In the Spotlight with Andy Beswick, Aviva

We spoke to Andy Beswick, MD of Business Solutions at Aviva, about why advisers should tap into the auto-enrolment market and what support providers like Aviva can offer.

Related topics:  In The Spotlight
Rozi Jones
12th February 2016
Andy Beswick Aviva

FR: Aviva recently created a guide to auto-enrolment for SMEs - how much do you expect the market to grow in 2016 and how big an opportunity is this for advisers?

The next two years are going to provide a huge opportunity for advisers who are willing to get involved in the auto-enrolment market. Between now and the end of 2017, 1.8m businesses have got to set up a workplace pension scheme with 480,000 of those staging during 2016. Added to that, around 50% of these employers haven’t got any form of workplace pension provision at all. This is a huge market with a lot people requiring advice and guidance to get them through the process and set up with a pension scheme which works for them now, but will also work for them should their business grow and develop in the future. In a recent survey we carried out with advisers, a third told us that they see AE as one of their greatest opportunities in 2016 and I think they’re right.

FR: Why should advisers tap into the auto-enrolment market and what other support can providers like yourselves offer?

Advisers should be tapping into the AE market because there is such potential demand there. We’re now at the stage where smaller businesses are starting to set up their workplace pension schemes and most of these employers won’t have the advantage of a HR or Finance department to help them through the process. This is where advisers can really demonstrate value.

It doesn’t have to be extremely labour intensive for advisers either. More providers are now putting their AE propositions online, which allows advisers to operate in this market in a more streamlined and profitable way than in the past. Also, once the AE scheme has been put in place this then gives a great springboard for advisers to go back to the employer with further corporate propositions that meet the needs of SMEs. And it shouldn’t be forgotten that getting access to the key decision maker in an SME can often be simpler than with larger companies.

At Aviva we’ve developed a guide to choosing an AE provider which is made up of independent, third party articles from a range of experts such as accountants, business owners and the British Chambers of Commerce. We’ve also created a planner for anyone going through the auto-enrolment journey. Both are suitable for advisers who need more information about the market and for SME owners themselves which means advisers can share them with their clients knowing that it uses language people will understand.

FR: What will be the biggest challenges for both employers and advisers in the coming months?

The sheer volume of schemes that need to be set up will be a challenge for everyone, but it’s a challenge the market is prepared for. AE has been around for over three years now so there is greater awareness. However, small business owners need to be really clear that if they miss their staging date then fines can be imposed. Leaving it too late will cause difficulties for everyone involved in the process, including advisers who may then be under pressure from clients to get a scheme set up before any financial penalties are incurred by the employer.

FR: What would you say to advisers who aren't currently operating in the auto-enrolment market?

Advisers know their audience and they know the areas they want to operate in. The only thing I would say to them is just be aware of the sheer volume of schemes that need to be set up in the next two years. 1.8m businesses need to go through AE and huge number of those will be looking for some form of support.

It’s also worth noting that some high net worth clients will also be Directors/Partners of small businesses. If their Wealth adviser won’t help them with their AE obligations then they will simply turn to another adviser who can. This other adviser may also offer Wealth services so it is actually a retention risk on the Wealth side of an adviser’s business not to have some form of AE support     

For those advisers that have actively chosen not to participate then they should at least have a process set up so they know what to do should they be approached by a company looking for guidance. That could be as simple as referring them on to a couple of different providers, another advice firm or some online resources.

FR: What trends do you expect to see in the market more broadly in 2016 that both advisers and firms should be aware of?

For advisers, they will need to work more closely with the payroll providers. Historically they haven’t had to do that but with most AE assessment now taking place in payroll they will need to work more closely with these systems to ensure their clients understand the end to end process they will have to go through. Payroll bureaux in particular are going to have to adapt their processes to deal with auto-enrolment. This will mean them potentially taking on extra work each month to upload more pension payment CSV files into pension providers systems. This could mean them increasing their fees to employers.

Similarly many employers will initially often turn to their bookkeepers or accountants to help them with auto-enrolment. Often though accountants and payroll bureaux won’t want to give advice or make recommendations on AE so financial advisers have an opportunity to get closer to these firms, particularly those accountancy firms that offer payroll services as well. However they will expect the financial adviser to deal with all of their clients not just the top ones.

Some firms will just view auto-enrolment as yet another mandatory obligation to get off their desks as quickly and as painlessly as possible. However some will take a view that if they are going to have to do this, then they might as well make the most of it. These will be the more paternalistic types of employers or those where key staff recruitment or retention is an issue for them. For these employers they may well start by paying in more than the statutory minimums and use AE as platform to introduce more benefits for their staff e.g. Shopping Discount schemes etc.

Overall I think it is clear that AE is going to have a significant impact on the adviser market in the coming years – whether advisers choose to participate or not.

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