72% of advisers dealing with group risk believe that auto-enrolment will present them with new business opportunities, as employers seek financial advice to ensure they are compliant with its regulations, according to research from Canada Life Group Insurance.
Research of almost 100 group risk intermediaries, conducted for Canada Life’s first Group Risk Speed Debate, found that most advisers think auto-enrolment will have a positive affect on the group risk market. 68% believe that businesses will review the benefits they offer to their employees, as they prepare to make their workplace pension compliant, launch a new scheme or direct their workers to NEST.
However, 20% think that these changes will have a negative impact on the group risk market as employers will reduce their expenditure on benefits to make sure that they can afford the necessary pension contributions they will have to make. Cost is not the only possible 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.
Group risk intermediaries were less positive about the impact of the Retail Distribution Review (RDR) on the size of the group risk market. 43% think that the size of the market will remain the same because advisers will find it too difficult to move across, while 40% think that the perceived value of this business is too low to encourage new entrants.
16% believe that new advisers will enter this market as a way of maintaining revenue streams while they train for the qualifications required by RDR; meanwhile 10% believe that advisers will use this as a way of avoiding the additional training they would otherwise have to take completely.
13% think that there may be an initial increase in the number of intermediaries moving across to the group market while seeking alternative revenue streams, but that once they are fully trained for RDR they will concentrate less on selling these products.
“This is a hugely exciting time for the Group Risk market,” said Paul Avis, sales and marketing director at Canada Life Group Insurance. “Auto-enrolment is one of the biggest legislative “game-changers” of the past few years, and businesses will have to adapt to ensure that they meet its 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 retail Distribution Review 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.”