Admin Panel (February 2007) - Question of trust

MARK LILLY
CHAIRMAN
Managing consultant, Mercer
Lilly is a managing consultant and a member of the senior leadership group within Mercer’s outsourcing business. He has 25 years’ experience in pensions and benefits administration and is a fellow of the Pensions Management Institute.

NICK COURTNEY
Head of client management, MNPA
Courtney is responsible for the management of client relationships through MNPA’s client management team. Before joining MNPA in January 2007, Courtney was UK pensions and benefits manager for a major communications organisation for over five years. Prior to that, he worked for a major employee benefits consultancy as an operational effectiveness consultant for 13 years. Consequently, Courtney has wide experience of administration.

IAN BLOXHAM
Head of client relationship management, pensions administration, Aon Consulting
Bloxham joined Aon in 1995, and in 1997 became the head of the Bristol service centre, responsible for all the services provided from this location. Today, as head of client relationship management for the pensions administration business, Bloxham provides strategic guidance to our clients and ensures that Aon provides a truly added value service that is aligned to clients’ needs.

TIM BANKS
Head of employee benefits, Equiniti
Banks is responsible for the employee benefits division within Equiniti. He joined Equiniti in September 2005 and has over 20 years’ experience in the employee benefits market. Banks previously worked for Standard Life, Fidelity Investments and Watson Wyatt performing a variety of roles in investment, consulting, DC and administration.

DAVID MADDISON
Client services director, rpmi
As client services director, Maddison manages all aspects of client services and service delivery to incorporate all clients’ needs. This includes managing a team of dedicated client service managers, working on pensions policy, managing the technical and compliance team and the successful delivery of all communications services. He is also responsible for overseeing trustee management services to over 300 trustees, including developing bespoke trustee training and enhancing it to meet the requirements of TKU.

BRIAN CRITCHELL
Account manager, Xafinity Paymaster
Critchell is head of account management for Paymaster’s statutory and public service scheme and responsible for the company’s technical developments team. He has 40 years’ experience in pensions, half with a major global consulting firm. He is vice-president of the PMI, a regular speaker and contributor on behalf of both the PMI and Paymaster.

MALCOLM REYNOLDS
Commercial director, JLT Benefit Solutions
Reynolds’s role is as national director of the benefits administration practice that provides advice to clients on operational administration effectiveness. Reynolds is a member of the JLT executive and has over 15 years’ experience in the pensions industry. He was previously a director at PricewaterhouseCoopers, where he spent 11 years and was responsible for the pensions management consultancy services. Reynolds was also a director at Profound Systems.


Chairman: Mark Lilly

1. What challenges do administrators face in managing their relationships with trustees and what do you believe contributes to working successfully in partnership with them?

2. How do you believe your clients would define excellent service and how can training and development help in achieving this?

3. Third-party administrators are typically appointed on the basis of providing agreed services for a known cost. Increasingly new and different requirements arise which change the scope of those services. How do you work with clients to ensure a fair commercial requirement in those circumstances?

4. Trust and confidence is core to a successful relationship. How do you ensure your clients have trust and confidence in the service you deliver?


NICK COURTNEY

1. As a result of the relationship being limited to trustee meetings, the administrator/trustee dynamic is often formal and prescribed. To build trust, the management information and the presentation thereof needs to be of an exceptional quality. Also, as significant amounts of trustee business relies on the working relationships between internal/external suppliers, it is imperative administrators provide demonstrable evidence of client rapport, robust process and expectation management, hence providing further trustee comfort.

2. Our clients are looking for a service that enhances the member experience. Members are looking for clear and easy to understand answers to questions, in a timely manner. Excellent external customer service starts with excellent internal customer service and deploying a “right first time” attitude within the administration team. Staff training/development that manifests itself in the administrator asking him/herself, key questions such as “How would I feel if I received that letter?” are key to meeting service expectations.

3. By pre-agreeing explicit and approved terms of reference before any client specific service change is actioned. The process would involve all stakeholders, preferably face-to-face, and would detail potential impact/risks on service delivery mechanisms, plus the amount of “effort” and resource required to meet the service changes, hence paving the way to negotiate a fair commercial agreement. Client-wide forums can address generic service issues so all clients air their views. This generates ideas, and promotes understanding so that service changes do not come as a surprise or do not meet expectations, hence again leading to sensible conversations regarding commercial agreements.

4. By seeking open and honest formal and informal feedback. Formal feedback via a variety of tools such as a programme of well designed surveys that ask trustees/clients their views, to holding client wide forums informing them items such as key company initiatives and changes to service, as well as regular service review workshops. Informal feedback ranging from client checkpoints (a quick “How is it going?” telephone conversation every fortnight), to breakfast drop-ins to discuss a few key points.


IAN BLOXHAM
1. Trustees, on the whole, are regular human beings who want the administration of their scheme to work. The key challenge in building and maintaining a relationship with trustees is to understand what their definition of this looks like, i.e. what are their key success criteria? At Aon, we therefore spend a good degree of time discussing with trustees their goals and objectives and aligning key measures to these that will provide clarity around progress and performance. This forms an annual cycle of planning and review that ensures we remain in touch with the trustees’ thoughts and also provides a solid fact base for administration performance review.

2. Our clients are scheme members and sponsoring employers as well as trustees. Each of these may have a slightly different perspective in terms of defining service excellence. For example, a member may judge the administration service solely on the quality and usability of the scheme website whereas trustees and the employer may be more focused on regulatory compliance and cost.Our training and development plans ensure our client relationship managers are able to build an accurate picture of what each client expects from us. We then plan, monitor and review as described above using measures that are relevant to each client’s particular circumstances and priorities.

3. This depends to a great degree on the nature of the change. If it is scheme specific then we would hope this has been identified and planned for at an early stage, so the impact on service scope can be discussed and a fair price adjustment (up or down) agreed. This should be supported by documented change control processes so that all parties agree to the nature of the change, the timescales, impact and price adjustment. For more widespread changes that affect multiple clients, costs tend to be spread across all those affected, thus mitigating the individual impact as far as possible.

4. Trust and confidence is the key. Our belief is that this is best achieved through complete clarity of purpose on all sides and then by delivering the service in accordance with this. There are four key steps to achieving this:
- Build a detailed picture of client expectations
- Integrate these into the service delivery plan
- Agree relevant measures that provide clarity on progress
- Review, refine and re-plan for the next period.


TIM BANKS
1. A successful partnership relies on a clear understanding of the trustee requirements. It is critical to set out clear responsibilities, deliverables and priorities. This allows the parties to establish an open and honest dialogue against the backdrop of certainty. Proactive account management is a pre-requisite, delivered by high-quality, focused client managers. Transparent trustee reporting against the agreed deliverables, together with clear analysis of issue resolution, as and when they arise builds trust. Equiniti believes that certain delivery, with no commercial surprises is the foundation of a successful relationship.

2. Ultimately clients define an excellent service as a positive member experience for all members at each interaction, although the level of member satisfaction that clients expect often varies.Administrators need to work to understand and document client’s exact requirements and expectations in different scenarios. Flexibility in meeting those requirements, in delivering the corporate and trustee agenda, managing the peaks and troughs in demand are important. Training and development plans need to be informed by structured client and member feedback.

3. Where things change early client/administrator engagement is key. We would expect the client manager to impact assess the change and arrange for the necessary project manager and plan to be put in place. At the outset of the relationship it is important to establish clear commercial terms to provide for most eventualities even if not initially required. Clear cost parameters facilitate an open forward looking dialogue to be developed, and not get in the way of successfully delivering the change.

4. It is no secret that establishing a successful relationship depends on delivering what you contractually promised, establishing an open and honest forward looking dialogue, and dealing with the inevitable issues in a positive pragmatic fashion. Proactive client management, clear commercial agreements, the provision of transparent and robust management information all have a key part to play in establishing trust.


DAVID MADDISON
1. First and foremost the administrator must understand the trustees needs. If there is a gap be-tween what trustees expect or the level of service they think the administrator is going to provide then the foundations exist for an unhappy relationship. One of the best ways of avoiding this sort of situation is to establish a service level agreement at the earliest possible stage and then using that to set the agenda for regular reporting. It goes without saying that administrators need to work hard to ensure administration standards are maintained at a high level – no trustees welcome reports of consistent poor service.

2. Our clients expect things to be done right, and to be done reasonably promptly. While we strive for speed of turnround, clients will often tell us that given the choice they would rather have it right than fast. Service excellence is often judged too on what can be small added-value events, such as our willingness to attend a meeting at short notice, how responsive we are in dealing with unexpected and urgent requests, having a point of contact which they can rely on to take ownership and get things done when they need it and so on. We invest heavily in people from the point at which a prospective employee first contacts us about a job. We want people from the beginning to know they will be joining a professional organisation focused on delivering a quality service to customers. Our training programmes are comprehensive, we have a strong commitment to qualifications and we strive to foster a supportive environment.

3. The starting point here is to ensure that the contract is established on a reasonable basis in the first place. It is no good paring down the contracted service to keep costs low or enhance profitability which can lead to stress points because the contract is unrealistic and does not provide an adequate basis for a decent level of service. Even then of course additional work can be needed, but generally we find that so long as things are clear from the outset clients are happy to meet the cost of additional work.

4. Openness and transparency go a long way. If something has gone wrong there is little to be gained by trying to cover it up. Regular reporting is just a part of building trust, but the reports do of course have to match the perception and having a process for getting regular feedback can help here. We appreciate trustees are risk averse and we recognise that and make sure our processes are designed with appropriate controls.


BRIAN CRITCHELL
1. Joint Xafinity Paymaster/Pensions Management Institute research into the quality of trustee decision making discovered that trustees want to get closer to their administrators. Interestingly, 74pc of administrators still feel undervalued, despite around the same percentage of trustees feeling they did not do so. Let’s aim for a common understanding of what service is required, and how we measure and reporting progress. Successful partnerships require working together to determine the best solution to challenges, so we need to understand each others’ issues. This requires open and transparent communication at all levels, coupled with the honesty to share bad news.

2. Doing what it says on the tin means delivering what we promise in a timely fashion, keeping members well informed, and paying the right person the right amount to the correct destination. There is too much focus on meeting 100pc SLAs, it is better to have 100pc accuracy first time, delivered in a reasonable timeframe. A structured training and continuing development programme helps to achieve these aims by ensuring, firstly, that staff have the right technical pensions skills and tools they need to do their assigned job. Secondly, appropriate customer service training to focus on relationship aspects and the quality of the member experience. All such training should be kept up-to-date.

3. It helps if the original contracts provide clarity and some control and a pricing mechanism around the change process. Then ensure any change is discussed fully and the impact understood. If charges are genuine and the reason they are incurred is understood, agreement can usually be reached fairly quickly. It boils down to working to ensure the trustees have a good understanding of your role and a willingness to consult with you early on. Supposedly simple changes to the scheme design can have a significant effect on working practices and procedures, if not require wholesale system changes.

4. Trust will be built up over a period of time. So, deliver accurate and timely work in accordance with the contract SLAs. Demonstrate a robust risk management framework and provide reassurance that the risk of things going wrong is being minimised through adequate internal controls. Discuss issues regularly with clients and look for practical solutions and opportunities to add value. Keep clients informed about your issues and tell them how it really is. Where unforeseen problems arise, communicate these expeditiously, along with proposals for resolution. Having discussed and agreed the way forward, ensure you deliver accurately, comprehensively and on time. Becoming a true business partner to your client will benefit both parties and better engage the respective teams to raise the quality of service.


MALCOLM REYNOLDS
1. Most profes-sional third-party admini-strators now have comprehensive administration agreements with clients that incorporate in detail the services provided by administrators as well as the remuneration conditions associated with those services. In my experience SLA penalty clauses are becoming less common with more emphasis being placed on quality of service and ability and desire to deliver services in partnership with a sponsoring organisation rather than as a supplier/provider relationship.

2. The provision of back-office pension administration is being seen more and more as a hygiene commodity with the real differentiation at the front-facing end through member communication methods and processes. This is largely due to the fact that having the right systems in place that facilitate straight-through processing takes the pain out of back office processing. With that in mind, this means back-office processing can be achieved almost anywhere where there is the resource capacity. I can therefore see our business evolving to a point where the main focus of administration is based on pension scheme member experience that will be delivered by local staff with good interpersonal, communication and technical know-how to ensure members understand the benefits they are entitled to.

3. There has, over a good number of years now, been a demand for constant change to systems, processes and staff education regarding legislation changes, scheme redesign and process improvement. This has now become “business as usual” and these activities have generally been amalgamated into continuous improvement departments.

4. The requirement to administer DB pension schemes will be around for many years to come. There will most likely be fewer DB arrangements to administer and those that will remain will be typically larger schemes. The shape of DB arrangements will change as more schemes that are able, will most likely look to reduce liabilities and then secure benefits through some form of buy out, wind up or complex financial instrument. One thing is for sure, the eradication of DB pension administration is still far off.