The role financial advisers can play

Mr McQueen recommends advisers lead with a headline message of “plan early”.

“It’s change, it can be complicated, and it carries a cost. Financial advisers are perfectly placed to support employers through this positive revolution.”

Getting into specifics, there are three main roles for advisers, adds Dale Critchley, technical reform manager of Friends Life:

1) Helping the employer ensure their duties are fully covered, which may include recommending provider or third party services - and that they implement a structure that works for their business.

Mr Critchley says: “Understanding of the true extent of the changes among employers is generally low, and most will need advice to ensure they fully comply with their duties.”

2) Ensuring effective communication with employees, especially as automatic enrolment will result in a significantly larger number of workers enrolled into pension schemes without any financial advice.

Employees will receive statutory communications but may not appreciate the impact their own decision making can have on their income in retirement. Advisers can add real value here for the members but also for the employers.

Mr Critchley says: “If the employees value the pension, the employer gets a greater return on their investment too.”

3) Advising on ongoing governance considerations. When providing a workplace pension scheme employers need to be aware they have a duty of care to their employees, they need to ensure employees do not suffer any detriment as a result of their decisions.

Mr Critchley says: “We believe that ongoing governance will come increasingly to the fore and the role of the adviser in delivering that governance will be significant.”

However, while ostensibly a major area of potential business for advisers, the ban on consultancy charges for auto-enrolment schemes in May’s Pensions Bill may change things. The ban means no employer can arrange to pay for advice through the scheme (and therefore, ultimately, members’ pots).

A company must meet any costs of advice, which RSM Tenon have estimated at up to £12,000 for most schemes. Many advisers and consultants have expressed concern that smaller companies in particular - who may benefit most from advice - may not be able to meet these costs.

Pensions minister Steve Webb MP has argued that no employer needs advice on setting up an auto-enrolment scheme, highlighting the default option of the government-backed National Employment Savings Trust (Nest).

However, advisers and providers argue that even smaller companies would typically need up to 12 months planning to set up a scheme and that there are many advantages for many firms going with a major private insurance company.

Of course, it may be that many companies, especially those with a smaller, professional workforce, are happy to pay fees to ensure they get a scheme that meets their needs.