PensionsSep 30 2016

Ignoring auto-enrolment a 'costly mistake', advisers told

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Ignoring auto-enrolment a 'costly mistake', advisers told

Financial advisers have been urged to work with accountants to maximise the business opportunities presented by auto-enrolment.

Accountancy firm Clapton Consultants cited a recent survey by The Pensions Regulator which found the number of advisers that viewed auto-enrolment as a business opportunity had fallen markedly since the end of last year.

While conceding workplace pensions advice was not necessarily a lucrative area, Eric Clapton, managing director of Clapton Consultants, said ignoring it could prove to be a "costly mistake".

"Government strategy is to use employers as a conduit to provide financial advice to many more people," he said. 

"Plugging the advice gap is a major objective and HM Treasury is willing to sanction tax breaks to achieve that aim."

He said collaboration with accountants would give access to new business avenues because "every accountancy practice has business clients who are affected by auto enrolment legislation".

Mr Clapton added: "Collaboration between accountants and regulated advisers will maximise the commercial reward afforded by this government sponsored opportunity. 

"Notwithstanding the fact that margins on workplace pension advice are under serious downward pressure, ignoring this area of business could be a costly mistake."

The Pensions Regulator's research, released in July, revealed that last autumn 66 per cent of IFAs viewed auto-enrolment as a business opportunity. By spring the figure had fallen 13 percentage points to just 53 per cent.

Meanwhile the interest of accountants, payroll administrators and book keepers had increased.

That was despite the fact that advisers were by far the most knowledgeable and qualified to provide advice on auto-enrolment.

Daren O'Brien, independent financial adviser with Aurora Financial Solutions, said collaborating with accountants was easier said than done.

"Generally we've found accountants to be quite protectionist of their clients and not clued up on what an IFA can offer," he said.

However, he said some IFA's had steered clear of auto-enrolment because they view it as the lower end of the market and not worth their while financially.

Mr O'Brien, however, said his own business model of providing auto-enrolment advice to the business could lead to knew private clients among the higher earners of the business's employees.

"Just because they don't have much money in auto-enrolment, doesn't mean they don't have much money," he said.