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, a report by The Pensions Regulator has found.
In autumn 2015, TPR found 66 per cent of IFAs viewed auto-enrolment as a business opportunity. But by spring 2016, that figure had fallen 13 percentage points to just 53 per cent.
The survey covered IFAs, accountants, payroll administrators and bookkeepers.
IFAs were by far the most knowledgeable about auto-enrolment, with 78 per cent saying they were “very confident” they could accurately answer questions about AE. Fewer than half in the other three groups felt confident.
IFAs were also substantially more likely than other types to know “a lot” about auto-enrolment: 73 per cent, compared to 47 per cent of accountants, 56 per cent or payroll administrators and 58 per cent of bookkeepers.
But, despite their superior expertise, IFAs were the least likely to be actively involved in auto-enrolment on their clients’ behalf. Thirty-one per cent of IFAs were acting on their clients’ behalf, compared to 57 per cent of accountants, 68 per cent of payroll administrators, and 66 per cent of bookkeepers.
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.
He said IFAs tend to favour high-net-worth clients, for the obvious reason that, as fees are charged as a percentage of assets under advice, the margins are much higher. With commissions no longer allowed, the incentive to focus on the high-net-worth side is even greater, he said.