You can make money in the auto enrolment smaller and micro markets
Advisers may have written off the idea of providing an auto enrolment service to the smaller SME and micro markets but there is a massive opportunity if the advice and service can be delivered via a commoditised automated solution, says Chris Daems, director of Principal Financial Solutions. We’re talking AE in a Box.
Auto enrolment has been through the corporate and SME employer stage and is now heading into smaller SME and micro firm territory. While working with large and medium-sized firms has proved profitable for many financial planning firms that have been able to charge consultancy fees, the employers in the current and forthcoming stages of auto enrolment are less likely to be willing to pay those fees. So can they be made a profitable business prospect for advisers?
The answer is yes, according to Chris Daems, director of Principal Financial Solutions and partner of the Auto Enrolment Advisory Group. Chris has specialised in helping firms of all sizes (work forces of 1,500 down to 30 employees) implement auto enrolment within their businesses and in terms of the potential opportunities, the figures speak for themselves, he says. “Recent estimates show that while just over six in every 10 employees have gone through
auto enrolment, only one in 100 employers have done so. Which means there are over a million firms that have yet to comply with the Law.”
Appetite for simple solution
The assumption is that smaller and micro companies are not going to want to pay for the face-to-face advice and support required by their larger counterparts. Yet a survey conducted by Principal among 50 of its accountancy connections showed that of those that are yet to comply 28% would pay for consultancy (although no costs were discussed), 8% felt they didn’t need external help and 64% said they would opt for an in-a-box solution that would help an employer comply with their obligations via simple step- by-step guidance.
These figures, Daems says, suggests that the large proportion of employers are looking for help but a key factor is cost.
“Professional advisers need to fill the gap between bespoke consultancy work and the automated systems in the market.”
He points out that smaller companies can have one person doing the combined roles of payroll, HR and running the office, and invariably they will be tasked with setting up and running the auto enrolment system.
Filling the gap
Professional advisers who can engage with these firms and make the process as simple as possible for them can win this business, Daems says. “It’s incorporating the elements of consultancy that the smaller employers need with the relevant technology to support their particular size of business.” Daems flags four areas where smaller employers are going to need support and which can be provided by an AE solution.
• Project management – planning, knowledge, expertise and resources.
• Employer support – low touch and systemised.
• Employees support and communications – non bespoke and low cost.
• Updates as legislation changes – ongoing updates and action plans to stay compliant.
AE solutions for smaller and micro cap employers can only be delivered by systemising every part of the process, says Daems, delivered through an IT-based platform at a price they can afford.
Professional advisers who are prepared to systemise and engage with the micro and small SME businesses that are looking for a commoditised solution have “massive opportunities both in building new relationships and income streams,” says Daems. “Not least” he adds, “because advisers who help business owners solve one of their biggest HR problems in recent years, can often have the chance of working with the senior management of the company on their corporate and personal finances.”
Four step process
Professional advisers looking to effectively service the smaller end of the SME and micro cap market need to take the following four steps, says Chris Daems.
1. Identify the gap and asfar as possible automate?the services delivered in the consultancy model.
2. Simplify the consultancy service.
3. Reduce costs to accommodate a scalable model that still allows employers to comply easily.
4. Make complying with automatic enrolment as easy as possible for the SME and micro markets.
In the White Paper, The Future of Providing an Auto Enrolment Service, Chris outlines the gap that exists between high end consultancies and software providers, into which advisers can step, building new relationships and income streams. A survey among 50 accountancy contacts revealed that 64% of companies that have yet to implement auto enrolment (there are over a million out there) would welcome a commoditised in-a-box solution that would help them comply with their obligations via simple, step-by-step guidance.
To read the White Paper click on the image or the link below.