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An age of opportunity; what can advisers gain from auto enrolment?

In February, I wrote a piece for New Model Adviser entitled ‘Reluctant advisers risk missing the auto-enrolment boat’ detailing why I thought getting into the AE market should be something all advisers were considering.  Whilst some of the comments my article received were positive about the opportunities auto enrolment presented, I was perturbed that advisers still seemed to be either unsure about this new market, or deterred from involvement by obstacles – some real and some imagined.  
 
One advantage for those who were unsure about what auto enrolment would bring is that the market is now up and running.  The staging dates for many large companies have already been and gone, whilst dates for medium sized and smaller companies are fast approaching.  Those of us in the financial services sector would have to have been fast asleep for the past year to have missed the legislative and regulatory change which has led to the introduction of ‘workplace pensions’, however, many businesses still appear to be blissfully unaware of what lurks around the corner for them.  One of the companies I’ve worked with in developing our own auto enrolment proposition tells me that they’re receiving at least one ‘distress call’ a day from firms who have left it almost too late to start taking the necessary actions and a survey conducted by the Pensions Regulator in January showed that 40% of small businesses and 66% of micro businesses planned to leave making their auto enrolment arrangements ‘until the last minute’ (and, bear in mind, these are the firms that have made any plans at all!).  
 
SMEs can’t be blamed for wanting to bury their heads in the sand at the thought of what auto enrolment holds in store for them.  Recent figures from the Centre of Economic & Business Research (Cebr), commissioned by Creative Auto Enrolment, show that preparing for auto enrolment involves 33 different tasks, which could take up to 103 man days – it’s a big challenge for employers to undertake. And that’s without considering the responsibility of choosing a pension scheme for employees and the looming capacity crunch – a very real issue with 38,000 businesses all required to enrol their eligible employees into pension schemes during 2014.
 
So, without meaning to belabour the point, the opportunities for advisers here are huge.  As the statistics above show, the sheer magnitude of the work the business owner has to undertake means that they will need – however reluctantly – professional help getting their auto enrolment house in order.  Throughout my entire career in financial services I can’t remember another instance where literally every working adult in Britain was up for grabs as a client.  Offering an auto enrolment solution isn’t a single action; it’s merely the first step in getting in front of a whole workplace full of potential clients.  Many of those who are automatically enrolled into a pension scheme are likely to seek additional financial advice to discuss their own contributions and the additional options open to them; successfully having implemented their auto enrolment scheme will place you firmly at the forefront of their mind as the logical place to go for this continuing advice.
 
However, as a realist, it’s necessary to recognise that this is an area of advice that you cannot get wrong.  If you start down the road of offering a solution without being properly prepared, there are two possible outcomes; either the firm will go elsewhere to find help and another adviser will reap the benefit of the opportunities mentioned above, or, they will leave it too late to get additional help anywhere and will face a hefty fine for non-compliance – for which you will be responsible.  The staging dates are imminent for many businesses and not complying with the legislation is just not an option, with potential fines as high as £5000 per day.
  
The Cebr data estimates that if the advisory market gets auto enrolment wrong, a total of £2.5 billion of revenue will be at risk by 2015, when all medium and large sized businesses will have staged. This is expected to rise to £2.8 billion of revenue by 2018 when all businesses will have automatically enrolled their eligible staff. That’s a significant chunk of income to risk losing out on.
 
I would therefore urge you to consider the potential of the auto enrolment market – if you have uncertainties or questions, then address them as soon as you can.  There will be some advisers who make a considered and fully informed decision not to get involved in AE, and if you are one of these advisers who has researched this market and chosen to take a step back, then so be it. However, missing out on one of the biggest opportunities in recent financial services history because of uncertainty or a lack of knowledge could not only be a costly regret with regards to the direct work provided, but could also impact on future opportunities when you discover that potential clients choose to use their AE adviser for all their financial needs. Auto enrolment is undeniably a complex beast, but as with most endeavours, there is a clear correlation between the time and effort invested and subsequent rewards to be reaped. 
 
David Golder, Client Proposition Director for SimplyBiz
 
 
 
 
[Sponsored article by SimplyBiz]

 

 

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Author: IFA Life Sponsored Post
Posted: Friday, May 02, 2014 | 10:34:28 AM


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