Study: Advisers see auto-enrolment protection opportunity
New findings reveal financial advisers believe new rules will allow them to increase sales of group protection policies.
Close to 60 per cent of financial advisers and employee benefit consultants believe that auto-enrolment provides an opportunity to increase sales of group protection products alongside new pension arrangements, according to a new study published today (28 August).
Global market research firm, ORC International, has released figures from its group protection tracker survey, with 57 per cent of respondents stating that opportunities for group protection sales would increase, up from 40 per cent at the time of the last survey in 2011.
A further 23 per cent felt that employers would cut back on existing cover to fund the new arrangements, a slight drop from 25 per cent in 2011, while 13 per cent expected little or no impact on group protection business, a decline from 30 per cent in 2011. There were 156 participants in 2012 and 151 in 2011.
Advisers representing leading EBCs and national IFA firms were most likely to see auto-enrolment as an opportunity in 2012, with the report highlighting a significant increase in this response among larger firms to 64 per cent from 38 per cent in 2011.
Auto-enrolment will begin to be phased in for all UK firms within five years and requires employers to enrol their workers into a workplace scheme to make it easier for them to save for retirement.
Very large businesses will start implementing this in October and all businesses with over 250 employees will have it in place by February 2014.
Vicky Whiting, research director at ORC International, said: “As AE rolls out nationwide, this presents a great opportunity for advisers to highlight the benefits of group protection products while supporting new and existing corporate clients with the new workplace pension requirements.”
The suggestion that corporate pensions business opportunities for advisers may also increase as a result of auto-enrolment reinforces widespread predictions of a growth in this area with the inauguration of the new rules this year.
In a video interview with FTAdviser’s sister title, Money Management, Graham Vidler, director of communications at the National Employment Savings Trust, said there will be “huge opportunities” for financial advisers in the corporate pensions arena in the coming years.
He said: “Hundreds of thousands of employers will be called to duty over the next five years, including many who have little or no relationship to the corporate pensions market at the moment.”
Mr Vidler added that employers will need assistance with the practicalities of setting up auto-enrolment as well as choosing a provider so advisers should be able to add value.
Financial research company Defaqto also agreed with this view, adding that the percentage of business devoted to employer pensions will grow from 6 to 16 per cent after RDR.