Where am I? 
Home Better Business
Categories: Better Business
Topics: blog| auto-enrolment| RDR| Steve Webb| TPR| PIPs| Gem and Co| NEST
Pensions minister Steve Webb angered IFAs recently when he said he did not want small employers to seek ‘expensive’ auto-enrolment advice. But do advisers want the business?
Just when advisers were beginning to offer (or at least consider offering) widespread auto-enrolment guidance to businesses, remarks by Steve Webb appeared to suggest they should not have bothered.
Webb told the Work and Pensions Committee he did not want small firms to seek and pay for “expensive” auto-enrolment advice; comments which later invited accusations the pensions minister was living in a “Whitehall bubble”.
"There will be a distinction between large and small employers. Large firms will be able to pay employee benefit consultants,” Webb said.
For small employers, he said, the “generic guidance” provided by the Pensions Regulator (TPR) should be sufficient.
Webb’s comments are at odds with the way many advisers have made sense of auto-enrolment and the Retail Distribution Review. As the commission model is phased out, advisers have been looking for clients who are willing to pay fees.
At the same time, auto-enrolment is shifting the focus of retirement provision back to the corporate space. Many advisers have drawn a connection between these two.
The thinking has been that businesses, unlike some consumers, can afford to pay fees for advice, and will have to due to their new employee savings obligations. This creates a new niche for advice and a natural progression for some advisers from individual to corporate business.
As early as 2010, Paradigm director Steve Bee was launching Jargon Free Benefits, a flex benefits platform designed to help IFAs to provide pension advice to small businesses in a cost-effective way.
In fact, some advisers have already started targeting small businesses in their local area, providing the information employers need to begin planning. However, Webb’s comments have blown this theory out of the water.
However, other advisers have said all along they are not interested in providing auto-enrolment advice to individuals or companies because it is not profitable, preferring to focus on high net worth individuals.
So was Webb on the right track after all?
CommentWas Webb wrong about who needs corporate benefit advice?Elliot Swatton, partner, Gem and Co: “This is a reflection of what we are saying about individuals: that those with less money do not need advice. There is no mechanism to make it affordable for them, but everyone should have advice. “Employers not taking advice will be to the detriment of employees within the pension scheme. It is to the employees within the scheme that advice should be targeted; advisers do not just set up the pension scheme for the employer, but go into workplaces and do presentations for staff. “Just because you work for a small company, why shouldn’t an employer pay for your advice?” James Marchant, financial planner, Sovereign IFA: “People do need advice. For example, we have a small business client who had already spoken to the National Employment Savings Trust (NEST) but was not confident in making the final decision without an adviser. “The government thinks if you make something simple and put it on the internet people will just do it, but we saw with stakeholder that this does not work. Companies will come for advice; it is about the trusted adviser relationship.” Barry Dixon, the Printing Industry Pension Scheme (PIPS): “I am producing communiques for all the print trade associations on the pension reforms and have been amazed at the complexity facing all employers. It does not diminish because you have only 49 employees. “We offer our scheme to all employers, using our appointed IFAs, at no cost to employers. This works very well and the advice is much appreciated by employers who can hardly believe it is free. “This will be undermined by Webb as employers will think they do not need to consider any scheme which uses IFAs. Webb is trying to pacify the employer lobby which has been concerned about the costs of auto-enrolment for small employers.” |
| Share | |
| Comment | Was Webb right to point small employers away from pension advice? |
More from professional adviser
Email alerts
Recommended reading
Categories
Topics
Comments
Related articles
Most Read
Audio / Visual
With the industry's biggest fund managers, IFAonline welcomes you to the media centre.
This year we have 14 awards designed to mark out the very best products in a highly competitive and innovative market. This includes three new awards for 2011 to reflect the developments in this rapidly growing market: Best Dual/Multi-Index Product, Best Structured (Oeic) Fund and Best Structured Product Provider.
Events
Poll
|
|
Job search
Ifaonlinejobs will open the right investment career path for you. Search hundreds of vacancies on www.ifaonlinejobs.co.uk now
In Focus
Viewpoints
About 2.66 million people are looking to increase the amount of money...
sponsored by
I suppose he would say that
From the government's point perspective, NEST has to work as has the AE process. The problem is that politicians and civil servants have meddled and interfered and the whole scenario has become an absolute, bureaucratic nightmare. Imagine a 50 man firm with some part time workers, some weekly paid but others on monthly salary, a couple of salesmen on commission or bonus and a few seasonal or high turnover positions. Then you have Rosie or Jim sitting in the accounts office doing the payroll and trying to make sense of what should be paid across with fixed penalties flying around for non-compliance. My questions are; will advisory firms want to get involved, can firms afford not to get advice and are we not just looking at one more piece of pensions complification that will make the great unwashed just yawn and do nothing?
Posted by: Duncan Carter