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Swot up to pass the test

Are you marketing and advertising your stakeholder expertise? The answer for most advisers is probably not. This is either because you do not see stakeholder as being a major part of your business or because its introduction seems too far away.

On both counts, you could be wrong. Like it or not, stakeholder is likely to have a major impact on all IFAs. It can be either a threat or an opportunity and I hope to show you it is a definite opportunity which you should exploit.

Equally, those who think stakeholder issues can be put off until next year are missing the fact that stakeholder business is being written now. While the first payment into stakeholder plans cannot be made until April 2001, schemes can be registered from next month and decisions on stakeholder are already being made.

Where do you start? The first step is to carry out a full Swot (strength, weakness, opportunity and threat) analysis of your business. This should cover questions such as:

l What is my client bank? Corporate or individual? Employed or self-employed?

l What professional connections do I have? Solicitors? Accountants?

l What is their attitude to stakeholder?

l Are you and your colleagues fully familiar with stakeholder and pensions in general?

Wider pension knowledge is vital as, when you review a possible stakeholder need, you may discover that the client would be better served by an alternative pension arrangement. It is at times like these that the extra study for G60 pays off.

Once you have completed your Swot analysis, you are in a better position to identify the type of strategy you should adopt. Even if you decide not to advise on individual stakeholder cases or see new clients in this category, you will still need to plan what you will do if an existing client requires a stakeholder plan. Do you refer them to another IFA, their bank or even their supermarket?

This is not a far-fetched possibility as stakeholder will have a major impact on many areas, not just the retirement needs of the “great unpensioned”. For example, how many of your high-net-worth clients would like the idea of giving money via stakeholder to their grandchildren? This could be up to £3,600 for each child and, even better, the grandparent would only have to pay the net contribution.

So, let&#39s review the process you should be following.

1) Complete a full Swot.

2) Increase your pension knowledge if necessary and make a decision as to whether you wish to offer stakeholder and, if so, to whom. If not, what will you do for those clients who require them?

3) Look at your existing client bank. Break it down into categories and formulate a strategy for each. For example:

High-net-worth clients


Suggest stakeholder for their grandchildren?

Saving for retirement

Will stakeholder be appropriate or should a Sipp be recommended? Remember, the FSA is talking about requiring “reasons why not” letters if you recommend an alternative to stakeholder. Therefore, you should ensure the alternative is more appropriate for the client&#39s needs and that the reasons are well documented.

One possible reason may be service and fees. If your client requires a sophisticated pension arrangement that will need a high level of ongoing support, unless they are prepared to pay a fee (and a stakeholder plan is developed that provides the additional features required), a traditional pension may be necessary so that the contract charges cover the cost of advice.

Corporate clients

With an existing pension scheme

If you are the adviser for the scheme, you should carry out a full review to ascertain if the arrangement meets the stakeholder opt-out terms. If not, you will need to modify the scheme or offer a stakeholder facility to run alongside the existing scheme.

But if you are not currently the scheme&#39s adviser, stakeholder gives you an excellent opportunity to offer to review the company&#39s pension requirements and possibly pick up the scheme or its replacement/additional arrangement.

Be aware that many IFAs are not properly counselling or servicing existing clients on this matter and I know of several IFAs who have already taken on new clients because of this.

Also remember that while payments into stakeholder cannot be made before April 2001, clients can establish group personal pensions and occupational arrangements now. Often, such arrangements can be tailored to better suit client needs.

Without an existing pension scheme

For those without a scheme, your advice and support is a legal necessity.

Professional connections

Do you already have professional connections? What are they doing about stakeholder, both for their clients and their own staff?

They will have clients who will be affected by stakeholder and, as professionals, should be able to support their clients but do they have the in-house expertise? Would the solution be to outsource their pension advice issues to you, allowing them to continue to offer a rounded service to their clients?

The advantages of your service to your professional connections include:

l As an IFA, you are an independent adviser.

l You take full responsibility for regulatory compliance.

l You have dedicated resources and knowledge.

l You can offer tailored support.

Many product providers can assist you in formulating your strategy with professional connections.

So far, we have discussed only personal contact but your marketing plan should also include an item in your client newsletter and articles in the local press. You should exploit any connections that you have with local chambers of commerce.

Running seminars for small businesses, in conjunction with your professional connections or using referrals from your clients, are also an excellent way of introducing your services and obtaining new stakeholder business.

Advertising, however, needs to be carefully considered. While it can be good for name awareness, it is difficult to target. Unless you propose to write high volumes of stakeholder business on an almost execution-only basis, the cost of mass advertising could be wasted.

If your target is high-net-worth individuals and small businesses, how do they choose a lawyer, accountant, doctor or financial adviser? Do they look in the local Yellow Pages or newspaper and pick the one that offers the prettiest advert? Probably not – they more than likely go on referrals or personal approaches.

The introduction of stakeholder pensions offers a wonderful opportunity to IFAs. Use it – and good luck.

PETER WILLIAMSChairman, Sofa, and IFA training manager, Scottish Equitable


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