WHEN IS NEST BEST? PUTTING THE PENSION TO THE TEST

ADVISER KNOWHOW EPISODE 83 10 SEPTEMBER 2014 WHEN IS NEST BEST? PUTTING THE PENSION TO THE TEST. ADVISER KNOWHOW THE WEEKLY TV PROGRAMME FOR ADVISE...
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ADVISER KNOWHOW EPISODE 83 10 SEPTEMBER 2014

WHEN IS NEST BEST? PUTTING THE PENSION TO THE TEST.

ADVISER KNOWHOW THE WEEKLY TV PROGRAMME FOR ADVISERS BY ADVISERS

WHEN IS NEST BEST? PUTTING THE PENSION TO THE TEST. With auto-enrolment making its way towards the smallest businesses, advisers with workplace pension propositions will inevitably see employers looking at the National Employment Savings Trust (Nest) for their staff. What is the best way to use Nest in a solution for employers? Will it help or hinder advisers facing new challenges form auto-enrolment? Is its investment process up to scratch, and is it any more suitable than rival low cost schemes?

KEY QUESTIONS 1 How does Nest compare to other pension schemes? 2 Further auto-enrolment challenges ahead 3 Nest’s challenges and strategies

ADVISER KNOWHOW EPISODE 83 10 SEPTEMBER 2014

WHEN IS NEST BEST? PUTTING THE PENSION TO THE TEST.

KEY POINTS KEY POINTS FOR THIS WEEK’S EPISODE FEATURING SEAN MAUDSLEY-BARTON OF PARSONAGE FINANCIAL.

1

HOW DOES NEST COMPARE TO OTHER PENSION SCHEMES?

NEST’S CHALLENGES AND STRATEGIES ¬¬ Consumer confidence in financial services

¬¬ Advisers must decide for themselves

¬¬ Less is more, but much more in a framework

¬¬ A foundation bedrock for auto-enrolment

¬¬ Plans to engage with specialist auto-enrolment advisers

¬¬ Nest is best used for automatic issues and employer challenges

2

3

FURTHER AUTO-ENROLMENT CHALLENGES AHEAD ¬¬ The number of employers staging is going to soar ¬¬ Advisers need to know their plan in detail ¬¬ Adviser should also work with third parties, i.e. accountancy firms

ADVISER KNOWHOW EPISODE 83 10 SEPTEMBER 2014

WHEN IS NEST BEST? PUTTING THE PENSION TO THE TEST.

PROGRAMME TRANSCRIPT “Have Nest as a base layer and then you might put other group schemes above that, which would give more benefit, more flexibility than Nest can.” Sean Maudsley-Barton, Parsonage Financial

Rosie Sells, New Model Adviser® Welcome to Adviser Know How. This week, we’ll be discussing how to use Nest, the National Employment Savings Trust. Auto-enrolment has been seen by many as a great business opportunity for financial advisers. So, as we reach the staging date of even more firms, what do advisers need to know about how to use Nest? Here with me now is Paul Budgen, central account manager at Nest, but before we speak to Paul, let’s have a look at what advisers have to say about using Nest. How does Nest fit with other schemes? Sean Maudsley-Barton, Parsonage Financial Nest will work perfectly well alongside any other scheme; it’s typical for people to have Nest as a compliance tool. So, you have it as a base layer and then you might put other group schemes above that, which would give more benefit, more flexibility than Nest can. Chris Holmes, Alan Boswell Where there’s a core scheme in place that we’ve set up previously and it’s compliant, a compliant workplace pension scheme, a qualifying scheme, we can use Nest for new joiners primarily and that’s where we’ve used it to date, but things may well change in the future and where capacity is at it’s limit with the other providers, then I’m sure Nest will become a bit more relevant to us. Why use Nest rather than a Nest-like rival like NOW Pensions?

Sean Maudsley-Barton, Parsonage Financial I think NOW and Nest are very similar so, as an employer if your intention is just to be compliant, I think NOW Pensions have a very strong position because they give you the compliance and they also give you the ability to integrate with lots of standard payroll packages out of the box. So, it’s an end-to-end solution and that’s done. I think Nest is just really about the pension and not about the integration. Chris Holmes, Alan Boswell We do think there are pretty good alternatives in the marketplace. The people’s pension we think is a perfectly adequate in fact, very, very good alternative to Nest and there’s a lot more value that we can bring because of the middleware functionality. What do you think about Nest’s investment strategy? Chris Holmes, Alan Boswell Some good in terms of the staple they’ve put together. The options, the Sharia fund, the Ethical Fund as well. So, there are some good options there to suit everybody, but we just think it’s a little bit too cautious, especially for those younger people and I understand the reason behind that. That they want to demonstrate to individuals that it’s not a question of losing money and if they haven’t had pensions in the past, there is a logic behind it, but I think if there’s a greater education piece with it that employers can bring, then they

should be looking at increasing the level of risk for the younger ones and certainly, in terms of the growth phase, we believe that they’re overweight in bonds and money markets in particular, which would cause us great concerns generally. So Paul, why should employers choose Nest over other low cost rivals? Paul Budgen, Nest That’s a really good question and it’s one which I think is probably best answered by advisers. Advisers are able to look at what we offer, what other master trust providers offer and they’re able to weigh up and pros and cons of each and come up with what they think is the best fit for their employer client. How does Nest fit in with other schemes? It’s interesting. I think again, it’s one of those areas where I think Nest is seen as very much a kind of foundation bedrock when it comes automatic enrolment. So, I would say the best way to use Nest is when looking at an automatic issue or challenge for an employer, what’s the safest, easiest way of doing that? Nest is a great part of that overall picture. What else do advisers need to be wary of with further stages of autoenrolment? That’s a really interesting question. So, let’s take a bit of a step back, we staged

ADVISER KNOWHOW EPISODE 83 10 SEPTEMBER 2014

WHEN IS NEST BEST? PUTTING THE PENSION TO THE TEST.

“If there’s one piece of advice I would say to an adviser is just know what it is that you’re going to do really, really well and partner up with other third parties that could help you. ” Paul Budgen, Nest

just over 5,500 employers. This year, we’re going stage somewhere in the region of 27,000 employers. In the next 12 months, that number just ratchets up and up and up and if there’s one piece of advice I would say to an adviser is just know what it is that you’re going to do really, really well and partner up with other third parties that could help you. A really obvious example is an accountancy firm that’s running its own payroll, they will have scale and they will have challenges which an adviser can really help with that. What challenges face Nest in the next stage of auto-enrolment? I think actually, one of the biggest challenges that Nest faces is an industry challenge and that’s around consumer confidence in financial services and their wanting to trust what happens in financial services, but there’s an unwillingness to it. So, faced with that challenge, one of the things that Nest does is make sure that all its communications is really clear as to what it is a consumer is trying to do with their pension investing. Less is more, but much more in a framework. Do you have any other strategies going forward? I think one of the key things for us at Nest is to identify those intermediaries, those advisers that are really experts in the automatic enrolment space. So, we’re seeing those advisory firms that

are really into automatic enrolment being the go-to experts within firms and within local areas and at Nest, one of our strategies would be to engage with those intermediaries and make sure that they have the up to minute news about what Nest can do for their clients and for their advisers. You can download the cribsheet for this week’s edition with further information on how to help clients shop around for annuities at citywire.co.uk/ adviserknowhow or bnymellonam. co.uk/adviserknowhow or you can find the link and add your views @ AdviserKnowHow on Twitter.

ADVISER KNOWHOW EPISODE 83 10 SEPTEMBER 2014

WHEN IS NEST BEST? PUTTING THE PENSION TO THE TEST.

ADVISER KNOWHOW A PROGRAMME FOR ADVISERS BY ADVISERS

Produced in association with BNY Mellon, Adviser KnowHow is a new groundbreaking programme, created specifically to help you and your business. Every week we speak directly to your peers in the industry to understand how they have addressed some of the key issues that advisers face every day of their working lives. Get involved and add your views on twitter: @Adviserknowhow

ADVISER KNOWHOW EPISODE 83 10 SEPTEMBER 2014

WHEN IS NEST BEST? PUTTING THE PENSION TO THE TEST.

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