In an increasingly complex financial world, employers and their staff often have a range of needs, not all of which can always be met by a single adviser or product provider. CLICK FOR ROUND TABLE SUPPLEMENT PDF
The Covid-19 pandemic has thrown a new spotlight onto this ongoing problem, with employers now more aware than ever of the need to help encourage financial resilience among their staff, as well as providing comprehensive pension and protection benefits.
For advisers and consultants, the question is how they can offer a robust employee benefits package to all staff, that draws on the best expertise and products available in the market, but that is also cost effective for both employer and provider. In order to achieve this, many firms are increasingly looking to step out of their silos and collaborate with other organisations and specialist services, rather than try to provide a one-stop shop that may fail to offer certain services and benefits that are deemed unprofitable.
At a recent Corporate Adviser round table event delegates discussed how more effective signposting could help deliver a better service for clients, and a more value-rich proposition for advisers and consultants, without damaging the business model of the entity with the client relationship.
Those attending the event agreed that better use of signposting could benefit both the consultant and client. Cavendish Ware associate director Roy McLoughlin said a more collaborative approach could help extend the reach of employee benefits in a number of ways. This, he said, might include partnering with organisations that can offer a wider range of employee benefits to all staff, not just the director and senior managers who are more likely to be offered higher premium products, such as private medical insurance, wealth management and more sophisticated pension and investment options. Rather than risking losing clients to other organisations, a collaborative approach can deliver a better solution to the client, strengthening the bond with them, and generate revenue and clients, he added.
Signpost solution
McLoughlin said more effective signposting could also help open up the door to providing employee benefits to smaller businesses. “This is a vast market and is currently underserved. The majority of employers in the UK are smaller businesses with an average of 10 or fewer employees.
“There is a real opportunity, and a need here, to help ensure parts of the market that have traditionally been forgotten can be served better.”
A number of the consultants and advisers attending the round table event said they already worked in close partnership with other companies and organisations to ensure they were better able to meet client needs.
Vicky Quigley a director of Demna Consulting said: “We work with a number of trusted partners who we think are best-placed to solve clients’ needs.”
McLoughlin added that Cavendish Ware, for example, had a well-established business relationship with Premier Choice Healthcare, where clients enquiring about medical insurance are referred on to the firm.
Paul Chedzey, relationship director at WorkLife by OpenMoney agreed that collaboration can often be more productive for all parties than competition. He said: “Signposting to different companies and organisations is critical.” Chedzey said he would like to see such practices become far more widespread across the industry, rather than a more closed mentality, which can see some companies unwilling to share client information with other providers.
McLoughlin argued that these signposting arrangements can work for a number of different areas falling within the scope of employee benefits.
This can include individual financial advice, mortgage products, protection, general insurance, wealth management, legal and accountancy services as well as more specialist areas, such as life or business coaching, or advice on more sophisticated investment schemes such as VCTs and EISs (Enterprise Investment Schemes).
Steve Bee, director of WorkLife by OpenMoney, said financial advisory firms should not be concerned about signposting clients to the sort of advice service offered by his organisation. Rather than competing with the wealth management individuals derived from employer clients, his service, which targets individuals who are a long way from having sufficient assets to become typical IFA clients, is more focused on developing financial advice as a workplace employee benefit.
Mutual benefit
He pointed out that many people — particularly in a post-Covid environment — need help with debt management, budgeting and day-to-day saving. Yet those needing help with these issues typically cannot afford to access traditional fee-based advice. This may be more effectively delivered through the workplace, particularly using newer technology platforms, such as that offered by WorkLife, he argued.
Delegates at the event agreed signposting arrangements were beneficial to advisers and consultants. McLoughlin said: “Clients tend to look on these favourably. They think you are a good adviser if you can recommend a specialist, rather than try to be a jack-of-all-trades.”
Bee compared this role to that of a GP: with the adviser taking a holistic view of the needs of the client and their employees, and then recommending an appropriate course of action, and referring on to a specialist if needed.
Without this signposting there is the danger advisers take a more blinkered view and only initiate conversations about areas where they can recommend specific products or services.
Quigley said that the first role of a consultancy is to fully understand the needs of clients. “Once you understand where they need help, what the specific problems or issues are, you can then look at how this is best addressed.
“For us it is this first stage that ensures they, the clients, get the most appropriate solutions. This may be services provided by us, or by partnering with other companies. Partnering can definitely improve client outcomes but the starting point has to be the focus on client need.”
So how do such partnerships work in practice? And what are the potential pitfalls that consultants need to be aware of?
Partnerships in practice
There are a number of different ways in which these business relationships can be set up. Some, like the relationship between Cavendish Ware and Premier Choice Healthcare are done on a commercial basis where a referral fee is paid for clients passed on to the partner firm.
This can work well across the industry, providing a financial benefit to both parties. WorkLife for example, says it pays a fee for advisers and consultants for employees who get put onto their employee benefits platform.
Other relationships are not unpinned by these commercial or financial arrangements. For example, lawyers and accountancy firms typically do not accept or pay referral fees.
Quigley said Demna Consulting works with a number of trusted partners, but does not have any commercial arrangements
with them, so do not receive referral fees, when they have signposted clients to other services.
She said: “For us it is all about being independent. When it comes to sourcing products we are whole-of-market to ensure we find the best and most appropriate product for a client. This ethos also applies when it comes to any third-party firms. We want to use whoever we think is best placed to solve the client’s need, rather than be limited to a number of firms where we have commercial arrangements.”
Regardless of whether these partnerships have a commercial underpinning, all of those attending the debate agreed that to work successfully, they need to be based on trust between the two parties.
Premier Choice Healthcare managing director Claire Ginnelly said: “It has to start from a place of trust. If you are working in partnership with another organisation you need to know they will deliver on promises and have good customer service.”
Without this initial due diligence and trust there is the danger that your client does not have a good experience, which can impact the consultant’s reputation.
Ginnelly added that both parties need to have “regular open and honest conversations”. Good communication is essential to making these partnerships work and ensure that they deliver benefits to both clients and providers.
She also said it helps for advisers to have “some good working knowledge” of the whole range of services and products, even if they are then signposting clients to another firm for more detailed advice.
Making partnerships work
Ginnelly added that for partnerships to work well it is often a two-way process. This may include referrals both ways, but it is also about sharing MI and building up a more detailed picture of the client’s needs.
Ginnelly said that that this signposting doesn’t just occur with areas of business that a firm might not cover. “We arrange travel insurance for clients, but only work with a couple of insurers and providers.
“If we think a client’s needs aren’t met by those particular providers we will signpost them to a partner firm to ensure they are still getting the most suitable product and right advice.”
McLoughlin added that when these business relationships are working well, clients often assume they are talking to the same organisations.
He said: “I take it as a big compliment, when someone rings me and say they were just talking to a colleague of mine, but it is actually someone from Premier Choice Healthcare. This shows how well the partnership is working, that the different services we are providing for the client appear to be seamless.”