Four in five advisers (83%) that are currently advising on auto enrolment intend to continue advising small and micro firms in 2016, research* conducted by independent financial researcher Defaqto on behalf of NOW: Pensions has revealed.
This year, around 46,000 companies reached their staging date but in 2016 over 500,000 small and micro companies will begin having to comply with the new legislation.
Of the 248 advisers questioned by Defaqto, 38% admitted that the auto enrolment business they’ve received to date was less than they expected, with 36% claiming that the volume of business was “as expected”. Despite this, 60% of advisers say they are still currently advising companies on auto enrolment.
Of the 40% that aren’t advising on auto enrolment, the main reason given, cited by 42% of is that there’s too much administration involved while a third (33%) say that they believe it’ll take up too much time. Nearly one in ten (8%) think the most profitable part of the market has gone while the same percentage think there’s no demand for advice from small and micro firms.
Looking ahead, nearly a third (32%) of advisers anticipate future auto enrolment business will come from existing clients. Nearly a quarter (24%) think the work will come via work with accountants while 23% expect to be providing advice to employers directly.
Morten Nilsson, CEO, NOW: Pensions said: “Advisers have played a critical role in the auto enrolment market so far and it’s encouraging that such a high proportion intend to continue being involved next year.
“The 2016 market does present a different challenge but there are plenty of opportunities for advisers. In particular we’re seeing a number forming partnerships with accountants and payroll bureaus. Approached in the right way, auto enrolment can prove profitable over the longer term.”
Scott Gallacher, director of Leicester based Chartered Financial Planners Rowley Turton said: “As a firm, we realised early on that auto enrolment was an area that we couldn’t afford to ignore. It’s true that there’s a lot to learn and advisers need to be aware that it’s not simply a case of recommending a pension scheme. But, the demand from small business owners is out there.
“We’ve made a significant investment in getting to grips with the legislation, and designing a valuable, and profitable, service proposition. We’re now seeing the rewards from this hard work in terms of new client enquiries and fees.”
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