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Are IFAs missing out on workplace wins?

Business-People-Leaving-Walking-Falling-Decline-Corporate-700x450.jpgThe workplace presents a significant opportunity for advisers, yet many are still shunning this sizable market, experts argue.

The pension freedoms and auto-enrolment have increased the unmet need for advice in the workplace. Some larger employers and pension trustees are no longer content to leave employees to fend for themselves among scammers and fraudsters and are actively looking for high quality advisers, particularly retirement specialists.

Partner at Secondsight, the employee benefits division of Foster Denovo, Matthew Mitten says: “This year we have seen an explosion in interest when it comes to workplace wellbeing.”

Workplace specialist Wealth at Work has also had a record autumn, director Jonathan Watts-Lay says.

Not all employers understand the benefits of facilitating advice and financial education for their employees, however. Chase de Vere corporate advice manager Sean McSweeney believes it is an IFA’s responsibility to make employers understand the benefits since “they won’t do it on their own”.

He says advising employees works best when employers have bought-in and are prepared to pay to “at
least cover the adviser’s time. Otherwise, the adviser risks providing services to a group which may predominantly not be their target audience and generates few business opportunities.”

Highclere Financial Services adviser Alan Lakey says the corporate market “not only opens the door for key directors’ protection and pension business but, even better, it usually enables advisers to meet individually with employees under friendly circumstances.”

Lakey has concentrated on protection advice. He says: “Many employees have inadequate or antiquated protection plans. Previous advisers may have focused on mortgage protection while ignoring the equally important family protection issues. Once an employee recognises the benefit of advice, the door is opened to advising on other aspects. Employees usually discuss these matters so saving money or enhancing benefits for one employee will usually result in approaches from other staff.

“Many employees will no longer have or never have had a financial adviser and may have relied on the dubious advice of banks or other tied agents. It is an opportunity to prove independence and added value.”

Rowley Turton IFA Scott Gallacher says: “For younger IFAs with little or no client bank, the workplace offers a great way of growing your business if it can be done profitably. Financial healthchecks would be appreciated by many in the workplace and would be a great start to financial planning and advice for them.

“Educational seminars would also be great for spreading your message and gaining new clients.”

Hargreaves Lansdown senior pensions analyst Nathan Long points to a growing support among employers for staff to receive an age 50 financial MOT, with advisers “perfectly placed” to offer this.

But Mitten cautions: “What one employee needs will vary greatly compared with another. For example, a 20-year-old graduate may find sufficient information online but a 55-year-old who may need to look towards more extensive financial planning.”

Some advisers may need to expand their skills to make sure they are offering the best service.

Cervello Financial Planning director Chris Daems says: “Working with corporate clients has taken a lot of work, skilling up and building the knowledge and experience as well as building internal systems and processes designed to support employers.

“I have said for some time that IFAs shouldn’t ‘dabble’ in a certain specialism. So while there is definite opportunity in the workplace I believe IFAs have a choice: be a genuine expert or leave it to someone who is.”

Daems’ top tip is to “take some time to understand the changing marketplace. Our experience in the past few years has been all about helping employers comply with auto-enrolment legislation. However, we’ve now reached a point where large and medium sized employers have already complied.

“This means that most of my recent corporate conversations have been about how employers reward, recruit and retain the right people as well as financial wellbeing in the workplace.”

Watts-Lay says: “Trustees tend to look for those who can offer a comprehensive retirement service, not just provide purely advice. They are concerned that people are being scammed out of their pensions.  They want their members to have a second line of defence. They are very nervous about appointing just an adviser. They want someone who can educate staff, who can guide staff, run helplines and also give advice.

“Advice firms can get a shot on things like pension increase exchanges [where members can choose to give up future contractual pension increases in return for a higher initial pension]. There are plenty of those where trustees and sponsors just want an adviser to deliver that.”

Watts-Lay adds that allegations of IFAs factory-gating Tata Steel employees into defined benefit pension transfers add to the reservations employers have.

He says: “I think the days of the local IFA going into one office are over. Firms want to do proper due diligence with rigorous procurement processes.”

Hunting profitability

Gallacher also questions whether IFAs should be seeking workplace wins when there is a shortage of
advisers to serve more affluent, and maybe more profitable, private clients.

Lakey says automated advice solutions could reduce costs and therefore boost profit margins, but this comes with its own caveats.

He says: “They only work if the employee has the nous or another incentive to use them. Even then, I’ve yet to see any automated system that can replace an adviser. Add to this, the fact that most people enjoy the interaction of one-to-one meetings  – a personalised service, if you like – then robo-advice of any description will always take second place.”

For IFAs who want help getting into workplace advice, SimplyBiz has recently launched its Workplace Academy, accredited by the Pensions Management Institute.

Firm partnerships are another way to get into corporate business. Lighthouse Group has secured a number of advice deals including with the Prospect, Unison and Unite unions, as well as the Royal College of Nursing. The firm was also selected by the Money Advice Service to provide regulated financial advice to its staff.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Alan Lakey has put it very well. But this really has little to do with AE. Indeed AE is a detriment as far as advisers are concerned. Most advisers deal with firms of 20 people or less (the main size of firms in the UK). Put in a group scheme (or AE) and in effect you have one client.

    On the other hand individual Personal Pensions; tailoring different providers to suit each client – and you have 20 clients, in addition to the directors and higher management.

  2. Many advisers shun this market for good reason – everything takes 10x as long as it should.

    Take a simple group insurance review for a new client:
    – Request data in a specific format, secured, without employee names
    – Spend an hour reformatting data and removing employee names
    – Obtain comparison quotes and wait while the proposal goes back for discussion at the next HR team meeting
    – Provide 10x further comparison quotes covering every permutation that the employer can think of
    – Wait while the quotes go back to the next HR team meeting
    – Repeat x several times
    – Request live updated data for implementing cover in a specific format
    – Spend 2 hours reformatting data, looking up postcodes, guessing genders
    – Implement cover. Easy
    – Discuss ongoing service with employer. They don’t want to pay as Tom in HR can do all the admin
    – Tom in HR messes up the admin. Spend 4 hours unravelling the mess. Dilemma over whether to charge, or to keep the client on-side
    – Spend hours training Tom to do the admin right
    – Tom leaves
    – Jenny joins. Messes up the admin. Spend hours unravelling the mess and training Jenny.
    – Annual review time. The new HR Director decides to do a “market review” which generally means asking 5 IFAs to get 10 group insurance quotes from the 10 same insurers.
    – Try to explain that the annual rate review is part of our chargeable service….. and so on


    Once you crack it with a client, it’s one of the most rewarding parts of the business. You become their trusted adviser and they turn to you for everything. They refer you to other businesses. They take your contact details to new employers so you can start the process again with someone else who doesn’t know what they are doing. It can be a hard slog if you don’t have an admin team behind you but it’s worth it in the end.

  3. There should be greater opportunity to provide advice as financial guidance/education is one of the fastest growing wellbeing initiatives (REBA Employee Wellbeing Research 2017) helping to raise awareness of the need for advice alongside the pension freedoms and auto enrolment. This is set against a background where employees biggest concerns are financial worries (33%)and health (29%) (Neyber 2017).
    This provides an opportunity to discuss the needs of the individual employee and/or the broader needs of all employees across the company.

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