Adviser consolidation – there’s a lot of it going about!

As a Pension Trustee, it is a requirement of my role to keep abreast of pension news. Given the amount of update emails I get on a daily basis there is an awful lot of news.  Some of it technical  – what is the government doing (or not), some of it legal – what impact does recent case law have and some of it relates to changes in adviser structures. This year has seen a large number of mergers and acquisitions involving key service providers.  This isn’t a new phenomenon with many firms still affectionately known by previous names! So apart from being interesting to know about who is merging with who and what snappy new title they are now to be known as what impact does that have on me as a Trustee?  More than you might think.

Trustees have a duty to monitor their advisers to ensure that they are competitive on both service and cost. Whilst there can be obvious potential benefits to the merging of two providers, such as management efficiency and sharing of creative ideas, a merger may also create a number of problems that Trustee’s should be aware of such as:

• How does the change impact the continuity of service from your incumbent provider?
• How will the culture/ethos of both organisations fit together and are you still part of their core service provision?
• What IT systems will be preferred, and will your data need to be migrated onto a different platform?
• How will the revised business objectives impact on the service you get?
• What will happen to your key team and contacts?

As a Trustee, it is vital that you undertake due diligence following transactional activity within a provider.  You should aim to understand the ongoing ownership structure, retention of key contacts and any short term disruption the transaction may cause. You should be following the internal communications and assessing the impact with your Board and sponsoring employer.

In undertaking this due diligence you may wish to consider the following steps to assist you when assessing the affects of the consolidation:

• Follow related articles and internal press releases. What is the market’s perception?
• Ask questions of your incumbent adviser and ensure that you are comfortable with the new position. Remember, the incumbent should be as keen to contact you as you are to hear from them.
• Remind them that the service they provide to you is still the most important thing.
• You may want to communicate with members as appropriate, so there are no surprises.
• Consider taking a light touch look at alternative options, so there is a contingency plan should things progress in a manner that does not bring comfort.

Overall, the key is not to panic. Knee jerk decisions are rarely optimal.  The key is to process the information and take sensible actions to ensure continuity of good service with value for money and ultimately to protect Scheme members.  As stated above, these changes can bring positives.  However, as a Trustee you should always be aware of your responsibilities.  You delegate the management of services but not overall responsibility.  Change may be good but then again …