Are pension and benefits consultants losing out to technology, or do employers still value the human connection?

We live in a digital age where we are bombarded by information at lightning speed. For many of us, it’s a struggle just to get through all of our email each day. But technological advancement also means better access to data, automation of laborious manual processes and outsourcing of HR functions so that companies can focus on their core business.

How do consultants fit into the equation? With increased use of technology, are they becoming obsolete? Or is there still a real need for them to interpret data, make recommendations and partner with their clients?

Meet the consultants

  • Sarah Beech (SB), president, Pal Benefits
  • Nigel Branker (NB), partner, Ontario pension consulting leader, Morneau Shepell
  • Tim Clarke (TC), SVP, chief innovation officer, health & benefits, Aon Hewitt
  • Renée Couture (RC), national retirement practice leader, Buck Consultants at Xerox
  • Nic Crook (NC), managing consultant, Towers Watson
  • Rick Holinshead (RH), senior partner, Mercer
  • Jill Wagman (JW), managing principal, Eckler

With the push toward greater use of technology, is face-to-face communication with your clients still important?

RC: Absolutely. At the end of the day, we’re human beings, and there’s still always a need for a contact.

NB: The face-to-face personal touch comes in when we’re a strategic partner who can interpret results and recommend solutions. I believe that’s where we’re more valuable but also understand the pressure from clients to have web-based tools so they can do some analysis on their own. We have to be nimble and adapt to that but still highlight the value we bring through the personal touch.

NC: I would say face-to-face communication is even more important now than it ever has been. I think we have moved to a world where email has become the norm, and it’s pretty easy to exchange information. But there are a lot of subtleties, and people will generally spend a lot of time providing background and interesting information about their business challenges and what’s going on within their companies if you’re face to face with them. So if you’re intending to have a long-term relationship, you really need to be getting together with people face to face.

What about communicating pensions and benefits to employees?

JW: Face-to-face communication remains the No. 1 way to engage employees. Despite the amazing tools and user-friendly sites made available to employees, take-up rates still remain extremely low. Technology makes things easier and faster, but it can’t be used in isolation. Other forms of communication—and especially face-to-face—are crucial to building employee trust, understanding and buy-in around benefits changes and actions required.

RH: Technology is being leveraged to a great extent with plan members and their families, but face-to-face communication with plan sponsors, benefits committees, etc., is still critical to cascade information, rationale for any changes (financial or design), etc. The cautionary note is that not everyone is—or wants to be—tech-savvy. Mobile apps, for example, can have a limited uptake in certain organizations or employee groups.

RC: Face-to-face, for members, is difficult because more and more, people will be spread [out]. There will be people working from home. So I think it’s going to be a challenge for face-to-face to be really a part of solutions in the future—and I think the beauty of technology is that it complements what we can do face to face.

Is it harder to be a consultant today than it used to be?

NC: Probably. But I would also say it’s more interesting and rewarding than it ever has been. If I think about the business challenges and opportunities that our clients face, they’re more complicated, interconnected and global than they ever have been, so that makes our assignments all the more interesting.

RH: I’m not sure I would say it’s harder to be a consultant today, but it’s very different than it used to be. Consultants, in my view, have evolved from being technical experts and advisors to a role of business partner. At one time, consultants were the sole resource for plan sponsors to access benefits information external to their organization. Now we’re almost like a traffic cop, seeking out the best in class in many different disciplines, bringing them together, filtering what they have to say and then translating it for the client’s circumstance.

SB: It’s more demanding. I think the speed of technology has also created that. I can get an email anywhere and respond. So the demands of the business world are just that much greater that, being on the service side of things, there are increased expectations on timing and ability to solve problems.

How has the consultant selection process changed over the years?

NC: It is probably more complicated than it has ever been. The number of stakeholders that we are meeting with—to try to both understand their perspectives and figure out what it is that they want—is ever-increasing.

RH: Procurement is a new sheriff in town, often guiding the process of consultant selection. As well, many organizations— especially in the public sector—are completing due diligence regularly at predetermined intervals.

SB: Many organizations rely on procurement to source anything the company buys— be it pens, pencils, paper, heavy machinery, or lawyers or consultants. So that becomes challenging because, on paper, one consulting firm may look very much the same as another. And really…it’s the trust, it’s the relationship, it’s the knowledge base that differentiates all of us.

Are consultants feeling the pressure from clients on costs?

TC: Definitely. Most organizations only want to spend money on the things they need to spend money on. But in my experience, it’s less about being concerned with the specific hourly rate involved and more about that balance between what an organization can do internally and what you need the consultant to do for you.

Being conscious about having your consultant do only what’s needed is the more successful way to keep your fees to the right level than to insist on using a junior consultant at a lower fee or to go with a firm that’s quoting a lower rate. It’s more about defining your scope really well and managing your fees that way.

No one wants to spend more money than they have to, though.

SB: If you’re not able to show value, then there’s a lot of pressure on cost. And when I say ‘value,’ it’s not just about getting the lowest rates; it’s about being proactive. Providing design solutions, providing alternate financial arrangements. Being able to discuss the health and well-being of your workforce, not just tactical benefits. I think there has always been an onus on any professional service provider—be they lawyers, accountants, consultants—to illustrate that they’re providing value on their client’s behalf.

If you don’t have a relationship, then you become a commodity.

Are you finding employers to be more or less involved in employees’ pension and benefits decision-making?

NC: Certainly, employers are becoming far less paternalistic than they ever have been, but I think we’re starting to pick that up by having an emphasis on education. We clearly can’t tell people what to do, but we should be able to give them tools—notably some fun things online—games, videos; things that are a little bit more relevant today than perhaps a brochure in the past. We can give them those types of things to help educate them and enable them to make good decisions.

RC: I still believe that it really depends on what your company culture fosters. Some companies are still a lot more hands-on, and the structure of the decision is kept at a higher level. And then you have the different [corporate] cultures. Whether or not there are more that are enabling their employees to make decisions, I’d like to believe so, but I can’t say that I’ve necessarily seen [it].

JW: We are seeing the trend reversing from offering a great deal of choice to offering little or no choice. The vast majority of employees prefer not to have to engage in making pension or benefits decisions, as evidenced by the proportion of them that end up in the default option where choice exists.

Do you think there will ever be a time when employers don’t use pension and benefits consultants?

RH: Never. If they don’t look to pension or benefits consultants for that expertise, where would they look?

That said, I guess there are two places they could look. One would be within their organization, but it would be virtually impossible for them to have the expertise, experience or broader perspective internally that an external advisor looking in can have.

The second player is possibly the insurance companies…but their advice—in my view, anyway—may be somewhat biased or skewed by virtue of the fact that it’s generally based on just their own portfolio of business.

JW: Optimistically, no. The pension and benefits world has become very complex, which makes it a challenge for employers to manage on their own. It’s also increasingly difficult to get unbiased, independent advice. Changing regulations, a better understanding of risk and lots of new plan design options continue to support the need for professional advisors to help plan sponsors maximize the value they are getting from their pension and benefits programs.

NB: It’s a risk. As pension consultants—and as actuaries in particular, where we’re all about managing and quantifying risk—we need to ensure we remain relevant. We need to continuously demonstrate the value we bring and be willing to reinvent ourselves to meet evolving client needs.

Do you find more employers are outsourcing all or part of the HR function?

SB: From a larger employer perspective, yes. There’s a cost/benefit model to it, though. For a mid-sized client—even for a 1,000-life organization or 1,500—you’re at the tipping point of where it can be very expensive. You still need people on the ground to support your people. So outsourced administration can become an additional expense.

TC: It does vary by business, in terms of how much they want to have that personal touch and be directly connected to doing administrative tasks. But certainly, the direction for a lot of employers is to outsource the process-driven tasks that take time and energy away from the HR activities that provide the most strategic value to the company.

NB: In a world where HR is being asked to do more with fewer resources, what we see is more outsourcing of the tactical or transactional aspects of their job. This means they can focus on adding strategic value and acting as key business partners within their organizations.

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