Hymans Robertson has won a host of awards over the past decade. Jonathan Stapleton speaks to the chairman of the firm's partnership board, John Dickson, about what is driving this success.
- Technology is becoming key, with nearly one-third of Hymans' staff now employed in this area
- Dickson says the partnership model is an important factor in Hymans success
- Hymans is looking to expand its trustee and DC business over the coming two years
In just five years Hymans Robertson will celebrate its centenary and mark 100 years since the firm of Robertson & Melville was established. But the Glasgow firm that Howard Robertson and George Wallace Melville set up in 1921 has changed markedly in that time.
Indeed, when the firm's current chairman of the board John Dickson joined the firm in 2003, the business only had around 200 people. Some 13 years later, its headcount is around three times bigger at 750.
Dickson says the firm is now expanding on all fronts - including in its trustee business. However, it is the area of technology that has been the key area of growth. Hymans Robertson now has 200 people developing its technology solutions.
As Dickson notes: "This has been one of the key areas of recent growth - effectively codifying our thinking into technology solutions to help individuals think about their retirement savings."
But while technology sits at the centre of much of what Hymans Robertson now does - and nearly a third of its workforce are currently involved in developing its technology - the business does not think of itself as a tech firm.
Dickson explains: "Technology is a tool for engagement to help individuals help themselves. We see a lot of that as the future of not just retirement savings but savings in general and spending as well.
"In this day and age it's as much about how you work with the interface with individuals as it is the hard core technology in the background. So the engagement and communication piece is really important."
Dickson says this idea of helping people help themselves using technology also spills over into more traditional areas of Hymans Robertson's business as well.
He says: "Many trustees are using iPads and you are typically engaging with them through tools that enable them to do a lot of 'what-if' work themselves, something which helps inform the whole consulting process.
"Once upon a time, the models were the expensive part of everything. Now the models are pretty easy to produce and the computing power is there to do all the hard work - it is all about the interface with the client, the consulting and helping them think about what to do as a result of any analysis you do."
Dickson says: "Technology is a huge part of what we do but I think we'll still always be about the consulting and advisory piece with clients. But we will support that with technology solutions, which may well be sold in their own right."
Position John Dickson is a partner and chairman of the board at Hymans Robertson, an independent consultancy whose history dates back to 1921, when Howard Robertson and George Wallace Melville established the firm of Robertson & Melville in Glasgow.
Previously Dickson is a fellow of the Institute and Faculty of Actuaries and began his career at Abbey National in 1992, where he undertook a variety of roles, including derivative solution design and management, and became head of structured products in 1998. He joined Hymans Robertson as a senior investment consultant in 2003 to develop some of the earliest LDI solutions for pensions. He later became the firm's head of investment consultancy in 2009 before becoming chairman of the partnership's board in 2014.
One of the areas in which Hymans Robertson has been developing its technology offering is in the defined contribution (DC) space.
In 2013, Hymans launched its guided outcomes (GO) offering - a solution that analyses a DC scheme to calculate individual members' pension savings as green, amber or red in terms of likelihood of achieving a suitable retirement income.
For members with an amber or red evaluation, GO guides them on ways to get on track to 'green' - suggesting they either up contributions and/or delay their retirement age, and nudging them to take action.
Where members accept GO's suggested changes, this is managed by the system, which ensures payroll and retirement age changes are made. Members can also
select an option to automate any future changes - with an 'opt out' if they change their mind.
The consulting framework around GO also gives clients a clear action plan to follow to improve their DC plan. Some 80% of clients have now changed their default funds as a result.
Dickson explains the rationale behind GO. He says: "The more you push the decisions and choices down to the individual, the more that you need some kind of engagement approach that helps them make those choices and decisions."
He adds: "With GO we tried to flip the whole thing on its head and focus on what outcomes the member wants going into retirement and how they are doing against that target.
"Knowing what that looks like and trying to gradually nudge them towards it, helping them understand to what extent they're off path and so on, helps them make the right decisions."
So far, GO has analysed the DC retirement savings of more than 500,000 members - resulting, in many cases, in a significant increase in contributions.
Dickson says: "It's that kind of level of engagement that we really need to strive for with all retirement savings plans."
Funding and reducing risk
Hymans has also innovated around DB funding and risk reduction - launching its 3DFunding and 3DAnalytics service to help trustees better understand the risks facing their schemes.
The 3DFunding is a tool that looks at investment, contributions and covenant in an integrated way - helping schemes better decide on a strategy to meet their goals.
Allied to this is Hymans Robertson's 3DAnalytics tool, a secure online application that gives schemes access to daily analytics direct from administration source data - allowing them to monitor funding positions and recovery plans, model scenarios, and track funding against insurance company buy-in pricing.
Over the past 18 months, the firm has also developed its 'road to resilience' risk management framework. This is based on four key milestones, which helps clients understand where they are on their risk journey and prioritise risk management efforts.
Dickson explains: "In the defined benefit space we're into the next phase of the evolution of schemes. They're largely shut and at some point in the not-too-distant future they'll be reasonably well funded and the contribution debate will be less of an issue.
Until then, it's all about the management of the various risks that you're running, to the point of maybe settling the risk altogether."
The partnership model
Yet, while Hymans Robertson has both innovated and grown rapidly over the past ten years, it certainly didn't target being a certain size. Instead, according to Dickson, it has focused on being able to deliver what clients need.
"We've emerged to a size that I think fits all of what the clients need; we're big enough that we can invest quite healthily in the future and small enough so the senior people in our business will know all of our major clients."
He also believes the amount of investment will be a key differentiator between Hymans Robertson and some of its larger competitors.
Dickson explains: "The big firms are highly successful but when you've got an industry that's in one geography - the UK - and is seen as far as the world is concerned to be a shrinking industry, you need to ask what kind of investment is going to go into that industry.
"The big firms have got lots of other things they can invest their money in - the UK market is not something that is absolutely vital to their business. We want to invest in that area of the business until it doesn't need us anymore, not until we don't need it and that is quite a different mindset."
Dickson also believes the partnership model is also a huge benefit - and helps the business get closer to its client.
He says: "We believe that the partnership model makes a lot of sense for a client-facing business, absolutely, and we believe that our independence helps in the advisory business. We're never going to be able to prove that conclusively to anyone but we're always going to believe it.
"First of all it helps our long-term thinking. We tend to see through the volatility of results and are prepared to invest for a market cycle rather than for a few months or a year or so. And we don't need to deliver certain numbers to certain people in short periods of time."
He adds: "If you think about it, the owners of the business are directly setting the strategy of the business and they're also directly working with the clients. That changes your whole mindset about what an appropriate strategy is, because you are not just making money from it but you're trying to deliver outcomes and value to clients. The individuals who own it are not there specifically for the commercial outcome of buying a share and selling a share, they're there to deliver the service to the clients and with a long-term view that will tend to be a commercial success.
"It becomes more than a job and I think that's a real strength."
Dickson says the next couple of years will be about more of the same - noting the firm will continue to build its market share in the DB trustee business; further develop its guided outcomes service on the DC side of the business; and continue to grow its Club Vita database.
But he adds the firm will also continue to innovate as the industry and regulation changes and things like the Lifetime ISA and freedom and choice take hold.
Dickson concludes: "So, I think there will be more of the same, establishing what we've got. But, the world keeps changing so we'll react and we'll try to innovate again."
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