Two days conducting over 300 conversations with accountants , payroll experts and a pension providers has put me in reflexive (and recumbent!) mood!. I may only have spoken to 1 in 10 of the people who passed the Pension PlayPen/MyPaye/MyDeck stand but I think I spoke to enough to be able to say a few things about our AE nation. Having been attending these conferences for four years, I’m able to chart in my head, how things are changing and think a little more strategically about what lies ahead.
I have a few key messages appearing through the fog
- God is on the side of the big battalions
- The innovators are making ground but there is more talk than walk
- Payroll will eat AE and it will eat HR
- Payroll though leaders are getting there on “auto enrolment”
- Accountants are clueless (about pensions!
Accountants are clueless about pensions!
Having alienated half my readers with point 6, I’ll deal it first and work backwards.
On my forays around Accountex I overheard accountants on various provider’s stands attempting to do due diligence on the pension providers exhibiting. These ranged from pension providers I had never heard of – “Budget?” to NEST , Aviva , Peoples and NOW.
They came away with a lot of brochures and a lot of half-baked ideas but to suppose they had done “due diligence” or were clear about the likely outcomes of choosing one provider over another is stretching things.
Thankfully Tony Margaritelli was growling at them from the ICPA stand, warning a little knowledge was a dangerous thing and pointing his members in our direction, I don’t know much about accountancy, but I do know that accountants are as far from being pension experts as actuaries are from being accountants ! As Tony points out
“you wouldn’t be advising clients on contract law, don’t start with pensions”.
Payroll thought leaders are getting there on AE
As John at Sift Media pointed out to me, I may know not know how to process a payroll (or even an auto-enrolment upload file) but my ignorance is bliss. Compared with the so called experts dotted around the hall claiming to be AE processing experts, payroll people are AE experts.
The comfort with which many of the leading bureaux managers now talk about payroll processing suggests to me that we have an emerging thought leadership. The best articulation of this is a pensionsync presentation delivered by Will Lovegrove earlier in the year which demonstrates how these experts are beginning to create a firm platform on which others will build.
Where these people lead, others will follow , but the pace will need to be swift.
Accountants experiencing scope creep
The breadth of HR related services being offered at Accountex 16 demonstrates not just the “digital dividend” of embracing the new technologies but the bewildering complexity of services that can now be offered through accountancy and payroll software.
The new technology looks capable of engaging, educating and empowering medium sized employers to do much of the work traditionally done by HR and employee benefit consultants – themselves. This threatens the established order in mid-market as much as AE threatens the traditional dependency of SMEs on IFAs.
Payroll will eat “pensions” and eat HR
I have been saying for some time that Auto-Enrolment will transfer the value of pensions from pension specialists to payroll. I can now see how small employers can use payroll’s new found confidence to build upwards from AE so they can establish some return on the investment on the new-found pension spend. I am going to be reporting this back to those in Government who are keen to find a way to improve financial literacy in the workforce. The new technology – available on almost every stand – shows how this can be done.
More talk and walk from the innovators
The speed of adoption of the new technologies is slow. Despite the noise, few people I spoke to at Accountex 16 were actually using APIs as part of their AE processing. We still see “old school” thinking in practice.
I don’t think this surprising but I do see it as disappointing. If (as pensionsync research suggests) it is currently taking an average of 67 minutes to process an auto-enrolment payment- that is 60 minutes too long. If it needs an IFA to write a report for £1000 on an employers’ pension options , that is £800 too much!
God is on the side of the big battalions
Accountex is about money, money talks and big money talks loudest. People go to Accountex to see Sage, Iris, Xero, Exact and they discover everyone else by accident!
The small vendors (of which Pension PlayPen is one) cannot make it to be big vendors without partnerships with the big boys. Indeed most of us are only waiting for those partnerships to become credible to the wider market.
The importance of the large accountancy and payroll software suppliers cannot be under-estimated. While innovation and early adoption comes from the mid tier (hats off in my world to Star, my Paye and QTAC) the market surrounds and is driven by the decisions taken by the major software house.
By my rough calculation, we can expect something like 400,000 employers to stage using Sage’s AE software with Iris and Moneysoft next in line, QTAC, Star and others will follow
The success of auto-enrolment is in their hands.