When we know nothing we take advice before deciding…
Conventional wisdom tells us that advisers tell employers and employers (or their trustees) tell staff. Staff get what they’re given because bosses know better and advisers know best.
But what if there’s a vacuum of advice?
But what if there are no advisers, and if the bosses don’t know much (and care less). What chance have staff to get proper help with their workplace pensions?
The events of the past three years, starting with RDR and culminating in the sunset clause that will see commission eradicated from workplace pensions next April, makes corporate pension advice a no go zone for many advisers.
The OFT have made it clear how little employers know (and frankly things are not getting any better since the publication of their report two years ago.
For the OFT, the problem wasn’t just that employers didn’t buy well, it was that staff didn’t engage in what was being bought for them.
This gave providers carte blanche to serve up any old rubbish – some of them did- the result was that we now have better provider governance , a charge cap and fewer and better providers.
But employees still don’t know what’s being bought for them, employers don’t know what they’re buying and advisers- well they’ve handed the jobs to accountants and payroll managers who are totally bemused!
Nature abhors a vacuum
Conventional wisdom says that nature abhors a vacuum and a new kind of adviser will arrive who can deliver help to employers or to the accountants and bureaux on whom employers are going to have to rely.
To some extent this is the case and we are seeing digital guidance emerging which enables employers to make informed choices -albeit at a price.
But whether the price is £1000 or £1, it will not be paid if the entity paying it can see no value.
I am coming to the conclusion that the further we get from the member, the less anyone cares. To boot, employers I speak to who are dealing with staff on a day to day basis are concerned their staff get the best deal. But the payroll manager, who may never speak to staff or even the employer, has considerably less reason to care. The accountant who owns the payroll bureau is a further step removed and the payroll software organisations who sell to the accountant are so far from the action for this conversation to be entirely abstract.
But this abstraction of the member of staff doesn’t bode well. We are in an age of consumerism. This morning sees the arrival of a raft of consumer legislation that gives people the power not just to complain but to get their money back if they see something as faulty. While the “30 day rule” doesn’t apply to Auto-Enrolment, people in pensions know that the Financial Ombudsman applies a 30 year rule for retrospective judgments.
If accountants, bureaux and most of all employers think they are immune from censure for the choices they make for their staff, they should talk with those sorting out the issues around PPI.
But let’s turn this around.
Supposing that instead of the driver for a good pension coming from an adviser via the employer, we inverted the hierarchy and put employees at the heart of the decision.
Instead of telling staff what they were getting, what if we asked them what they wanted?
Would you be employer enough to send a five minute survey monkey to your workers asking them about what they wanted?
This question troubles us.
We want to know whether – were we to develop such a survey , would you as employers poll your staff.
We want to know whether – were we to develop such a survey, would you as advisers, encourage employers to poll their staff.
What we think!
Engaging staff in what is being bought for them, even in an area as novel and problematic as workplace pensions, comes down to some simple rules.
If you don’t ask – you don’t get
If you didn’t ask – you can expect trouble
If you ask- you can expect to get more bang for your buck.
I guess it’s a glass half full or glass half empty think, but either way, it’s probably better to ask.