Since RDR in January 2013, the number of IFAs operating in Britain has more than halved from 50 to 24,000. The ban on commission or its sibling “consultancy charging” has made it all but impossible for IFAs to make money from “selling” workplace pensions to employers.
Indeed, we are fast approaching the point where commission will be turned off for existing sales made prior to January 2013, making workplace pensions a barren desert for most advisers.
As well as the positive aspects of the shift away from commission, there have been a number of negative side-effects
- voluntary contributions from members have fallen (partly as a result of IFAs not being in the workplace cajoling reluctant employees to save)
- employers with workplace pensions have found themselves left to their own devices, particularly harrowing if your pension provider assumes you will be getting a BAU service from the intermediary
- employers purchasing workplace pensions (Workies) for the first time, have precious little help to turn to.
- employees joining these pensions are even less supported.
The commission system, flawed as it was, had the benefit of supporting advice and that advice is now no more.
The Financial Advice Market Review being sponsored by Treasury Select Committee head honcho Harriet Baldwin, is now underway. It’s task to address the advice gap left by the RDR’s implementation. It should definitely consider the impact of advice on pension saving and on the quality of pension decisions being taken by employers.
But after the scorched earth policy of the RDR, we are already seeing green shoots – where advice is returning to the workplace. One such shoot is the launch of a little known facility
The Auto-enrolment Member Advisory service – 0207 630 2705
This helpline is for members who have been enrolled and for people considering whether to opt in , out or who simply want to know what auto-enrolment is about. It’s staffed by dedicated pension professionals from the Pension Advisory Service.
As with all things TPAS, you don’t get told what to do (no provision of a definitive course of action), but you get told what’s what and what your choices are.
What’s more it is free to use and it’s staffed by people who know their stuff (most TPAS advisers are PMI qualified).
If I was in the mood, I would turn this blog into a press release and if the pension press were of a mind, they would distribute this number to every employer in the land as a little oasis of hope in the desert of neglect, we advisers have created since 2012.
But I’m not in the mood, and if you have read this far, you may want to put the number into your phone and give it a ring. You’ll speak to a real person who will be interested to speak to you and will answer your question courteously and with authority.
Frankly, that’s what most people need.
You don’t need to be an IFA to help an employer, you just need to know the right people and the right telephone numbers!
While I am in this happy mood, here’s my favourite pension video of all time.
Thanks to Quietroom for curating it to us, I hope there are more in the pipeline – perhaps one on our options with the new State Pension?
it is an excellent video but it doesn’t give people what they really want which is advice. they don’t want to stop at knowing what their options are they want to be advised what is best for them given their own circumstances. taking away commission took away the option for people to use their plan to pay for advice and took away advice from the man and woman in the street
In reality little has changed.Previously pension plans were burdened return wise with the negative impact of commission.OK you got advice but it was costing money and in an opaque way where member had little or no idea what the negative commission costs were.in addition because of the distorting effect of commission on advice the quality and integrity of that advice could not be relied upon.
Now shorn of commission the basic plans offer better investment value and if a real effort is made by the industry to get that across sensible people will pay for advice safe in the knowledge the advice is far less likely to be biased and long term to have a positive impact
Hear hear Henry! Could not agree more…..
Never in the field of workplace pensions has so much been required of so few!
Great article. Whose is the video and do we need permission to use it.?
How far can someone who is not a Regulated Adviser go in giving guidance to employers for a modest fee without getting into regulatory hot water?
The video is Ar http://www.quietroom.co.uk . Quiet room is happy for you to link to it or embed it on your site!