Advisers and service providers

What does TPR say?

The main points of TPR's guidance were:

  • You should appoint good quality professional advisers and service providers to help you run your scheme well
  • Select the right advisers to provide advice and manage certain aspects of your scheme - this is a vital part of governance
  • Retain sufficient oversight of the tasks you delegate to others and regularly review and manage their performance

Read the guidance here.

What do we think?

Selecting and appointing advisers and service providers

Trustees should certainly agree and set clear criteria but there are other areas to consider that are not in TPR’s list. For example, consider the merits of bundling the main administration, actuarial and investment services into a full-services contract versus being able to select the best of breed in each area. There are pros and cons for each depending on what is wanted and what has been experienced in the past. Advisers/ providers also face conflicts of interest – can your investment consultant impartially advise you on going down the fiduciary management (FM) route if their firm provides this service? Trustees need therefore to consider ‘independence’ as one of their criteria.

To get the best out of your advisers it is imperative that clear long-term objectives and shorter-term goals have been set and agreed for your scheme. These then need to be freely shared with your advisers so that they can together work with you to help you achieve these objectives, improving value for money and avoiding, for example, scope creep and unnecessary costs. Of course, agreeing such objectives is not always easy but the right adviser for you will assist in this.

Within a ‘roles and responsibilities’ framework, Trustees can set out what is required and who is doing what. This can then be used to ensure that a holistic picture is taken and that the required role of the advisers/ providers being reviewed/ selected are in alignment with all the other stakeholders.

Monitoring performance

To facilitate the monitoring of the performance of your advisers and providers against the levels of service and advice expected/ required, it is a good idea to have an informal annual review. Your advisers should be encouraged to provide an annual stewardship report on their previous 12-months activities. This not only gives you the opportunity to give them feedback but also encourages them to provide you with feedback, all in the interests of improving your working relationship and scheme specific outcomes.

This can make it easier for advisers to advise, help make requirements clear and lead to a way of working that is conducive to success for both you and the advisers.

It also provides an opportunity for you to understand each adviser’s broader business as a means of identifying potential issues before they arise, for example, significant business/ staff gains and losses, corporate actions impacting the business etc. as well as an opportunity for your advisers to share service developments with you that you may be interested in.

Monitoring performance should also be extended to trustee support such as your executive team or your Secretary. Indeed, the role of a good executive team will be to manage the advisers/ providers effectively.

It is also important to ensure that services directly affecting members and which underpin other services such as administration are overseen in an effective manner. The key trustee duty of paying the right money to the right people at the right time can only be achieved if the administration is delivering.

Understanding and scrutinising advice

We wholeheartedly agree that there can be risks associated with not taking a course of action – not doing something is the same as a decision not to change and should therefore be seen in the same light as deciding to change. It is therefore imperative that advice obtained is understood and scrutinised as effectively as possible. If this is not the case, it is often best to work closely with your adviser to establish how best to achieve this, for example, through just‑in‑time training or taking a second opinion or calling upon the services of an experienced independent trustee.

Reviewing contract terms

These should be reviewed both at outset and from time to time; certainly in good time before a renewal to ensure that they continue to meet the scheme needs.

Risk management

To help see the wood for the trees, advisers should be encouraged to set out the key risks associated with any course of action/ inaction.

Business continuity planning

This should be extended to what would happen if, for example, your adviser/ provider went out of business or decided not to renew their contract with you. Some contingency planning would not go amiss in these circumstances particularly where this could directly impact members, for example, administration.

What do others do?

Broadening horizons

This Trustee Board had been with their full services provider for over 15 years and enjoyed, on the whole, a good relationship. However, more recently some strains had started to appear and frustrations were building. The Trustee began to feel that they were not hearing the best thinking on investments and funding. They were concerned that fees were no longer competitive and that they were not an important client.

The problem faced was in knowing how to address these issues and what was available in the market after 15 years of development and change. They wanted to be brought up to speed with the latest offerings and find a provider that would bring fresh views and work well with them.

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We facilitated a discussion on the service requirements, which helped the Trustee identify specific issues and focus on how they liked to work with their adviser, and how the relationship should work. We were able to probe and challenge the existing ways of working and help them start afresh.

We then managed the selection process. We approached a broad range of firms to ensure the client saw the full spectrum of offerings in the market and options for their future relationship.

For us, selecting a new adviser is about the relationships between client and provider. Our role is to ensure that there are opportunities to build relationships, see what the provider would be like to work with and ensure that the Trustee is satisfied that a provider can meet their requirements.

Our approach was to run a mock trustee meeting. We set a scenario an agenda that covered the full range of services, allowing candidates to approach it as they would at a real meeting.

It was interesting for the Trustees to see the range of approaches that were taken and to hear some, essentially, free advice! It gave a good feel for what the relationship would be like and how well the two parties would gel in practice.

The Trustees were pleasantly surprised by what they saw: a decision was reached and a new provider was appointed.

The importance of administration oversight

Administration is complex. It may seem simple to the member on the receiving end, and to the clients that hold it at arm’s length. But think about the raft of legislation, data issues, legacy rules, technology, mergers, acquisitions and all the other things that get thrown into the pot for good measure. It’s easy to see how mistakes can creep in and errors be made regardless of how robust the systems, risk management and quality controls are that wrap around it. How do trustees get behind this without endless digging themselves in? What should you even look for?

This Trustee Board had several quality issues with their administrator and complaints were on the increase. Minor errors are manageable and inevitable. Larger errors and systemic issues in an operation are of greater concern, but can often be more difficult to see when the Trustee is viewing the service from a distance, and assuming the administrator is otherwise on top of things.

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We spoke with the Trustee and in-house team to build an understanding of the issues, and to get their perspectives. Most importantly, we asked about how they manage the relationship. We followed this up with a visit to the administrator to hear the other side of the story and see it for ourselves?

It is important in any relationship to accept that there are always two sides to any story. The administration operation was not set up to deliver an effective and quality service, but neither had the Trustee really got to grips with what was happening at the administrator. The Trustee had never visited the office, never met the team and relied largely on the standard quarterly reporting and overall KPIs. For all intents and purposes, the administrator was left to their own devices, and unchallenged.

Our recommendation to the client was first to spend some time with the administrator to think about what was wrong, why it was wrong and how to fix it, turning that into a plan and working together to transform the services. Secondly, the Trustee needed to take a moment to reflect on the role they played in the oversight of the administration and whether there were they could do better.

Oversight of the administrator is important in ensuring the operation is effective and delivering a quality service. It also helps to build and foster constructive, collaborative relationships and ensures that both parties know what is going on and when and how it impacts the service.

Choosing your Covenant Adviser

This Trustee Board’s covenant provider had just been appointed to provide advice to the sponsoring employer. The Trustee were not happy with the potential conflicts in this and decided it was time to change.

The Trustee and the executive support team had limited knowledge of the market for covenant advice, and wanted someone to guide them through the process, making sure they were seeing the right advisers, asking the right questions and avoiding the sales and marketing that can obfuscate the realities of working with an adviser in a sensitive and often complex area like covenant.

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The first step was to help our client understand the market and the options available. We helped them obtain relevant information and segment the covenant adviser market. By providing our insights and knowledge of each, we helped the client select the shortlist of firms that represented the best likely match for them.

Through discussion about the market and the providers, we were also able to draw out the elements that were particularly important to the Trustee. This formed the basis of the selection criteria and requirements against which providers would be consistently assessed for suitability and fit. In this instance, it was an understanding of regulated markets that would set them apart.

Our process enabled the Trustee to determine the right provider for them, in terms of the services being provided, the providers’ understanding of the Trustee and regulated markets, but, perhaps most importantly, the way they would work with the Trustee. We also facilitate the selection day/ process including feedback to the providers.

The thinking and discussion that goes into the requirements, shortlisting and criteria mean that bidders have a much clearer idea of what is wanted from them, and the Trustee received responses that were geared to what they needed.

Selecting an Actuary

This Trustee had two schemes, each with a different actuary. This wasn’t a problem, but it was time for a review and they wanted to consider the benefits and downside of sharing an actuary across both schemes. We worked with the client’s own team and melded their ideas and process with ours to make 2+2=5 due to our market knowledge, independence and integrated technical/ soft skills approach.

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There isn’t any great secret to a selection process, so the key is how you focus on getting the right candidates, and finding the right cultural fit whilst meeting your service requirements. The shortlisting is critical in this, and a knowledge of the market really helps to identify a broad range of firms, lead actuaries within them and consulting styles.

Six firms responded to an RfP, which we had structured and written to provide candidates with a good understanding of the client. This allowed candidates to put forward the most appropriate person and adapt their proposal accordingly.

The Trustee identified as important the commitment of the actuary to them, an ability to get up to speed on the Trustee’s specific schemes, and showing innovative approaches and thinking relevant to the specific circumstances of our client. The “softer” aspects were also given consideration. Does the actuary understand you as a client? Will they be able to challenge you and present complex ideas simply? Will you get on well? How will you work with two rather different sets of trustees, with different scheme funding situations?

Through an exercise that really sought to test the key criteria for our client, whilst not neglecting the “hygiene” factors, this Trustee landed on an actuary with which they are very happy.

Our market knowledge identified the most appropriate candidates, and our process drove candidates to demonstrate the characteristics, and skills, required to meet the needs of this Trustee.

Are your administration processes effective and your SLAs clear?

Pension administration processes often involve several interactions between different parties. Understanding the different roles and responsibilities, ensuring appropriate SLAs are in place for all steps, and managing risks in the handover is crucial to ensuring effective administration and a positive member experience. It’s important that as technology evolves and the parties involved change, the processes are revisited to ensure they continue to meet Trustee requirements. Sometimes this gets lost, with constant change because there is no ‘burning platform’ to address. But a big change can be a different matter.

This Trustee was implementing a new DC platform provider. The existing DB administration remained in‑house. The new provider had proposed their standard SLAs, and the Trustee wanted to ensure they were fit for purpose and in line with good practice. We were appointed to use our experience and expertise to assess the SLAs and DC processes.

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With our support, the Trustee was able to negotiate alterations and reach a level of comfort with the SLAs proposed by their new provider - not only that these were in line with market practice, but also that they were appropriate for the volumes of work expected to be undertaken in future.

By reviewing the DC processes, we were able to help the Trustee put in place an end-to-end SLA, which covered each step in the process, including internal parties like payroll and HR. Our review helped the Trustee, platform provider and in-house administration team mitigate risks inherent in the processes and develop detailed work instructions, with clear demarcation of responsibilities between the parties.

Each party has now signed up to these SLAs and they are an effective tool for monitoring the efficiency of a process. However, it is equally important that the aim to hit an SLA target doesn’t sacrifice process and output quality. It is about striking the right balance between timeliness of a process, the quality of the member experience and the line of oversight for the Trustee.

How can we help?

    Adviser Reviews/ Selection

    We can help you review and/ or select advisers/ providers from several disciplines including administration, actuarial, investment, fiduciary management, covenant, master trusts and full/ bundled services.

    • We can review an existing relationship and make sure that it is delivering the support that you need, or help with a full market selection, identifying the different attributes of the market participants to help you appoint the right firm and person:
      • Has your adviser failed to keep up with changes in the industry?
      • Is your service on a par with the service being delivered to their newest clients?
    • We help those bidding so they understand what you need and to show you their best face, rather than wasting your time sitting through a standard marketing pitch. We combine deep experience with a proven process to help you properly weigh up what will suit your scheme best, and the risks.
    • We are completely independent from suppliers so have no hidden agenda or preconceived idea of the best solution.

    Adviser Consolidation

    • A growing number of organisations are looking to bring their schemes together. It may not be possible to undertake a full scheme merger, but many are looking to create a single trustee board to cover all schemes. In this instance, there tends to be consolidation of suppliers and we can support you in ensuring that you end up with the right support and advice which will combine with you well.
    • It is important to set clear success criteria for the exercise, as well as identifying the risks of making the change and putting in place the appropriate mitigations.

    Outsourced Administration Reviews

    • We can help regularly review your administration to ensure it continues to deliver what you require and what your members expect.
    • We can undertake a review to help you understand what has gone wrong and where the weaknesses are in the operations. We can support you to get the service back on to a solid foundation.

    Administrator Selection

    • We can find the right administrator for your scheme and for your members based on our unrivalled knowledge and experience of the administration market.
    • We can manage the process, talk to you about the marketplace and what each of the providers can offer, and help you define the criteria against which to measure the market.
    • Our process ensures that you reach a decision with all the information you need to be confident in the choice you make.

    Administrator Transition

    • Our vast experience of administration transitions can be used to help you identify and manage the risks during your transition and to supporting you with the additional workload.

    Annual Operational Health Assessment

    • Our set of proprietary tools can help you measure your administrator against where you want to be and what the market provides, providing you with a clear report on recommended improvements, risks, issues, governance and market practice.

    Contract Management Support

    • We can work with you in a range of ways that best meet your support needs, ranging from a light touch “sounding board” through to taking ownership of the contract management, acting as an early warning system and a guide to market practice.

    Independent Administration Expertise

    Administration is complex, expertise is often in short supply and it is the point at which the pension promise is ultimately delivered to members.

    • We can attend your Committee meetings, bringing our wealth of experience, a source of expertise and be able to challenge and influence your administrator.

Who to contact

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Barry Mack

I specialise in governance, trustee effectiveness, pension management (including administration) strategy and large change management projects.

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What do you do?

I am a Director of Muse Advisory and specialise in DB & DC pensions, governance (especially funding, investment and risk management), trustee effectiveness, outsourced pensions management, pension management (including administration) strategy and large pension change management projects. I particularly enjoy facilitating trustees to fully articulate their objectives and beliefs and, consequently, to be as effective as they can be.

What is your background?

I’m an actuary and have worked in governance, administration consulting and DC arenas at Mercer and Hymans Robertson. At Hymans Robertson I was a partner, Head of Governance, Risk Group chairman and DC Governance Committee chairman.

What do you bring to Muse?

More than 30 years of financial, pensions and business experience supported with strategic, technical and commercial skill, and a heavy dose of pragmatism.

What do you do for fun?

Bellringing, photography, Lego! And watching F1 with my two (now grown up) sons.

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Ian McQuade

I have 30 years’ experience across pension scheme management and administration, governance, project management and review, selection and implementation work.

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What do you do?

I help our clients run their pension schemes more effectively. That might be leading projects to improve the administration, advisory services, or management of their pension schemes, supporting them in setting the Scheme’s strategy, or just helping them deliver complex projects. As a Director, I also do a lot to promote the business to new prospects and support the day to day management.

What is your background?

There have been three themes to my life in pensions. Firstly, the administration and management of pension schemes – in the dim and distant past I ran the operations for a large Third Party Administrator. Secondly, all things DC – I first got involved in Money Purchase schemes when contracting out was introduced in 1988 so I have seen it grow into Defined Contribution. And finally, Project and Programme Management – I have led all sorts of projects covering administration, valuation and investment aspects of pensions, as well as many wider change and HR projects.

What do you bring to Muse?

A lot of practical experience from having run and been involved in the running of pension schemes, from the very largest in the country to some of the smallest that exist, for over three decades! An ability to engage with stakeholders at all levels, a ‘get-it-done’ attitude, and underneath the playful exterior, a deep understanding of the market. 

What do you do for fun?

It’s not always fun, but I run occasionally, and am one of the legion of MAMILs that plague the countryside. For the uninitiated, that’s Middle Aged Man In Lycra. Sorry for that image! I tend to enjoy the rides up to about 50 miles, but it gets much harder after that. The upside is the lovely countryside, the great company and the fabulous coffee and cakes!

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Jo Fellowes

My expertise spans project and change management, pensions governance, administrator and adviser reviews and data integrity.

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What do you do?

I joined Muse in 2015 as a Senior Associate and became part of the employee team as a Senior Consultant in 2017. My responsibilities and role is varied, which I love. I can find myself supporting a client with an administration provider review at one moment and consulting on pension management effectiveness and Trustee governance the next.

What is your background?

I started my career in the Pensions and Reward industry in 2000, progressing through various roles in administration, project management and client service management. Simultaneously I gained my BSc in Economics and Mathematical Sciences, along with various other vocational qualifications including certificates in natural sciences, interior design and I also became an NVQ assessor.

I have also worked at British American Tobacco as a Pensions Project Manager, with responsibilities across provider management, risk reduction, data rectification, communications and governance. After covering maternity leave for the UK Pensions Manager, I also became involved in HR projects and was later promoted into HR as the UK Talent and Organisation Effectiveness Manager.

Of course during this time I continued to study, completing my MBA and CIPD. I left BAT in 2014 and travelled and volunteered overseas as a Teacher of English as a Foreign Language, before joining Muse early in 2015.

What do you bring to Muse?

My experience has spanned both provider and in-house management on behalf of Trustee and the employer, giving me insight of the different agendas and challenges facing each. As a life-long learner, I am also adept at assimilating and analysing information quickly. But my real passion lies in helping clients identify, design and implement project and change management solutions.

What do you do for fun?

I absolutely love to travel, explore new places and try new and adventurous activities. My most extreme adventures were tornado chasing in the USA, and a skeleton bob in Lillehammer. I am a runner, albeit perhaps a little too prone to injury, and when I’m fit I also enjoy hiking and generally being outdoors. And of course, I’m still planning on more study!

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Damon Lacey

My experience is in outsourced pensions management/ trustee secretarial, trustee governance software, administration and advisor reviews

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What do you do?

I am a Consultant and like to get involved in a range of different projects. My main focus has been administration reviews, selections and transitions and adviser reviews, but I have also worked with clients on governance and trustee effectiveness.

I oversee our comprehensive supplier research programme and our thought leadership, making sure that we bring our best thinking to our clients and the wider industry.

Outside of Muse, I am a member and Social Committee Chair for the PMI London Group Committee, and a co-opted member of the PMI's Development Committee. I am APMI and PRINCE2 qualified and am now working through an MBA.

What is your background?

I started out as a pensions administrator, before moving into their Trustee Executive Services team with Mercer where I provided outsourced pensions management, project management and secretarial support to clients.

My background has shown me a wide variety of projects and issues and given me a decent technical grounding having once sat and calculated pensions! 

What do you bring to Muse?

Well, apart from my wit (and sarcasm!), my practical experience of administration and governance allows me to speak with clients from the perspective of actually having done the work and knowing how the overall strategy filters down to the ground level.

Since joining Muse, I’ve built expertise on administration and the administration market. I drafted the PMI’s Key Principles to Administration Agreements, and lead on our triennial cost comparison survey, The Mercury Project.

What do you do for fun?

I’m currently grappling with the Portuguese language, having managed a reasonable level in Spanish. Other than that, you might find me reading, swimming, running or back in Portsmouth being Uncle to 6 exhausting kids.

I am Chair of Governors at a primary school in Kilburn, a charity Trustee for a local charity and foster cats for a local animal shelter.

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Muse Advisory helps trustees and companies to better govern and manage their pension schemes. We believe that good governance leads to improved outcomes for members; through better fund performance, effective and proportionate management of risk, value for money and cost efficiencies and strategic and dynamic decision making.

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