Plan Sponsors Have Important Role In Encouraging Use of Financial Advisers
02 August 2012 (PLANSPONSOREurope.com) - Plan sponsors have an important role to play in encouraging plan members of defined contribution arrangements to seek financial advice to make more informed choices when new auto-enrolment rules come into force this autumn, Andrew Power, Partner at Deloitte has told PLANSPONSOR Europe.
A Deloitte survey this week found that:
• 84% of people are unaware of Retail Distribution Review (RDR) and that consumers will pay a fee for advice when the RDR is implemented on 31 December 2012;
• More than half of all consumers (54%) would refuse financial advice if charged a fee;
• 47% would be likely to reduce the number of times they use financial advisers if charged a fee of between £400-£600 or 3% of invested assets;
• Attitudes to paying for advice vary according to wealth and where consumers take advice.
• Only 3% of people with no savings would be prepared to pay a fee for advice; 14% of people with savings above £50,000 would be prepared to pay a fee.
• Bank customers are five times as likely (60%) as IFAs’ (12%) customers to reject paying fees for advice
Power told PLANSPONSOR Europe: “Employers can play a role because often employees trust their employees particularly if employers would contribute towards the costs of financial advice. It is a way for advisers to provide advice on a more economical basis because providing advice to a mass of people as opposed to individuals to deal with the advice gap.
“It will help in terms of the number of people who sign up under auto-enrolment. Whether it goes beyond that and offers financial planning on a broader basis to get them to invest beyond their auto-enrolment contributions is one potential issue. There are some people wary of their employers gathering too much data and if people have to pay for the advice even if the employer makes some contribution will that put them off seeking advice because people have been used to getting what they think is free advice and if they see an explicit advice charge will they want to get it?
“Generally it should open up the market for workplace based advice. How encouraging employers are in terms of giving access to it and partially paying for that remains clear. Some will say we are doing the minimum requirement – we are offering auto-enrolment as we are obliged to do and go no further to that.”