Don’t get sidetracked by the wrong auto-enrolment issues, says Steve Bee
Travelling back on the plane from a weekend away in Budapest, I was interested to read in the papers that Malcolm Small, the director of policy at the Tax Incentivised Savings Association (TISA), is being quoted as saying that, as their staging dates loom, employers are more concerned about how to run the process of auto-enrolment than anything else.
Of course, they’ll need a pension scheme. But, to quote Mr Small from the article I read, “Employers really aren’t bothered about that. What they want to do is comply. They want to not change their existing payroll supplier, and they want the HR and communication processes to be thorough, but as simple as possible.”
“The choice of the end scheme is secondary. It’s important but it’s secondary, and I think advisers need to bear that in mind. For an employer, this is about compliance.”
To me, that rang true. I have always said that just selecting the right pension scheme is the easy bit. Putting in place robust processes that will run auto-enrolment for decades in the future, month in, month out, is quite another.
The Government people understand this very well. They were right to ban consultancy charging for pension schemes that are to be used for auto-enrolment. Right for so many reasons – not least, that these reforms are not really about pensions at all.
Opportunities For The Taking
A problem that affects all employers really needs to be looked at from the point of view of employers, and not from the perspective of the product providers. The problem for adviser firms is that almost all the comment and debate in the industry press is (and always has been) driven from the point of view of providers.
That’s been fine in the past, but it’s no good now that so many employers have real issues to deal with. Issues, I’ll remind you, that go a bit deeper than simply picking the right pension scheme out of a beauty parade.
It is now time for advisers to adapt to the situation they’re in, and to help employers adapt to the situation that they’re in. From that mindset, I can see new business possibilities ahead for savvy IFA firms.
The reforms, as I’ve said, are nothing to do with pensions – any more than the solutions are anything to do with financial products. IFA businesses that want to grow stronger on the back of the auto-enrolment reforms will need to change in order to do so.
Last weekend in Budapest I saw a good example of how adapting your business model can give you an edge. It has nothing to do with financial services, but it’s a good example of what I’m talking about here.
The temperatures in Hungary last week were unusual and hit forty degrees centigrade (that’s over one hundred degrees in old money!) That was pretty hot for a city-break weekend, and it meant that people like me (i.e. tourists) headed for the nearest bar for as much lager as required to cool off.
The bars were packed – but only the ones that had hooked up water hoses to giant electric fans, so as to spray a fine mist over their customers. The other bars that didn’t adapt like that were empty – even though the beers they sold were just as good.
When it comes down to it, you’ve got to see things from the customer’s point of view…