Regulator: Most employers won’t pay for AE advice
Advisers show consistent knowledge of auto-enrolment compared with other intermediaries, but most expect to be paid for services while employers are unwilling.
Most employers say they are not prepared to pay for someone to help them prepare for automatic enrolment, in spite of almost nine out of ten independent financial advisers saying they expect to charge companies for their services.
In a research report titled Intermediaries’ awareness, understanding and activity relating to workplace pension reforms, Spring 2012, the Pensions Regulator and BMG Research interviewed 326 IFAs and brokers between January 2011 and May 2012, as well as samples from other sectors such as HR professionals, accountants and pensions specialists.
Of the interviewees, 88 per cent of IFAs said they plan to charge for set-up and 86 per cent said they plan to charge for ongoing services related to auto-enrolment, a greater percentage than that of any other surveyed intermediary sector.
However, most employers said they do not intend to pay someone to carry out the processes required for auto-enrolment, with 64 per cent saying they are not prepared to pay.
According to a previous survey of 714 employers, only 28 per cent of employers reported being prepared to pay over and above what they already pay their advisers, including 17 per cent who said they would only pay if absolutely necessary. In contrast, most intermediaries who typically charge for their advice or services reported being likely to charge for preparing and setting up auto-enrolment solutions as well as for any ongoing aspects.
John Bloomfield, IFA at Paul Wilson Financial Services, argued that these two numbers are not necessarily in conflict depending on the size of each sample, with only employers willing to pay hiring advisers and the rest going different routes.
He said: “I suspect that the ones who aren’t willing to pay are the ones who wouldn’t put a scheme in place unless they have to and will just take what the government default is, in other words, Nest.”
When asked if they were aware of any changes to pension law, 96 per cent of IFAs interviewed mentioned changes in pensions law without being prompted, with 45 per cent specifically mentioning automatic enrolment.
A smaller percentage (85 per cent) understood five key aspects of auto-enrolment.