This article was first published in the September 2019 edition of Pensions Aspects magazine.
Administrators have spent a long time pleading for a more prominent position at the trustee table. Asking for more time, more consultation and more input into decision-making so that the practicalities of implementing real-world change can be properly considered.
It’s not a condition particular to trustee boards, but so often a service only gets any detailed enquiry when something goes wrong. It’s a human condition in fact. We’re all fundamentally reactionary, and with trustees spending so much of their time reacting to investment and funding issues, administration simply hasn’t garnered enough attention.
For good or bad, cyber threats, de-risking and GDPR have switched a light on for many trustee boards. Realising that the traditional reactionary approach to problem-solving simply isn’t good enough when it comes to these issues - and that pre-emptive strategic planning is now needed - administration has suddenly found its place on everyone’s agenda. Administrators have finally got what they want, but they and trustees are not making the most of the opportunity.
Effective administration that addresses the myriad of potential risks, threats and operational issues cannot be explained or condensed into an administration report – it’s too big and too complex. And, unless administrators are asked to focus on explaining how they address particular issues, they will revert to type and present the same standard report at each meeting.
This is where trustees can seize power and take control of the dialogue.
The first thing to do is to demote the administration report. Yes, it is important to understand delivery and check adherence to contractual standards. But, unless there’s a persistent issue with service delivery, administration reports should be noted and not presented. If everything is running fine, move on and don’t be dragged into the minutiae. If you are really into the detail, form an admin sub-committee and delegate this task to them, this needn’t clog the trustee agenda.
Once you’re liberated from the administration report, you can start to take a more strategic view of administration. Identify the top four or five risks and spend time focussing on these. Typical examples for most boards include readiness for a buy-out, staffing and resourcing, cyber resilience, efficiency or the control environment. Presentations can include the results of tests and audits as well as information on how your administrator is making operational plans to ensure service continuity and mitigate risks.
Not all presentations need to take place around the board table, nor should they put an unnecessary burden on your administrator to prepare lots of documentation.
One of the best ways to learn more about how well your service is running, and how well-positioned it is to deal with unexpected issues, is to meet the service teams.
Site visits often only happen as part of a selection process but taking the time to visit your administrator can pay dividends. The key is to ensure each visit is structured so that specific topics are talked about and that you get the time to speak to more people than just your client manager. It can bring the service to life and give you a much more rounded view of how well the complete service is running. It’s time to break out of the boardroom and make the most of that newfound interest in administration.
Taylor Smith, Client Relationship Manager, Trafalgar House