34 March 2008www.the-actuary.org.uk Not that long ago, some industry research highlighted how people are more likely to change their friends, or even their spouses, rather than their trusted professional advisers. If that8217s true of us as individuals, then put us together as a board of trustees and we can be just as loyal. The relationship between a trustee board and the scheme actuary is usually about as close as it gets, probably because the scheme8217s viability hinges on valuation results. A scheme actuary is a personal appointment and so it shouldn8217t be a surprise that the relationship is personal. Often an actuarial firm originally won the scheme8217s business on the basis of the experience and personality of the nominated actuary, not just its resources and reputation. An appointment can just as easily be lost because the actuary moves to another firm.The thought of changing a long-standing relationship can leave trustees feeling vulnerable at the thought of losing sometimes many years8217 worth of scheme knowledge 8212 and who can blame them? With mounting responsibilities resting on trustees8217 shoulders, many are unwilling to potentially 8216throw the baby out with the bathwater8217. Unfortunately, this often leaves trustees in a position where they have to put up with a less than perfect service, because at least they know the major issues are under control. To try and resolve this conflict, trustees often make their unhappiness known through informal 8216chats8217, rather than tackling the problem formally. This often causes frustration, leaves issues unresolved and can lead to the relationship passing the point of no return into a re-tender.Living recordThere is another way, of course, but it does require time and attention. There8217s no question that proactively managing the relationship is hard work, but it reaps rewards and can ultimately save it. Often dissatisfaction stems from a string of smaller issues rather than one or two show-stoppers. Annual due diligence reviews and evaluation of the cost/service balance are essential components in formal evaluation, as these yield indisputable truths. The formal process gives trustees a forum for raising concerns in a non-confrontational way, with evidence, records and justification forming the basis of any discussion, rather than the most recent thing to go wrong (or right). For this to work effectively, issues arising throughout the year need to be kept in a 8216living record8217. It doesn8217t have to be complicated, as long as it lists the details of any problems.Another step in the annual review is to re-visit the service agreement. It should be up to date and relevant to the scheme 8211 not just a standard document 8211 and should acknowledge the complexity of the scheme. The current structure might be fairly straightforward, but what about historic benefit structures? Have there been any mergers or acquisitions? Are there any members with 8216special8217 benefits? Is the administration data up to scratch? Is the scheme contracted out? Has anything changed significantly since the appointment? These factors will all impact on the actuary8217s ability to deliver on time and at optimum cost. Other points to look for are detailed in the box opposite.Now more than ever, cost control is essential. It8217s surprising how many schemes never compare invoice charges against the actual work produced. Empirical evidence suggests that some trustees are becoming less anxious of change and are more willing to switch their actuarial provider 8211 they soon accept it8217s not an easy task. Kim Gubler explores how good relationship management can stop clients looking elsewhere for adviceBreaking up is hard to doKim Gubler is an independent management and pensions consultant187 Matching an actuarial firm to a board of trustees is like finding a good pair of walking shoes. A comfortable fit for one scheme could be totally wrong for another 171PensionsClient service034+035_Actuary_Gubler_0308.indd34 3419/2/08 10:58:50
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