Transform or Transition?
6 Jan 2022
Anything sound familiar?
'Administration is tricky. Errors occur. Mistakes happen. That is the nature of the beast.' This is a message that some have heard from their administrators over the years. But, what if it's not just day-to-day errors? Are there more fundamental issues? Perhaps the transition to your administrator was poor, your data may be unreliable or errors have gone undetected and have compounded.
We have recently worked with two clients in this position. We were appointed to help them find a way forward. Essentially, should they stay or should they go?
Outsourced administration isn't just a service. It's a relationship as well. And in our experience, it seems you cannot have one, without the other!
If it's broke; fix it
There are risks in moving administrator. Not just to the data, but the disruption to members, reputational damage, financial and time costs.
A possible option is to initiate a transformation project to work with the incumbent administrator. The project would encompass the full service and work to bring them into line with trustee expectations and best practice. This is not easy to achieve, and it will depend on the state of the relationship. Fixing the services might not be appropriate if the relationship is lacking trust or commitment.
All relationships rely on trust and when it hits a bump in the road, the question is: can you move on? Our clients had faced issues with their services, and had lost faith in the capabilities of their administrator. However, given the risks of transitioning, it is important that trustees really consider whether the relationship is beyond repair. You can have a strong administration service, but without any trust in what the administrator is doing, the relationship is unlikely to last for long.
A fresh start
So, by way of illustration: one of our clients went to the market. The relationship was irreparable. Another took steps to fix the issues and move forward. What is important is that you don't make a snap decision, but evaluate the options.
If you are facing service issues, the automatic response should not be to move away, but to look at your provider, and yourselves. Truly challenge whether the goals and objectives are correct, whether they are shared between the parties, whether the relationship is open and transparent, and whether you are in a partnership or a one-sided relationship.
Administration will always be susceptible to errors. It's how you, and your administrator respond, that determines whether the relationship is fit for the future and will work.
- Transforming the service is very difficult and might not be right if the relationship has failed.
- Before any decision is made, it is important to understand the issues and the challenges from both sides.
- Taking the time to assess the relationship can help prevent the same mistakes. Assessing where the relationship went wrong, for example poorly understood objectives, will contribute to making the next relationship work in harmony.