How to charge for auto-enrolment advice

Auto-enrolment for small firms has been delayed by a year, but the reform is still an opportunity for firms to move to profitable corporate advice. Three advisers have given us their models to consider.

Sam Caunt, company secretary, Kingston IFA

Caunt said his business is in the process building up its auto-enrolment proposition.

Kingston will offer a fixed fee to assess a workforce’s needs, dependent on the number of employees, and then provide a menu of services thereafter.

However, Caunt said all other services will be charged on an hourly basis, with rates depending on the specialism of the adviser.

“Simple pension administration would cost less, but the services of an IFA or a chartered financial planner would be more,” Caunt said.

He added that for ongoing service to the employer’s scheme, the firm would be willing to negotiate remuneration with clients and could offer a retainer, a fixed fee or hourly rates.”

Mark Ginger, IFA, 121 Financial Services

Ginger said his firm is in the process of creating its model for an auto-enrolment package, but is still considering several options.

He said it is likely he would charge a set fee for the assessment of the workforce.

Implementation would also be charged as a set fee which depended on the number of members.

Ongoing services would be charged to the member, not the employer, Ginger said.

“For members who just go into the employer’s default vehicle we would not charge,” said Ginger. “But if they want more management we would look at it on an individual basis.

“We would charge a fee for setting up a new pension if they want one and take a trail commission on their fund.”

Brian Hill, director, Jones Hill

Hill splits his charging structure into three parts, which he said gives clients the freedom to choose which services they want. The advice and implementation of pension schemes for employers are paid for on a fee basis.

The ongoing service to the scheme is paid for by the employer via a retainer which is calculated per member per month.

“We only charge percentages of funds invested when individuals are moving around within a GPP, because this is where we have to provide full advice,” Hill said.

“We do not do percentage charging of funds under management generally. This prevents cross-subsidies between members,” he added.