But how does an adviser position themselves when there are providers offering low cost or in some cases free solutions? There has always been low cost competition for advisers from the likes of supermarkets and comparison websites, but advisers have won through by selling their added value services. Auto-enrolment is no different and software on its own is not the solution.
Recent research [NB Nest] highlights a large majority of employers will be looking for help from advisers to ensure they don’t fall foul of the Pensions Regulator and to provide advice and guidance to their employees. As more employers stage there will be increasing pressure on who provides this support. This is not an area that payroll providers are experienced or skilled to address and many of the pension providers will not be able to deal with the volume or may even decline a scheme if the contribution levels are too low. If employers are hoping their accountants will help them that could be another potential misgiving as they are already expressing nervousness about aligning themselves with one pension provider and recommending this to their clients, as they don’t want to be seen to be offering advice and in breach of FCA regulation. Advisers should be thinking about partnering with accountants.
It’s not just the employers staging over the next year or so that present an opportunity either. There will be a number of businesses who have staged in the last two years and have realised that auto-enrolment is more complex than they originally thought. This “second user” market will have learnt from past mistakes and could now be looking to get support from an adviser who can manage the whole process for them end to end.
Advisers need to decide if they want to embrace this or hand off clients to a specialist. They shouldn’t ignore it and leave their clients to struggle through. The most successful advisers in the auto-enrolment space have been very clear about their go to market proposition. This usually involves an auto-enrolment platform branded as the advisers own and a menu of consulting, broking and administration services.
Managing high volumes of small auto-enrolment schemes and ensuring clients meet their duties on time and on an ongoing basis will require robust and flexible technology which an adviser can use comfortably and efficiently in order to make this a profitable and scalable business proposition. An adviser will be far more efficient with one software platform that they can manage centrally for all clients as it would be impossible to try and get to grips with each and every payroll and pension provider system out there. Leaving clients to manage auto-enrolment through payroll and pension provider systems means the adviser won’t have a single view of all client and member data, won’t be able to use the platform for communicating or managing other benefits or promoting their broader proposition in the workplace. It also leaves the client open to attack from other advisers, or dare we say it, from pension providers approaching clients directly.
Auto-enrolment presents advisers with an opening to create value with recurring revenue through a subscription model, as well as upfront fees. Once an adviser has cemented their relationship with the employer, there is scope to create further revenue through the broking of other group employee benefits and for providing advice to individuals, potentially leading to securing assets under management. Auto enrolment presents an exciting prospect for advisers and, if handled correctly, could generate a wealth of opportunities.
