This month, we lift the lid on how corporate advisers charge employers for services they provide related to group pensions and group insurances.
I would like to think that readers of Employee Benefits have a pretty clear idea of how much they are paying and what services they are getting in return (and if not, you can take a peek at How transparent are benefits charging structures?).
The sad truth is that this is not the case for the vast majority of organisations. I cannot blame them. Unless you are in the industry, why would you keep up with all the discussions and arguments about trail commissions, consultancy charges, the impact of last year’s retail distribution review and next year’s changes to platform charges?
Like most things in life, there are the good, the bad and the ugly in terms of how advisers have made their money out of advising clients, both corporate and individual. The government, through regulation, is trying to clean out the bad and tidy up the ugly by tightening up, or banning, the aforementioned charges.
Obviously, advisers need to be paid, and necessary services need to be paid for. A good corporate adviser is worth every penny, as well as being an essential partner for human resources departments trying to work their way through workplace pensions and group insurances.
We are moving into a new world order of charging that will not suit all advisers (listen for the howls of protest over the changes), and in the short term we will see many employers having to reassess how services, both necessary and optional, will be paid for.
Just as advisers are having to come clean on exactly what services employers are paying for, employers too should be clear with their staff about which charges are being passed on and why.
Otherwise, in a few years’ time there will be a mis-selling scandal, with staff asking why they were auto-enrolled into a pension scheme and part of that money was used to fund services that were never delivered or they did not want (such as financial advice or, say, flexible benefits), or investment fees that never delivered the promised performance.
Organisations are prepared to pay fees to their accountants, auditors and lawyers. So, hopefully, as greater transparency on services and charges comes into the corporate adviser market, paying adviser fees will also be regarded as a worthwhile corporate cost.
Debi O’Donovan, Editor
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