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How to triumph over auto-enrolment apathy

The paradox of auto-enrolment is that for advisers it exists in two parallel states; opportunity and apathy. Energy must be exerted if advisers want to extract the opportunity, but it is worth it, asks Anthony Carty of Clifton Asset Management.

Auto-enrolment provides advisers with a once-in-a-lifetime chance to engage with key decision makers within businesses of every shape and size across the UK. Unlike virtually every other aspect of corporate financial planning it has to be done and if well done it could lead to the buried treasure of advising on business owners’ and directors’ other corporate needs and personal assets.

On the other hand it could be a poisoned chalice, because it might be argued that most business owners in the small and medium-sized enterprise (SME) sector (those staging at the moment) really do not care about auto-enrolment. They may have glanced at the letter from The Pensions Regulator or had a brief chat with their accountant, but in the main it is nowhere near the top of their ‘to do’ list, even if they are due to stage in a matter of months.

While most businesses understand the need to comply with auto-enrolment, a large proportion of the UK’s SMEs are not engaging with the problem. In fact research we carried out in October 2013 showed 49.6% of employers still do not understand what auto-enrolment is and 88.6% of those due to stage within 12 months have not started preparations.

So, what can be done to get businesses involved with auto-enrolment? Here are a few suggestions:

Auto-enrolment provides advisers with a once-in-a-lifetime chance to engage with key decision makers within businesses of every shape and size across the UK. Unlike virtually every other aspect of corporate financial planning it has to be done and if well done it could lead to the buried treasure of advising on business owners’ and directors’ other corporate needs and personal assets.

On the other hand it could be a poisoned chalice, because it might be argued that most business owners in the small and medium-sized enterprise (SME) sector (those staging at the moment) really do not care about auto-enrolment. They may have glanced at the letter from The Pensions Regulator or had a brief chat with their accountant, but in the main it is nowhere near the top of their ‘to do’ list, even if they are due to stage in a matter of months.

While most businesses understand the need to comply with auto-enrolment, a large proportion of the UK’s SMEs are not engaging with the problem. In fact research we carried out in October 2013 showed 49.6% of employers still do not understand what auto-enrolment is and 88.6% of those due to stage within 12 months have not started preparations.

So, what can be done to get businesses involved with auto-enrolment? Here are a few suggestions:

Leverage existing relationships

Most people running a SME are time-poor, continually fighting fires and moving from one crisis to the next. Do not be afraid to leverage the power of existing relationships and be blunt about who does what by when. While it may be an uncomfortable conversation to have at the time, they will thank you if it stops them sleep-walking into a fine.

Get to the point

My experience is that most SMEs want to comply, but at the lowest cost and with as little involvement as possible. They do not want to choose between five different providers, four different definitions of pensionable pay and eight different default funds. Do your research, understand the key components of their back-office systems and the demographics of the workforce, and tailor your recommendations accordingly. Sometimes less is more.

Be flexible

You must be prepared to adapt to the needs of the company you are talking with, rather than being evangelical about your new proposition. You may have just bought some new compliance software, agreed preferential terms with a provider and spent hours or days on a new brand and menu of charges – but, ultimately, this is irrelevant to the SME community.

One size does not fit all and you need to be able to quickly and efficiently mix-and-match all the solutions at your disposal and reassure potential clients with a bespoke service.

Engage the key stakeholders

Most traditional workplace pensions were set up on a voluntarily basis and had the buy-in from key departments such as finance, human resources and payroll. We are now moving into an era where most plans are being set up to deal with a statutory responsibility and it is unrealistic to expect every one of those departments (who may all be the same person, in some businesses) to treat auto-enrolment with an equal amount of urgency and enthusiasm.

Educating, motivating and guiding them before, during and after their staging date is a task that should not be underestimated and it is worth factoring in that several key stakeholders may well be external parties such as accountants and payroll providers who will inevitably have their own take on auto-enrolment.

Be heard

Finally there is the simple matter of getting out there, meeting people and spreading the word. Getting in front of business owners is not that simple, given these same business owners have more pressing matters to attend to than a regulatory compliance that is almost 12 months away.

We have attended various auto-enrolment talks and events over the past 18 months and engaging directly with businesses gives us a chance to find out what they are thinking. It is also a great opportunity to find out more about what other experts are doing to strengthen the profile of auto-enrolment.

Next month we are holding a conference in Bristol Zoo and inviting local business owners and advisers to come along and listen to speakers such as Jargonfree Benefits chief executive Steve Bee and NOW: Pensions chief executive Morten Nilsson.

It is going to be a busy couple of years, with thousands more businesses to stage and of course employees needing to be re-registered every three years, even if they opt out initially. The reality is that overcoming the apathy within the SME community is going to need as much thought and skill as selecting an appropriate provider or software solution – but it is going to be a vital skill to have.

Anthony Carty is group financial planning director at Clifton Asset Management

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