Almost three quarters of IFAs believe regime will boost their business
Auto-enrolment presents more of an opportunity than a threat to the group risk market, intermediaries believe.
Research carried out by Canada Life shows that 72% of group risk intermediaries believe that government plans to automatically enrol employees in company pension schemes will present them with new business opportunities.
Some 68% of advisers believe that businesses will review the benefits they offer to their employees as they prepare to ensure their existing pension schemes are compliant with the new regulations or look to launch new schemes.
Roy McLoughlin, senior partner at Central London-based IFA Master Adviser, said: “Intermediaries have an opportunity here to open up a conversation with firms and speak to them about their whole suite of benefit products.”
However, Canada Life’s research shows that some advisers have reservations about the impact of auto-enrolment on the market.
Some 20% of those asked said they believe the changes will have a negative impact on the group risk market as employers will reduce their expenditure on benefits to compensate for the additional pension contributions they will have to make.
And cost is not the only perceived potential barrier to growth, as 15% believe that employers will shy away from the additional administration of implementing both new benefits and pension schemes at the same time.
When asked about the impact of the Retail Distribution Review, the majority of advisers believe it is unlikely that a significant number of intermediaries will move into the group risk market as a way of retaining commission.
Some 43% of respondents said they believe the size of the market will remain the same because advisers will find it too difficult to move across, while 40% think the perceived value of group risk business is too low to encourage new entrants.
Allyson Gayle, senior consultant for risk and healthcare at employee benefits consultancy Premier Benefit Solutions, said: “I don’t think the RDR will have much of an impact on the number of advisers coming into the market – it is a very specialist area and those who do not have established relationships with the big players would struggle to gain traction.”
Paul Avis, sales and marketing director at Canada Life, said now is an exciting time for the group risk market, with auto-enrolment being one of the biggest legislative “game-changers” of the past few years.
He said: “Businesses will have to adapt to ensure that they meet the auto-enrolment requirements and look for additional revenue streams. As a result there are many opportunities for advisers to approach new clients, or encourage their existing ones to review their employee benefits at the same time as they do with their workplace pension schemes.
“At the same time, the RDR may draw new advisers to the group risk market, as they undertake the additional training needed to meet its requirements. Therefore, this seems the ideal time for providers to consider how they can support intermediaries through both of these, and help them to secure the opportunities that are available to them.”