Tom Nall, Workplace Solutions Director, SimplyBiz Group shares his insights on good practice for advisers offering workplace and employee benefits.
The advent of auto-enrolment has helped to increase general awareness of workplace pensions. In turn, this has encouraged wealth-management clients to ask their advisers about their workplace pensions and how to identify and manage the risks.
- Developments in technology have helped pension advisers to control costs and maximise efficiency
- The removal of commission from workplace pensions has led to the creation of new services to add value
- These services range from annual governance reports to a greater focus on employer-funded pension advice allowance
At SimplyBiz Group we've been supporting advisers take that first step into offering workplace and employee benefits, and it's helped me understand the barriers to this change and the untapped value in the SME market. In this article I want to share some of the opportunities as I've seen them, based on what's working for advisers.
For many advisers, auto enrolment has been a catalyst - prompting their wealth management clients to ask about workplace pensions. In doing so, the client is effectively asking for support with their benefits, and also help in identifying and managing/mitigating risk.
The majority of advisers I've supported with auto enrolment have been protecting existing clients, with charges ranging from gratis to £300-£500 for a simple proposition, to thousands of pounds for complex solutions. The pricing has been keen because technology has made the processes much more efficient - who could set up a pension scheme in five minutes just a few years ago?!
The removal of commission from workplace pensions has demanded a new menu of services to add value - from annual governance reports to an increased focus on the employer-funded pension advice allowance, which increases from £150 per employee per annum to £500pppa from next tax year.
There's been a focus on what a package of services should look like and cost, with a monthly retainer of £100-£300 covering an annual benefits review, senior management meetings and staff presentation depending on numbers and sites involved and, of course, the perceived value this access to key individuals brings. One cost-effective way to keep awareness of your brand in the workplace is to set-up a staff discounts site, which are cost-effective and a very well-received and engaging perk of being your client.
I've been surprised to see how many advisers haven't built group risk quotes into their auto enrolment on-boarding processes - you have all the data you need, providers will now support schemes from just two or three lives and, with benefits offered on a flat rate as well as the traditional multiples of salary, the cost is incredibly low. For individual clients who are finding cover difficult to come by or the premiums prohibitive, it's worth considering the benefit in a group context - for example group life with no underwriting and a free cover limit of £550k, dividends included, could be significantly more cost effective than individual policies. Often these conversations lead into other areas, such as business protection, to protect dividends and profits.
So, why the poor pun on 'assets'? Well, I'll leave you with this: if you were going to sell your business, what effect would the stock market shenanigans have on the value of your business? If you're drawing an income from assets managed, then volatility is a risk. The income streams I've outlined above are building recurring revenue streams more aligned with salaries and size of workforce, and so should help protect and diversify the value of your business whilst also creating wealth management opportunities from the senior managers to whom you’ll gain access.