The US experience in financial services is widely banded around as a model that the UK market follows. Worksite financial services are already common in America. Stakeholder offers the key to this door for IFAs in the UK, and opens up an affinity channel that is extremely cost-effective to service for other more profitable business.
Cost effectiveness comes from greater homogeneity than that offered by many of the other affinity channels for stakeholder often talked about (such as trade unions and other professional bodies) due to:
Common financial needs – employees share a basic benefit platform and a lot is known about the potential client;
Geographic concentration – employees spend seven hours a day in the same place and generally within a 20-mile radius of thesite.
So how can IFAs tap into this market? Worksite marketing refers to the selling of financial solutions to employees in the workplace beyond the scope of core employee benefit packages they receive. Stakeholder presents the best opportunity yet to find out if worksite marketing in the UK really is worthwhile.
We are helped by one big factor – compulsion. Although it is not compulsory for individuals to join a stakeholder pension, it is compulsory for an employer with at least five employees to offer it. And if an employer does not make stakeholder available to the employees by October 7, 2001, the firm could face a £50,000 fine. To do nothing is not an option.
The starting point of any worksite marketing campaign is to contact your prospective employers. Try the following:
Write to local employers offering advice;
Speak to your clients who do not have access to a company scheme when you carry out your fact-find – their referral is the best route to an employer; Run seminars for local employers for a fee – to increase the perceived value of what you are offering. Fees charged by DBS members range from £250 to £3,000.
The Government's massive communication campaign, including a £6.5m television advertising campaign already on-air, provides excellent backing for your own campaign.
To achieve success in worksite marketing and affinity relationships using stakeholder as bait to make the catch, five golden rules need to be understood and followed.
See your service from the point of view of the decision-maker – it is often his or her job or reputation that is at stake. So reassurance of your high service standards is needed – the last thing the decision-maker wants is a complaint from an employee.
Understand that there are likely to be many people involved in making the decision – the board, unions, finance department, human resources department etc., making it a lengthy process.
Even when the firm has decided to give you access, it is a slow process making employees aware of your services. Some ideas or best practice tips include:
Use the company newsletter/intranet/notice board etc;
Use wage slips to provide a regular reminder;
Organise on-site clinics once a week and ask the human resources team to run your diary on the day;
Make sure appointments are offered to new starters – does the company run an induction course that you could contribute to?
Offer a charitable/social club donation as a percentage of fees earned each year.
Ensure the employees understand the value of the benefits the employer provides in an annual benefit statement. This should include:
Cost of the employer's pension contribution;
Value of the fund;
Value of the death-in-service provided and the equivalent premium they would have to find to replace this cover;
Equivalent value of any other premiums, say, group PHI.
You can offer to carry out an audit or survey for the firm – I started a presentation to a major plc board on the company's benefits package with:
“My recommendation is to cancel all benefits as your employees have no idea of their value – so why incur the cost?”
The introduction of an annual benefits value statement to that firm increased the percentage take-up on their schemes two-fold.
The fifth and final golden rule is that affinity schemes need managing.
You will need:
Regular review meetings with the managers;
Monthly updates on business written, who with and why;
Published service standards and how you did against them;
Helpline or email facility.
Once established, affinity groups are a cost-effective way of marketing yourself and almost always lead to referrals to other companies, especially in their own sector.