Do regular adviser and provider reviews really matter?
Yes, they do – and I’d like to share some insights from the work I’ve done with pension trustees to demonstrate why. Whilst it’s important for compliance, to get the most out of it we should go beyond just a tick box exercise.
Achieving compliance
For a long time we’ve been told regular reviews of pension scheme advisers is a fundamental part of good governance. More recently the emphasis changed as it became an explicit requirement under The Pensions Regulator’s general code of practice, sitting squarely within the expectations of an effective system of governance (ESOG).
Of course, all pension trustees want to achieve compliance including the need to:
assess
adviser/provider performance against agreed key performance indicators (KPIs) and service levels
review
them against the trustees’ strategic and operational objectives for their pension scheme
check
the wider market periodically to ensure the scheme keeps receiving high quality service and value for money.
Trustees now understand these activities should be embedded within their business plan and form part of an ESOG.
The value of going beyond compliance
While the general code provides the regulatory push, there are many practical – and valuable – reasons to review pension scheme advisers (click the tabs):
Whether there’s been significant turnover or no change at all, this question is worth asking. A board I support did just that and ended up appointing a new Scheme Actuary from within the same firm who was a much better fit for them. As a result, the new Scheme Actuary helped the trustee board work more effectively and meet its objectives and the quality of advice improved. This was a really cost-effective way of achieving a fresh approach without an expensive, time-consuming tender process.
They’re a natural point to step back, reassess priorities and ensure the adviser remains the right fit and offers the right value. For example, an existing administration agreement was originally drafted 20 years ago and, although it had been updated since then, a full review identified various gaps where the market had evolved e.g. online member access, cyber security etc.
Fees increase over time and experience shows it’s often beneficial to check they remain competitive. After some concern about gradual increase in legal fees, my trustee board worked with their existing adviser to fix fees where there was certainty of the scope of work. Again, this avoided the need for a full tender process where there was no desire to replace a long standing and trusted adviser.
Recurring issues or declining service levels should trigger a closer look, no matter how well you or others on your trustee board get on with an individual adviser or provider.
High level or deep dive – how do you know when you need a detailed review?
A practical starting point I often use with pension trustee boards is carrying out a survey for each adviser and service provider. We tend to stagger them over of time and ask anyone who interacts with the provider (trustees, scheme secretary, sponsoring employer or other advisers) to complete them. This wider look has some real advantages.
On one of my schemes, services were reviewed by wider stakeholders and this identified the administration and actuarial functions were not working particularly collaboratively. Following discussions with both teams, new ways of working were agreed which improved efficiency and communication. This may not have been identified if wider stakeholders were not invited to provide feedback.
This example shows other stakeholders (beyond the trustees) can provide insight the governing body is unlikely to have. As well as highlighting difficulties in working relationships the trustee board may not be aware of, it may flag other concerns that aren’t raised during busy trustee meetings.
Taking clear, positive action
Capturing this broad and balanced view of performance anonymously, reduces pressure and encourages honesty. It helps highlight areas needing further investigation, enabling boards to decide on next steps.
More often than not I find a simple conversation with a provider strengthens the relationship and drives improvements to performance and fees. Where survey results highlight deeper uncertainty or dissatisfaction around value for money, a simple benchmarking exercise can help clarify whether fees are competitive and provide a basis for discussion and negotiation. Only if problems persist or there are fundamental issues with service provision do I find a tender may be the right step.
Ready to review?
Our online adviser/service provider assessment is a quick and easy way for to review an adviser’s performance, service and fees. It takes just 5–10 minutes to complete. The results are presented clearly, giving pension trustees a strong foundation for discussion and, where needed, action. At the same time, you’ll meet a key requirement of the general code!
Read the flyer, view our adviser review and benchmarking page or get in touch.
