Summer - the silly season for adviser reviews

Topic:

Market trends

Date published:

Thursday, 9 August 2018

Author:

Kevin Kenneally

The work of a pension trustee never really stops. Even during the summer when the rest of the world seems to pause, at least for a few weeks, we always have something on the go - and one of those things has been reviewing scheme advisers. I don’t know whether it is the heat but, judging by the amount of tender requests we’ve had over the past couple of months, pension schemes and their sponsors seem to be reviewing their trustee boards this year too!

Driving pension scheme adviser performance and value for money is one of the key reasons a professional trustee is appointed to a pension scheme. I take this responsibility seriously and time and time again we find we can achieve improvements in costs and service for schemes and their members. It is about getting the right fit for the right price.

Saving a small scheme £50,000 a year

Here’s an example… I arranged a benchmarking and tender exercise for a client where the sponsor was directly paying considerable pension scheme adviser fees to one of the larger providers. There was no issue with the quality of their service, just the cost at a time when the scheme had become a legacy arrangement.

We know getting the scope of an adviser’s service right can make a big difference so we refined this as a first step. We then took what seems a fairly standard process - invitation to tender, interview, shortlist and site visits - but avoided the scatter gun approach used by so many.

Going to the whole market really doesn’t help anyone - you can get bogged down in responses and it makes it hard to see the wood for the trees. From the experience we have of the wider pensions advisory sphere, I knew there were three other advisers who would offer a quality proposition for a scheme of this size - so that’s who we invited to tender along with the incumbent.

The scheme had some historical issues the pension trustees needed to be confident would be managed well. A standard interview process can be quite artificial in giving the complete picture of an organisation and their proposed team. That’s where the site visit came in. We really pressed and probed the teams - smiling faces are always nice to see (especially as an ongoing professional relationship is key), but trustees don’t buy services on the basis of that, tidy offices and decent coffee.

We made our decision; which in this case involved a move away from the incumbent. Most importantly, the adviser we chose was better suited to a small legacy arrangement and had built up a good rapport with our co-trustees and the pension scheme sponsor in a short period of time. The bonus was the potential average fee saving of £50,000 a year.

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