Aviva publishes report on how advisers can adapt to new fee based model when commission ends

Article date: 24 March 2015

  • End of trail commission from workplace pensions looming in April 2016
  • Corporate advisers will need to start charging fees – less than half do as yet
  • 41% of advisers are concerned about remaining profitable1
  • Of c250,000 SME employers affected, research shows that 36% of small employers and 24% of micro employers need advisers’ help2
  • Aviva’s new report helps advisers make the transition from commission to fees

Aviva has published a report on how advisers can adapt to new fee based business models, helping them navigate the end of commission.

Many providers are phasing out initial commission before the government’s April 2016 deadline. Switching to a fee based model can take time, so advisers need to act now or risk losing income – but Aviva’s research highlights more than half are yet to do so. Just 48% of advisers currently charge fees for their corporate advice and services, and 41% say they are concerned about remaining profitable.

The switchover is the latest in a series of challenges that have impacted corporate advisers’ income and profitability in the last two years. These include the introduction of the Retail Distribution Review, the implementation of auto-enrolment, the 2014 Budget changes to pensions and the DWP Command Paper outlining the charge caps and the commission ban.

To help advisers tackle the latest business changes with confidence, Aviva has launched a new report “Moving from commission to fees”. This practical guide includes contributions from firms that have already made the transition successfully.  It sets out how advisers can develop new income streams and outlines the services that can be charged for, as well as highlighting fees from an employer’s perspective.                                                                                  

Bringing together industry experts, the report outlines the key areas that advisers should consider during this transition and how to achieve the best results for their clients. Contributors highlight that auto-enrolment provides a great opportunity for corporate advisers, with 250,000 SME employers “staging” in 2015/2016. Aviva research shows that 36% of small employers and 24% of micro employers want advisers to help them navigate their requirements.

Expert contributors to the Aviva report include:

  • Andrew Manson from KPMG focuses on how intermediaries can prosper in the post-commission corporate advice market.
  • James Biggs from Fidelius outlines what advisers need to do to begin the transition from commission to fees.
  • Kris Black and Hannah Knight from Aviva consider what services advisers can profitably charge fees for.
  • Matthew Barrow from McParland & Partners discusses how much advisers should charge employers and on what basis; and how to attract and retain profitable clients.

Recommendations include:

  • That auto-enrolment provides a great opportunity for advisers. Compliance and legal requirements are complex and advisers can show their value in helping manage these risks.
  • Use of employee benefits can help clients to cost effectively attract, reward and retain talented employees, for example through the use of flexible and voluntary benefits as well as holiday and absence management systems.
  • Advisers need to understand and be able to clearly articulate what they offer their clients and how it differentiates them from competitors.

Malcolm Goodwin, Head of Corporate Distribution at Aviva says, “There’s no time to waste, as some providers are phasing out commission before the government’s April 2016 deadline and switching to a fee based model can take time. In this report, these experts have provided valuable insight and guidance for advisers on one of the most daunting of business issues we’ve seen yet. At the same time, auto-enrolment presents advisers with a significant opportunity and I would encourage them to use this guide to help when re-defining their business models. I hope the knowledge shared by these specialists helps advisers to take the next step in developing their business models for the new world ahead.”     

To download a copy of the report or for information about how Aviva can help you, go to – http://bit.ly/1Mrf5Qp

– Ends –

If you are a journalist and would like further information, please contact: Jess Geoghegan: Aviva Press Office: 01904 684128: 07800 695673: jess.geoghegan@aviva.co.uk

Notes to editors:

1 and 2 - Aviva Adviser Barometer, November 2014

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