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The Actuary The magazine of the Institute & Faculty of Actuaries
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IT: Size isn’t everything

Small and medium-sized actuarial and pension consultancy firms often market themselves under the aphorisms that there are “horses for courses” and that “biggest is not always best”. Both of these may be true, but can smaller consultancies really match the quality of service of their larger, better resourced competitors?

Smaller firms may aim to provide a personalised, bespoke and committed service. However, prospective clients will or should quite rightly ask whether they can really offer more than the core actuarial services in order to advise them on all aspects of pensions.

The experience of the consultants is a key element in answering this question, but what about resources? The UK pensions environment is subject to ongoing, often daily, developments involving changes to legislation, landmark cases, ombudsman’s decisions and the issuance of new codes, not to mention the plethora of reports, surveys, industry statistics and so on. Can they keep up?

A decade ago, smaller consultancies would have had real difficulty answering such questions, as they could in no way match the information resources available to larger firms. However, IT developments over recent years, including the falling costs of hardware, have fundamentally changed this proposition. Additionally and paradoxically, smaller concerns can often take advantage of technological advances more easily than a larger, established business with their enterprise-wide networks and sometimes complex computer protocols.

As with many things in life, though, the medium alone can not produce the message — access to the world wide web in itself will not ‘cut the mustard’ today any more than the purchase of a copy of an act from Her Majesty’s Stationary Office would have done 10 years ago. And, again, there is good news for the smaller consultancy in that the last decade has seen an exponential growth in the availability of electronic pensions information providers. With the connectivity of broadband, remote working — the mode of choice for many smaller consultancies — is both feasible and practicable.

The real challenge for the small consultancy is to ensure that consultants are kept fully up to date with legislative changes, products and trends. One option is to subscribe to Perspective, which is perhaps the single most comprehensive electronic information service available to the UK pensions industry. Access to it means that smaller firms are working with the same electronic resource that is used by many of the largest UK consultancies. It is also significant to note that most electronic pensions information services themselves cost in proportion to the scale of their clients’ operations. So although the cost-per-user may be higher, the absolute costs of subscribing to the service remain manageable.

With the availability of not only of a wealth of information but also the functionality that would previously have been the full-time occupation of a substantial research department, today’s consultant can concentrate on serving clients and developing their business. Besides which, most consultants entered their profession to advise clients, not to be researchers.

For consultancies that are not yet subscribed to an electronic pensions information service, I would suggest that they critique prospective suppliers on the following criteria:
>> Range of source material on offer
>> Functionality: searching, cross-referencing
>> The breadth and speed of availability of significant news and apposite comment
>> Provision of daily updates and e-mail alerts n The offering of added-value notes and cross-references
>> The ability to link with or even incorporate internal information/documentation.

In general, it is good business and sound management to be info-savvy, and in our business it is a fundamental cornerstone to almost everything we do. I would strongly suggest that this is an area to which my counterparts in similarly sized consultancies should pay close attention.

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Gary Tansley is a senior actuary at HamishWilson