Are traditional consulting services still relevant?
David Burke: The core stuff that we’ve been doing for 20 to 30 years is under stress. There’s no question it’s under stress. And it’s our collective challenge to make sure we continue to grow this business.
David Krieger: What can we do as a profession to ensure that we are helping our clients really identify the link between their benefit plans and their business strategies? If we can do that I think we’ll be adding a lot of relevance.
Sarah Beech: How can employers illustrate that we are adding value to their bottom line? It’s not just about a benefit program or a pension plan but it’s about running an entire business. We’re going to have to be more relevant from an overall business perspective.
How large a part of your business is outsourcing?
Pierre Chamberland: In our case, outsourcing is about 50% of the business, so it’s a very large part. It’s very much part of the consulting business and it’s something that’s core to us.
Beech: We’ve been involved in benefits outsourcing for over 15 years and I think absolutely it is a core to our business. What we’re seeing is the evolution of outsourcing.
Jan Grude: The dominance of outsourcing over professional advisory services—we certainly feel that tension inside our firm. From the consultant side we hear: ‘Are we more important? We’re more profitable.’ Which is typically true because margins are very tough in outsourcing. And yet consulting is in a lower growth type of sector. Then you’ve got the outsourcing side. Contracts are larger and the use of technology tends to be highly efficient. The margins are thinner but you can grow your business more quickly with outsourcing. The real challenge inside our industry and in serving clients is not to let the internal tension affect the way that we provide service to clients.
Burke: We jumped with both feet in the outsourcing business in the early ‘90s and we decided, ‘not for us,’ and we actually got out of it. However, we never got out of the pension administration business and it remains important for us today. But it’s wrapped around the use of technology.
With all the new service areas consulting firms are becoming involved with, what has your industry done to avoid and identify potential conflicts of interest?
Krieger: From what I can see within the profession it’s one of the biggest challenges. It’s safeguarding our reputation, our credibility. Nothing, to my way of thinking, is more important. I think the answer to your question is, there’s been very little done. We’re very self-regulated and there’s really not from what I can see huge guidelines on what you should do to make sure that one is operating appropriately.
Beech: We historically had a great deal of transparency about what we did in the services we were providing. Sarbanes-Oxley has required us to be completely transparent and have all the audits, to have all the guidelines before any work is begun or continued on behalf of the client.
Ashim Khemani: How does our industry get compensated for the services that we offer independently of doing compensation consulting? The principle is disclosure.
How is technology changing the things you do and the way you do them?
Krieger: Is technology the horse or the cart? Is this technology responding to needs that our clients have? Or is technology being created and people are running to it? To my way of thinking, technology needs to be the cart, not the horse.
Kevin Aselstine: If you can harness technology to provide better information to make better business decisions, it helps us as consultants so we can focus more of our time on the actual consulting. I think it helps our clients as well. I’ve seen a number of clients who are looking at building HR dashboards to help make better business decisions. Information that would take weeks and months to collect in the past can be accessed instantaneously.
Beech: With technology the answer to ‘Can we do this?’ is always ‘Yes.’ The key is how much money does it cost, how should it be built, what is it going to do in the end? And the differentiator is the thought behind it. How can it be leveraged going forward? What are the multiple uses of it? Where is the client heading?
Grude: As a firm we are less efficient in our consulting business at using technology for our own internal processes than we are in driving efficiencies for our clients. Their demands are far outstripping our ability to actually deliver fast enough. We’re driven by what our clients want more than anything.
How are plan sponsor expectations of you changing?
Burke: Whenever I do regular feedback sessions with our clients, the most important thing we always get back is, ‘Know my business.’ I think that’s probably always been true but I think it’s only getting more true.
Chamberland: I think they are always looking to us to see what’s new on the market. And clients are expecting us now to look at new solutions, introduce to them solutions that we might not have thought about years ago. They aren’t looking for salesmen.
Khemani: One [expectation] is very simple and very relevant. It’s ‘listen.’
Aselstine: More and more clients are saying, ‘Bring me the right team. I’m not expecting you to be my trusted advisor on everything. I’m expecting you to understand my business well enough to know when to bring in additional resources and what additional resources to bring to the table.’
Grude: As much as we like to tiptoe around it, one thing they are going to expect us to address is the crisis in DB pension plans. We have problems with funding and risk asymmetry. I’m not sure we’re touching it on their behalf. We’re certainly [addressing it] on a client-by-client basis. But in the private sector they are in severe trouble.
What criteria should plan sponsors use to select their consultants?
Khemani: To be able to demonstrate value in a manner that’s personal to their organization in a very tactile and tangible way. I think that’s the outcome they should ask us to prove to them.
Chamberland: Obviously experience and cost are at the front. I’d always ask for references when I would be looking for a new consultant and not only references from the firm in general but from the team that’s going to service you. And clients should not be afraid to put the consultant in face of a practical problem and ask for a solution that would show the creativity of the consultant.
David Czuczman: The criteria that I think plan sponsors should use is to find the best match for the organization: and that’s based on technical capabilities, talent services, and product offerings. Plan sponsors should isolate the best match based on those criteria and then negotiate.
Grude: I still think the number one measure for a consultant’s performance is: on time and on budget. It’s amazing the extent to which that’s not the case in many industries.