Mark Cardy, director of Skerritts, said selecting from a small panel had become an industry standard because so many providers were pulling out of the market.
Commenting on pension partnerships between providers and advisers that guaranteed clients places on schemes provided they comply with certain criteria, Mr Cardy said he had been approached by a number of pension providers to “join the gang before the doors close”.
Although he said his firm had decided against it to maintain its independent status, he understood why others signed deals.
Apart from the obvious benefit of guaranteed schemes for less profitable clients, he said agreements also meant potentially negotiating lower costs and avoiding the prospect of National Employment Savings Trust, which was perceived negatively by most clients.
But he warned that limiting choice in a market of “significant product differentiation” was not the best message to send out, irrespective of the capacity crunch.
He added: “It is inevitable and I cannot see any big detriment if advisers deal with many more smaller panels because that is what it will be like anyway, given that providers are pulling out.
“It is easy to say that advisers are not choosing from the whole of the market, but the reality is different. But if as an advisory firm you restrict your services, you are no longer independent.”
Standard Life has been at the forefront of auto-enrolment strategic partnerships and, according to its head of SME workplace proposition, Alan Ritchie, the benefits are huge in terms of negotiating better deals and avoiding the capacity crunch, which he claimed could happen.
Mr Ritchie confirmed Standard Life had cemented a number of partnerships but that some requested not to be named for fear of being “misrepresented”.
Adviser view
Tom Binstead, director of employee benefits at Cheltenham-based Bank House Corporate, said: “Every provider offers something different and the idea of sticking with the traditional, who are often expensive, just does not make sense. Nest is certainly an option.”