Blog: Clichés in your backyard

Rowanmoor Pensions’ compliance manager Mark Lisle wonders how his old boss would have treated the arrival of NEST.

My first taste of the business we now call financial services was in the form of a sales-focused general insurance and life operation that nowadays would be an IFA practice; in the dazzling days of the last century it was called an insurance broker.

The boss was a charismatic cove who could have sold ice to Eskimos, talked in sales speak and three letter acronyms, and who struggled with delegation as so many of his charges were woefully lacking his PMA.

As one of that alumni, I was exposed at an early age to traditional financial services folklore, in the form of “The Widow’s Story” (coping with bereavement bereft of life cover for the middle-class housewife) and “Your Longest Holiday” (yes, it’s never too early to start saving for retirement, featuring the enduring staple “cost of delay”).

But the super salesman saved his best material for motivation, desperately trying to engender a positive mental attitude in the ranks. A personal favourite was “Diamonds in Your Backyard”; a moral tale of overlooking what riches you have in favour of what possible treasures may be out of sight.

We read so much about NEST, and the compulsion for employers to be offering some form of pension provision by October 2012.

I am pretty sure, were my old gaffer still around to witness financial services in the 21st Century, he would be talking up the unfairness of such legislation and its impact on his owner-manager clientele, to the point where they would be desperately looking to him for a solution. He would close with the classic line: “If I could show you a way to avoid all that hassle and grief, and do so at a reasonable cost, would you be interested?”

But he would not stop at his existing clients. His idea of a referral would be to their accountants, going up the pyramid of influence, probably laying on a breakfast seminar with bacon butties, pitching to groups of like-minded prospects, again disturbing their peace with tales of the woe they could expect from their moaning clientele, then, when they were suitably concerned, throw them the same $64,000 close.

NEST will offer a ‘one size fits all’ approach. It is designed as a low cost scheme, which means it will have limited investment and retirement options, zero portability and restrictive contribution limits. Employees will have limited control over their retirement planning and retirement income. Employers will have no say in how the scheme is set up and communicated and they will face the risk that their competitors will offer a more attractive pension, making it difficult to recruit and retain valuable employees.

A substantial administrative liability will be placed upon employers, who will be expected to keep scheme records, automatically enrol their employees into their scheme and ensure it remains compliant with the ever-changing pensions landscape. If they do not, they will be liable to severe penalties.

So what is it about the financial services community in 2011 that means most of our energy is expended in tilting at windmills, rather than grasping the nettle of opportunity? For years, the industry has been crying out for an incentive to get people to make greater provision for retirement. NEST creates a compulsion to act, and it would be a crying shame if it did not result in a tidal wave of group pensions business for the financial services community.

So, if I could show you a way to increase your business, would you be interested?