Starting the search

Our client was reviewing their DC options, something that we increasingly see, and had decided to look at the master trust market. They wanted to reduce the costs and governance burden for the company, but ensure that members were getting good value for money. It was also important that the members could access the full flexibilities.

We were appointed because of our depth of knowledge of the master trust market and our lack of ties to any master trust provider. We led the client through a detailed selection exercise which asked some probing questions and looked at the depth of the master trust propositions, not just the face value.

Asking the right questions

The selection exercise followed a similar pattern to many others: an RfP, presentations and site visits. However, what marks this one out from many others that we have seen is the level of engagement from the client’s working group, which contained both trustee and sponsor representatives. The client asked lots of questions and with our support, undertook a lot of due diligence on their bidders. They genuinely wanted a detailed understanding of what a move to the master trust would mean for members.

There were a few surprises along the way: the client was not aware of all the detail that sits behind a master trust proposition and how the choices that members face will be different to what they had in the existing DC arrangement. There would be different lifestyling choices, different fund ranges, new ways to engage with the master trust and new tools to support decisions and education.

The client was not familiar with the market and it was our involvement that allowed them to ask searching questions of providers and test what each aspect meant for members.

Making the decision

We encouraged the client to think about the options and ask questions, not just of us and the bidders, but of themselves as well. Our independence allowed us to facilitate conversations with the master trusts. We often find that providers are more open with us because we have no axe to grind; we are not offering a master trust solution ourselves or competing with the providers in other areas.

The client saw behind the scenes and was able to understand that the value for members was not just in the AMC, but the overall proposition: the communications, the website, the fund range, and the at-retirement options.

They made their selection. They chose the provider that was able to demonstrate the true value of their overall proposition to members as well consistent performance. At the end of the process, we documented the exercise, the outcomes, the evidence and the decision. This is a useful tool to bring everything together and look back over a project.

Key learnings

• Value is not just about cost. It can often be hard to define, but a thorough review and selection can help challenge providers to truly demonstrate the value in their proposition.
• Asking lots of questions helps to get under the skin of a proposal and to challenge what is being presented to you.
• Documenting the process and outcomes is a useful way of reviewing a project and the objectives it has delivered (if it has!). It is also a handy audit trail.