The IFA can enable potential members to self-service with regards to

quotations and key features while what-if calculators enable employees to

run various scenarios online.

The employer avoids the need to be directly involved in the communication

process and can direct internal quer-

ies to the intranet and the employee has access to instant information

which is not reliant on the availability of a representative from the

adviser&#39s office.

Agreed levels of access to the employees could form the basis of

negotiation with the employer over cost. If it could be agreed to insert

links to the IFA&#39s site from the intranet, then multiple cross-marketing

opportunities open up.

It is crucially important to note that through all these web-based

processes there will always be the need for personal support and contact.

If the IFA is to offer a menu of services from intensive face-to-face

counselling to a remote, execution-only offering with no face-to-face

contact, then there will need to be the additional support from experienced


Who will provide this? I think employees need access to a dedicated

communication centre which can support both IFA and employer/employee at

varying levels depending on the menu of services being offered. This

service provides the additional support needed for those that feel

uncertain about a self-service option.

What guarantees do clients have of sufficient investment to ensure such

communication and support is of the level that they deserve? They can

always take their business elsewhere.


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