Auto-enrollment - Trojan Horse?

LHW99

I was browsing the web, to check on current thinking / progress on autoenrollment, and hit on this article:

(Can't post the actual link, so please paste into you browser, with the usual prefix, and remove the spaces)
adviser .aegon .co.uk/ Support/Business-brain/Transform-ideas/Proposition/cms_025089#!

I can't help feeling that if this is the attitude of even a small proportion of the pensions advice industry, there could be the foundations of another (range of?) miss-selling issue.

If companies and their autoenrolled staff are to be looked on in the context of "not just a pension advice piece, but as a wider Trojan horse to consolidate and grow your (the advice company's) position in the corporate market" then it seems there could be an opportunity for growing profits at the expense of clients.

Interested in any comments on this.

Your_Hero

I don't see what the issue is here. It's the financial advice world looking to expand to help the corporate market?

Many businesses need advice for auto enrolment, and advice firms are gearing up to help them set up their pension schemes. Alternatively, the businesses that do not need advice and can do it themselves.

mania112

Don't forget this is an article by a provider for the benefit of Advisers. This is just a marketing article in attempt to tempt Advisers into using Aegon.

Advisers themselves are already aware of the opportunities surrounding auto-enrolment.

But that doesn't alter your question I don't suppose.

My response would be that EVERYONE would benefit from A-E, in terms of the other opportunities. Advisers can't mis-sell, it's against the rules. So if an Adviser finds other products to recommend, it can only be for the benefit of the client.

dunstonh

I can't help feeling that if this is the attitude of even a small proportion of the pensions advice industry, there could be the foundations of another (range of?) miss-selling issue.

Joining an auto enrolment scheme is not mis-selling. Not joining could be.

If companies and their autoenrolled staff are to be looked on in the context of "not just a pension advice piece, but as a wider Trojan horse to consolidate and grow your (the advice company's) position in the corporate market" then it seems there could be an opportunity for growing profits at the expense of clients.

It may come as a shock but businesses exist to make a profit to pay their shareholders. They have distribution channels and they want those distribution channels to sell more of their product. So, they come up with marketing to aid that. Just as every business in retail and supply does.

Doing things to make money is not mis-selling.

LHW99

I take the points raised, and particularly the idea of businesses making profits.

Nevertheless, we have already had the "sell interest only mortgages to be paid by with profits insurance" and the "make profit by selling PPI" issues.

Businesses and individuals definately need advice to ensure they comply with the law and make the most of the opportunities provided by autoenrollment - which I do think is a welcome step, although there are some questions in the details (notably NEST). I still wonder if the idea that people who need advice on pensions should be automatically be regarded as good targets for crossselling would actually be best practise.
Speaking here as someone who (many years ago) was given an introduction to financial advice when an insurer decided that a whole of life policy was a good idea to sell a 19 year old student with no dependents.

dunstonh

Nevertheless, we have already had the "sell interest only mortgages to be paid by with profits insurance" and the "make profit by selling PPI" issues.

Most endowments paid out surpluses. It was only in the later years they were not. You also need to remember that most endowment complaints failed and it came from an era or lower regulation and salesforces (there are hardly any salesforces left nowadays).

I still wonder if the idea that people who need advice on pensions should be automatically be regarded as good targets for crossselling would actually be best practise.

Selling has little to do with it. There is no profit to adviser is selling products.

LHW99

Unfortunately, it was in the later years, when they began to be "sold", that the with profits policies failed to pay out surpluses.

I am unsure though on your point that "there is no profit to the adviser in selling products". Granted there is no longer comission, but because of that, advisers charge fees. The more activity that can be generated (visits, new product information work, continued monitoring), the more payable time can be charged.
Great if that is all to the benefit of the customer. Unfortunately (in all industries) there are too many who see the earnings before they see the customer.