Around 10,000 small and medium-sized enterprises will reach auto-enrolment staging dates on 1 July, with many needing last minute advice at higher fees as they are substantially behind on preparations, according to Standard Life.
Head of workplace strategy Jamie Jenkins told FTAdviser that the firm had experience of thousands of small firms that will be staged in at the beginning of next month, giving them three months to automatically enrol eligible employees, which had initially sought to go it alone and are are being forced to seek last minute support.
He said many advisers are seeking to move into the space to respond to this business opportunity, while Standard Life has also seen evidence of advisers referring to peers with a specialism is corporate pensions and using ‘waivers’ to reduce the risk of losing clients.
“If a private client of yours asks for auto-enrolment advice and you’re not able to help them, then they may find someone else and end up being someone else’s private client too.
“But it works both ways, because in some cases we’re seeing advisers that are actively going out and seeking corporate clients to set up their pension scheme and are also by virtue of that gaining private clients.
“We’ve seen a conglomerate of advisers offering [an outsourcing] service, finding a waiver to make them comfortable they won’t take the client on a private basis,” explained Mr Jenkins.
One fear that has not come to pass is a predicted squeeze on adviser and provider capacity this year as SMEs began staging, with Standard Life among several that have developed packages to help with auto-enrolment.
Concerns around SME preparation still abound though, with the focus rightly being on keeping businesses afloat.
Mr Jenkins said that many will believe they are nimble enough to deal with another regulatory change, but when faced with the complexity, communications and third party providers needed for auto-enrolment, SMEs realise too late that they need extra help.
“The downside is not just getting things done on time and a potential risk of fines from the regulator, more immediately when they do turn to an adviser at the last minute they will charge more for having to work extra hours or displacing existing work.”
“What we’re seeing, which is a great opportunity for advisers, is not just one-off fees to employers, but mitigating those up-front fees in favour of ongoing charges to the employer, maybe a certain amount per member, per month to review what’s happening and continue to make sure they’re compliant, so you’re building future revenues rather than one off payments.”