In this article, I am setting out First Actuarial’s and Pension PlayPen’s auto-enrolment strategy for 2015 and beyond.
It is a strategy that sets out to collaborate with not compete with advisers.
Why we chose to work with, not compete with IFAs
When I Joined First Actuarial five years ago, we have plans to become regulated advisers and offer independent financial advice. Having been a reguated IFA for 15 years, I was bought in to make it happen.
Instead of setting up First Actuarial IFA, I advised the Founders of the firm to to another route.
As a firm we chose to work with IFAs rather than compete with them, and I’m glad we did.
Our firm now has a series of partnerships with advisory firms that enable us to work together on client projects.
Wd work on DB de-risking projects , on financial education in the workplace and we direct the members of the schemes we administer to IFAs when they are retiring.
So why did we choose to outsource this work , not do it ourselves?
The positive impact of the RDR
The Retail Distribution review has radically improved both the quality and the image of financial advice. People are now turning to IFAs for advice rather than advisers turning to people to sell product. There is still a long way to go before the advice and product are de-linked but increasingly we see advisers invoicing clients and invoices being paid.
Our principal motivation for becoming advisers was a frustration with the lack of integrity and independence displayed by advisers. With this changing, the need for us to step into the breach has largely disappeared
Auto-enrolment makes it easier to collaborate than compete
The implementation of auto-enrolment into firms staging in 2012 and 2013 was always gong to require specialist skills. The processes needed to integrate complex HR and payroll systems with the clunky back ends of workplace providers became a pre-occupation for pension consultancies. The challenge for these clients is moving on, soon the 2012 stagers will be re-enrolling, many of the processes put in place in the early days , already look obsolete, simplification and digital automation will be the buzzwords in this part of the market.
But the second round of stagers, with the huge spikes in demand from the back end of 2015 onwards, are going to require advisers and pension technicians (which is what we at First Actuarial are) to work together.
We foresaw this problem in 2012 when we started planning to deliver a service which would allow SMEs and micros to choose the right pension for their staff, whether that pension was a master trust, an insured GPP or even an uninsured SIPP.
First Actuarial set up Pension PlayPen to help advisers not to compete with them
Our bet was that with the help of the Pension Regulator, payroll would step up to the mark and deliver the kind of support that would make auto-enrolment processing an extension of the payroll service offered by accountants, book-keepers and specialist payroll bureaux.
If, as we expect, smaller employers find it possible to manage auto-enrolment processing for themselves , or through an outsourced payroll service, then how will IFAs add value?
Our bet is that a high number of smaller companies will regard the decision about choosing a workplace pension for management and staff as too important than simply to opt for NEST.
Even when the search concludes that NEST is the right answer, many employers will feel comfortable knowing that not only can they explain why they chose NEST but why they didn’t chose from the other options available to them.
And for many employers, NEST may not be the right answer.
The problem for IFAs is that the kind of research needed to explain why NEST is more suitable than NOW, or Legal & General more suitable than Standard Life is beyond their grasp. What is needed is a technical service provided by experts who have systems and processes in place to do this research.
The research and development into the delivery of this kind of help to employers and their advisers, led to our setting up http://www.pensionplaypen.com , a service specifically targeting the choice of providers when an employer is setting up a workplace pension under providers.
To our surprise and delight, the majority of workplace pensions that we have set up in 2014 have been through Pension PlayPen and under the guidance of independent financial advisers.
So how can we work with YOU in 2015?
We see 2015 as a year when advisers can establish workplace pension practices where they can become the trusted corporate advisers to the small employers of Great Britain.
Contrary to the experience of large employers, who already had pensions, the next waves of employers (who don’t) will see auto-enrolment as an opportunity to set up pensions for their staff (not just another regulatory headache).
Of course advisers will need to know and understand the rules and be experienced in implementing auto-enrolment best practice, but this will not be where advisers will be valued.
We see advisers as the bridgehead between the pointy headed technicians we employ at First Actuarial and the one million employers who have never set up or paid money into any pension plan.
Establishing a credible service has been hard work
In our first year of trading, Pension PlayPen has won 11 national awards. We know our stuff and we’re proud of the profile we’ve achieved
Building on two years in the market
When we originally scoped the service provided by http://www.pensionplaypen.com , we thought that many employers would source pensions directly from the site. Some have- but we underestimated the ongoing importance of advisers in “hand-holding”.
In practice, choosing a workplace pension, even using a system as childishly simple as ours, is intimidating, pressing the button to choose one pension provider from a list of many and initiating a relationship with that provider is still too hard for most employers.
However, when an adviser is in place, choosing a workplace pension really seems child’s play. Over 450 employers have used http://www.pensionplaypen.com to source their workplace pension in our first years’s trading, of these – over 80% did so with the help of an adviser.
Whether the adviser is regulated (an IFA) or an accountant or book-keeper is not the issue. The issue, as the Pension Regulator is right to point out, is that there is skill and knowledge on hand to ensure that the choice made is appropriate and properly documented.
Non-regulated advisers are wary , both in respect of their insurance and their position in relation to regulators, to be seen to be offering a definitive course of action. Like IFAs, they are using http://www.pensionplaypen.com both to add value to their client relationship , and to protect themselves from being seen to be “offering financial advice”.
And this gives regulated advisers the opportunity to work with accountants, who have the existing relationships with employers, to the common good.
A new approach to solving problems for small employers
Collaboration, not just between Pension PlayPen and advisers , but between accountants, advisers and Pension PlayPen is the way First Actuarial have chosen to bring its skills and knowledge to market.
We think it is a model that could be repeated but we know how hard it is to deliver this service within a tight budget in a way that makes sense for both employers and advisers.
If you are an adviser (regulated or otherwise) and want to know more about how to use http://www.pensionplaypen.com, you should register at http://www.pensionplaypen.com. If you would like to speak with one of us about how we can set up an agency agreement with us that can allow you to profit share with us.
Now is the time to be setting your auto-enrolment strategy in place, now’s the time to be getting in touch. My mobile is always on 07785 377768, my e-mail is regularly checked, firstname.lastname@example.org