The number of financial advisers who view auto-enrolment as an opportunity has dropped markedly since the end of last year, at a time when other business service providers are ramping up their knowledge and interest in the area.
Research by The Pensions Regulator found last autumn, 66 per cent of IFAs viewed auto-enrolment as a business opportunity, but by this spring the figure had fallen 13 percentage points to just 53 per cent.
The survey covered advisers, accountants, payroll administrators and book keepers.
IFAs were by far the most knowledgeable about auto-enrolment, with 78 per cent saying they were “very confident” that they could accurately answer questions about it. Fewer than half in the other three groups felt confident.
But despite their superior expertise, advisers were the least likely to be actively involved in auto-enrolment on their clients’ behalf. Thirty-one per cent were acting on their clients’ behalf, compared to 57 per cent of accountants, 68 per cent of payroll administrators, and 66 per cent of book keepers.
William Annison, an employee benefits consultant with HWWA Consulting, said the drop in interest was probably related to the small size of the businesses now reaching their staging dates.
“There’s a lot more of the companies with two or three employees coming through. The amount of money they [advisers] can make from those clients is much lower,” he said, pointing out advisers tend to favour high-net worth clients, as fees are charged as a percentage of assets under advice, so the margins are much higher.
But Mr Annison also pointed out businesses were reluctant to pay for advice. “A lot of companies I’m talking to are saying they want to do auto-enrolment right, but they don’t want to pay for it.”
This means they are depending on accountants and payroll administrators. However, they cannot provide advice to employees, a service for which there is demand, Mr Annison said.
Wealth management and employee benefits firm Mattioli Woods is one provider ramping up its auto-enrolment operations.
Director Murray Smith told FTAdviser the firm is increasingly asked to come into companies specifically to provide financial education to employees. Mattioli Woods sees this both as a new business avenue in itself, but also as a way to win clients to its wider employee benefits services.
But he said the employers who want this sort of service tend to be bigger corporates, rather than small employers.