Auto-enrolment is a great opportunity for financial advisers to build lasting relationships with business owners and make new professional connections, although it is not without its challenges, according to Mike O’Brien.
With around 1.8m small businesses due to be enrolled in the next financial year, the time is ripe for financial advisers to develop their corporate advice service for that market, the director of Tenet Employee Benefit Solutions said – outlining seven ways in which financial advisers can exploit the opportunity.
The first is to forge links with local accountants. Most employers are likely to turn to their accountants in the first instance, but while many will facilitate auto-enrolment through payroll, they may not be able to deliver key elements such as setting up a suitable pension scheme, Mr O’Brien said.
The second step is to revisit accountants who had originally declined adviser support.
Mr O’Brien said: “When they start to appreciate the practicalities of auto-enrolment, many accountancy firms will soon realise that the resources required are beyond their appetite or capabilities.
“While they may have the software to ‘do’ auto-enrolment and assess the payroll and create the payslip, the levels of administration and communications involved may come as an unpleasant surprise and advisers can help them direct this to an appropriate third party with the infrastructure required.”
Step three requires financial advisers to promote their services to local employers – which could involve writing to employers and placing adverts in the regional newspapers.
Fourth, unless a financial adviser has experience in auto-enrolment, outsourcing could prove to be the more cost-effective option. This could involve one of two things: the first is where the financial adviser handles the advice aspect and outsources the administration. The second is an introducer service where the whole process is completely outsourced – saving time and minimising pressure on resources, Mr O’Brien said.
The next step is effective and timely planning.
“We recommend employers start the process at least six months before their enrolment. This will help ensure that they have enough time to go through the process and also secure the support they need from an adviser and pension provider.”
Step six requires financial advisers to understand the service offered by pension providers to identify the most suitable proposition for their employer client, while taking charging into consideration.
Lastly, financial advisers should not be afraid to ask for help.
Mr O’Brien said: “If you’re not an expert in the corporate market, ask for help from a source such as your network or support provider. The auto-enrolment opportunity is here and you should embrace it now or miss out.”
Adviser view
Mike Pendergast, a financial adviser with Cheshire-based Zen Financial Services, said: “It is always useful to develop a business relationship with accountants. The adviser can refer clients to them, and the accountants can refer business to the adviser for workplace pension schemes.
AE is an opportunity for advisers. If advisers want to get involved in AE, it is a question of making sure they know the procedures and what actually needs to be done.”
