So, you’ve made the in principle decision to appoint a Professional Trustee. What, though, do you look for? How do you know what a good professional trustee looks like?
Knowledge, experience and professionalism should be a given. Here are some thoughts on other things to look for.
Pension schemes are complex and the rules around them change all the time, particularly at the moment. To stay up to speed and so to help you understand and mitigate the complexity and impact of change, your Professional Trustee must be immersed in it. They have to be doing this all day every day. If they aren’t they can’t hope to stay up to speed.
As mentioned above, the pension’s world is always changing. To cope with this and so to successfully steer your pension scheme towards its objectives a Professional Trustee has to be energetic and cannot be either arrogant or a luddite. They have to be willing to look for and take up new ideas: in technology, solutions and even language.
No one man or woman can know all things. Your Professional Trustee, however, has to try. This is made easier if they have the benefit of collective knowledge. This can come from all sorts of sources, but is, perhaps, most reliable, if it comes from within. Your Professional Trustee must have access to more than one set of ideas, values, opinions and training. A good trustee firm will have two things in this respect (a) people from a variety of backgrounds with a variety of skills and qualifications and (b) a mechanism for sharing this collective knowledge. If your Professional Trustee does not have this, you are at risk of being influenced and guided by one person’s prejudices and lack of knowledge.
Checks and balances
It’s said that being a leader is lonely, but this doesn’t have to be the case. As the chief executive of a plc will have the chairman to act as his council, so your Professional Trustee should have someone within his own set up that challenges and questions him. Provided that exists, his decisions will be better and his contribution to your objectives more sound. It should also act as a powerful tool to protect you against rogue and harmful decisions.
Pension schemes are very long term in nature. The problems and risks that go with them have a similar longevity. The best way to resolve a pension problem is to nibble at it consistently over a period of time. This means that longevity and the ability to be consistent are also important in your trustee board. To support that, your Professional Trustee must be sustainable: they must be a strong business and with a long term outlook. If they are not, your scheme will end up chopping and changing its direction – rather like a racing car zig zagging along the home straight.
90% of new to market products fail, most commonly because there is a failure to plan. Pension schemes don’t usually fail but they can fail to achieve their objectives. Your Professional Trustee must have a strategic mind: they must help you to identify your objectives and the different ways of achieving them. They must choose the most appropriate way and then execute the plan. They must also constantly review the plan because the economic, regulatory and social world changes. If they do not do these things you are at best treading water and, at worst, drowning.
Some other things to look for...
The regulator insists that trustees on its panel have an Audit Assurance Framework signed off by an independent auditor. This is now standard for all good firms, whether on panel or not.
You are going to be working closely with your Professional Trustee. You should be able to get on with them. A warm relationship is a more productive relationship.
Trusteeship is not an exact science, it is a subtle art. There is, therefore, no room for dogmatism. A good Professional Trustee will be able to demonstrate his pragmatism, to a prospective client, through testimonial.
Your Professional Trustee is the only professional service provider around your pension scheme that has the same legal obligations and risks, in relation to the scheme, that you have. This means that they have to be on the same side as you. You can make use of this. Your Professional Trustee can be your in-house powerhouse on pensions: driving the agenda and fixing the problems. But only if you buy the right one.