Workplace is the new retail

I noted with interest Chris Daems’ article last month, from which this title comes. Chris rightly points out that automatic enrolment is bringing about a step change in how people access financial services. I don’t mean those who already do – those with an adviser and a wrap portfolio – rather, the masses who haven’t previously been saving for retirement.

And over a million employers will need to establish or upgrade their pension schemes over the coming years and they will likely enrol around ten million employees. That’s going to require help, guidance, support, and at times, advice. Far more for the employer than the employee, who will sleepily find themselves saving with the benefit of employer contributions.

I don’t provide advice – regulated or otherwise – instead, I speak to politicians, regulators, trade bodies and press about how we collectively make sure this whole automatic enrolment thing works. How we get the nation saving again. And how we hopefully start to resolve at least one of the financial gaps we have as a nation.

For now, we need to focus on how we engage the many employers facing up to this challenge for the first time. And for many small businesses, the employer is very often represented by a solitary person. Unlike bigger firms, they won’t have a team of HR people, a pensions department and payroll staff to manage the project. And they won’t necessarily be engaged in the subject at all. Apart from a wake-up call from the Pensions Regulator, they probably don’t have pensions high on their business agenda.

A friend of mine runs a small but expanding business. He has around 100 staff now working across four bars and a restaurant. At the moment, the company doesn’t operate a pension scheme with any employer contributions.

Last year, having explained automatic enrolment to him, I asked him to present to our management team here on how he viewed pensions in the scheme of all the other things he has to worry about as a small business owner. He presented a list of priorities that started with ‘making sure the doors are open,’ ‘the staff have turned up’ and ‘the beer isn’t frothing.’ Things like that. At number 2,372, he listed ‘make sure pension scheme in place.’

Ok, I won’t suggest this represents every employer, and he was being deliberately provocative, but it certainly sounds familiar. And it’s certainly understandable. Like many, I think he’ll need support.

Here’s my humble predictions of things to look out for:

  • Individual clients suddenly in need of corporate advice, and willing to pay.
  • Small employers will seek to comply, little more.
  • Most small employers will leave it late, because it’s not a priority.

I’d be interested to hear what you think.

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10 thoughts on “Workplace is the new retail

  • Firstly, thanks for the mention Jamie. I appreciate it!

    Interestingly we are already seeing larger and medium sized employers just looking to get ‘over the line’ and just comply and I don’t think this trend won’t change as the companies who need to comply reduces in size.

    I also agree that for most SME’s auto enrolment doesn’t seem to be a huge priority. This needs to be picked up by the regulator, politicians and people responsible for spreading the word and the message that firms need to comply and preparing early (although for many medium sized businesses this might already be too late ) needs to be clearer, cleaner and potentially more scary!

    Reply
  • Thanks Chris.

    Couldn’t agree more. I’ve started a rallying call in this respect with various influencers across the industry. Getting the message across to SMEs that they need to start preparing is – for me – one of the single most important aspects of automatic enrolment success. And hopefully this will help the role of advisers supporting them.

    Jamie

    Reply
  • How about discussing what kind of pension proposition might engage the employees and possibly go some way to re establishing the levels of trust that used to exist in the days of Home Service.

    People have not really changed and still want to know they will be able to live properly in much the same way that they used to be concerned about being buried properly.

    Our industry changed as it gradually became driven by bean counters and shareholder values rather than by the desire to serve customers.

    Employers have not been shown how employee benefits can be seen as adding value from both their perspective and that of their employees.

    If you get that right and you have a whole new ball game but if you just focus on one aspect you will surely fail.

    Reply
    • Phil, it’s a good challenge!

      Getting the proposition right will be crucial. Ensuring that we help employers comply and do so without hassle, coupled with something simple that employees will value, could just be the Holy Grail.

      I also think we become too focussed on trying to get the perfect communication (or the perfectly compliant communication), but this on its own will rarely engage someone in saving. The conversation between employers and their employees – and employees with their friends and family – will be equally if not more important. Our challenge is to ensure there is at least a positive attitude to saving, beyond which we’ll earn the right to tell people about the proposition in a way they might value.

      You’re right, people do want a good retirement, I’m just not sure that thought is linked well enough to workplace saving yet and we might have to engender that first.

      What do you think?

      Reply
  • Jamie,

    Isn’t that our job and my goodness what an opportunity,

    All to often pensions have been dealt with at Board level and have ultimately ended up being resented by employers for their cost and mistrusted for their opaqueness – justifiably- by employees.

    Communication has appeared to be for the benefit of providers and actuaries rather than employees with the consequence that reams of paper remain in envelopes and no one understands how their fund is progressing.

    Their is an enormous market waiting for the right approach which in reality means a different approach from advisers working to what the market can and will pay rather than what advisers think they are worth.

    Get the product right and the public will buy it !

    Reply
  • Thanks Chris.

    Couldn’t agree more. I’ve started a rallying call in this respect with various influencers across the industry. Getting the message across to SMEs that they need to start preparing is – for me – one of the single most important aspects of automatic enrolment success. And hopefully this will help the role of advisers supporting them.

    Jamie

    Reply
  • How about discussing what kind of pension proposition might engage the employees and possibly go some way to re establishing the levels of trust that used to exist in the days of Home Service.

    People have not really changed and still want to know they will be able to live properly in much the same way that they used to be concerned about being buried properly.

    Our industry changed as it gradually became driven by bean counters and shareholder values rather than by the desire to serve customers.

    Employers have not been shown how employee benefits can be seen as adding value from both their perspective and that of their employees.

    If you get that right and you have a whole new ball game but if you just focus on one aspect you will surely fail.

    Reply
    • Phil, it’s a good challenge!

      Getting the proposition right will be crucial. Ensuring that we help employers comply and do so without hassle, coupled with something simple that employees will value, could just be the Holy Grail.

      I also think we become too focussed on trying to get the perfect communication (or the perfectly compliant communication), but this on its own will rarely engage someone in saving. The conversation between employers and their employees – and employees with their friends and family – will be equally if not more important. Our challenge is to ensure there is at least a positive attitude to saving, beyond which we’ll earn the right to tell people about the proposition in a way they might value.

      You’re right, people do want a good retirement, I’m just not sure that thought is linked well enough to workplace saving yet and we might have to engender that first.

      What do you think?

      Reply
  • Jamie,

    Isn’t that our job and my goodness what an opportunity,

    All to often pensions have been dealt with at Board level and have ultimately ended up being resented by employers for their cost and mistrusted for their opaqueness – justifiably- by employees.

    Communication has appeared to be for the benefit of providers and actuaries rather than employees with the consequence that reams of paper remain in envelopes and no one understands how their fund is progressing.

    Their is an enormous market waiting for the right approach which in reality means a different approach from advisers working to what the market can and will pay rather than what advisers think they are worth.

    Get the product right and the public will buy it !

    Reply
  • Firstly, thanks for the mention Jamie. I appreciate it!

    Interestingly we are already seeing larger and medium sized employers just looking to get ‘over the line’ and just comply and I don’t think this trend won’t change as the companies who need to comply reduces in size.

    I also agree that for most SME’s auto enrolment doesn’t seem to be a huge priority. This needs to be picked up by the regulator, politicians and people responsible for spreading the word and the message that firms need to comply and preparing early (although for many medium sized businesses this might already be too late ) needs to be clearer, cleaner and potentially more scary!

    Reply

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