Most IFAs are dinosaurs in danger of going extinct, according to Genlife’s managing director Nick Ayton, unless they are able to grasp the opportunity presented by small and medium-sized enterprises going through auto-enrolment.
Speaking to FTAdviser, he said that while some of the larger advisory firms catering to high net worth individuals could probably ignore the trend, those with less scale and a broader client base need to adapt their business model soon.
Mr Ayton said: “The direction of travel is towards platforms, direct sales and simplified models, so I can see a definite acceleration in the rate of IFA consolidation in the next year or two.”
In recent weeks, Standard Life announced the launch of a wholly-owned, UK-wide financial advice business, after agreeing a deal with Skipton Building Society to buy its Pearson Jones advisory business.
Just Retirement also announced it would be launching a ‘simplified’ advice service, which it said is designed to help retirees with medium-sized pension funds navigate new at-retirement freedoms.
Mr Ayton added: “IFAs need to be much more savvy about marketing themselves and many have no idea how to exploit this auto-enrolment opportunity.”
Mr Ayton put forward his business as a solution to the auto-enrolment problem problem, explaining that Genlife’s platform lets IFAs and accountants use their technology for free so they can set themselves up as payroll bureaus with their own branding.
Mr Ayton added that IFAs are “generally incapable” of running the payroll side themselves, but can quickly get SMEs set up using their technology.
Philip Stevenson, Chartered financial planner at ARK Financial Planning, told FTAdviser that to begin with his firm was only going to use auto-enrolment as a way to protect their existing client base, but as more enquiries came in externally, he now sees it as a definite opportunity.
He said: “We will register them with Now: Pensions for the payroll side of things, then provide support by coming into the employer and doing presentations and introduction packs.”
Matthew Harris, director at Dalbeath Financial Planning, said his firm was generally looking to help smaller companies comply with their auto-enrolment obligations, with the big flood of staging dates for this group kicking off later this year and into 2016 to 2017.
Mr Harris said: “It is a completely different market to what advisers are used to, which is perhaps why many are hesitant in attacking it. Employers don’t really want to set up a pension scheme as it costs them money and time, plus in some cases employees don’t really want one either.
“It requires a different approach, more about educating employers and staff, letting them know you are on their side and will get them through this process at the lowest possible cost.”
Mr Harris also warned that as the market is essentially unregulated, literally anyone can help a company arrange an pension scheme, “from accountants, to bookkeepers, to the guy who washes the windows”.