For a couple of years now the advice industry has been saying that accountants and payroll bureaux need advisers involved within their auto enrolment proposition. At last they seem to be realising it.
Auto enrolment is the best opportunity for advisers to develop accountancy relationships – ever!
Research carried out in Autumn 2014 by Jigsaw on behalf of The Pensions Regulator revealed that a staggering 89% of all small employers (5-49 employees) will be relying on an adviser (or advisers) to help them through at least some aspects of the AE process. Easily the most popular sources of that help are financial advisers and accountants. The smaller the firm generally the higher is the response that they will consult with their accountant.
The trouble is that accountants know little about AE and neither do their payroll services departments. The last thing they want is employers coming to them seeking AE advice – either in order to set a scheme up or to deal with ongoing pension matters. The reality is that they are now realising they have to do something – those with foresight are seeking alliances with IFAs.
How does the adviser/payroll bureau model work?
Most payroll bureaux, whether or not attached to an accountancy firm, are offering some sort of AE managed service. After all, if they don’t their clients will go elsewhere. They need to do extra work within payroll to accommodate AE regulation so they must charge for it. Some are just reacting to client wishes in terms of choice of pension provider and charging a standard fee. Some are operating a differential charging model – with discounts when an employer uses their default or preferred pension provider as this drives economies and efficiencies for the payroll bureau.
The key for IFAs is that no matter what the payroll bureau approach is to AE and pension provider selection – they do NOT want to have employers or employees calling them about the pension scheme or about legislation either during the lead up to staging date or at any time in the years afterwards. They want to be able to make it quite clear to their clients that an IFA has been nominated to help them set up their scheme and deal with all pension related queries now and in the future.
How to charge?
Well in some models of course the accountant/payroll bureau refers each client to the IFA with the IFA then billing the client. However, as discussed within my last article how many small and micro employers will pay a fee directly for AE advice?
The best model we have seen is where the IFA charges the payroll bureau/accountant per employer client, with the payroll bureau recouping the cost via the ongoing managed service fees to the employer.
We are not talking about large fees here; we are talking about many small fees for standardised, repeat work.
The work the IFA might do in order to charge the payroll bureau is:
- Set up pension scheme for all employers
- Confirm compliance to TPR
- Provide ongoing employer phone help centre
The fee for the first two items may be anything in the “low hundred pounds” per employer depending on the number of employer clients the payroll bureau has. The fee for ongoing support may be c£100 per annum. Those fee examples are purely indicative.
You will achieve a real win/win/win
The employer wins as he receives a managed AE payroll service AND a level of advice he probably would have not have gained access to any other way.
The payroll bureau wins as they can operate their AE proposition profitably without unwanted advice distractions and in the knowledge their clients are getting professional pension advice.
The IFA wins as they gain access to new accountancy professional relationships and hundreds, maybe thousands, of new small business owners. Not to mention the opportunity to market to thousands of employees in the future.
Martin Olive, Strategic Partnership Manager
If you would like more information about NOW: Pensions and our market leading proposition for IFAs please register your interest here.
Alternatively you can contact our business development team on 0333 33 22 025.