A New Consulting Model
What do all of these issues mean for the pension and benefits consulting industry in the future?
Given the ongoing emphasis on cost control, consultants say we’ll see stronger links between the finance and HR functions of a client’s business in the future, and consultants will help facilitate this. “I think that’s where we, as consultants, can play a very integral role—in helping to relate those interests,” says Pitcher. “Because, at the end of the day, they’re going to be different, but the end objective is very much aligned.”
To this end, it will become more important for consultants to provide comprehensive research and tools. Consultants say their clients are increasingly asking for ways to help them model the effects of changes to benefits and plan designs, manage continually escalating costs, benchmark their plans against the competition and measure their return on investment in pensions and benefits. “Given those overriding people and business issues that our clients are faced with, we’re being asked more than ever before for research—for guidance based on fact-based research and data, understanding trends [and the] prevalence of what other organizations are doing,” Beech affirms.
If finance becomes more involved in benefits-related dialogue and decision- making, a retail or consumer-based approach to benefits is another possible trend. In the future, some say, employers will act as facilitators for pensions and benefits but not necessarily payers. Their goal will be to share the costs—and the risks—of pension and benefits plans with the employees who use them. “On the benefits side, I think that we’ll continue to see the trend that’s shifting the cost to employees, but at the same time, giving them much more flexibility in the choice of their benefits,” Guay agrees.
And there’s a logical tie-in between viewing the employee as a consumer and attempting to influence employee behaviour in a positive way. Following the recent trend toward health and wellness in the U.S., consultants believe that we’ll see greater emphasis on prevention through wellness in Canada, too. “Rewarding for positive behaviours—we’re going to see more of that, but with a focus that is broader than that, so that rewarding for healthy behaviours is going to have good cost implications and good health implications,” Billinger adds.
Since the workforce is becoming increasingly diverse, strategies to better address multi-generational and multicultural needs will come to the forefront. Aselstine says that organizations will need to customize their benefits more in the future. “While one-size-fits-all is simpler from an administrative standpoint, it’s not the answer when you look at optimizing results,” he says. “So we are seeing a lot of organizations struggling with what is the balance between the administrative efficiency of one-sizefits- all versus the need to compete in the war for talent and have customization that recognizes the unique and valid needs of employees across some very different business segments.”
And, given the anticipated labour shortage, the employee—not the employer—will be in the driver’s seat. “The other thing that’s become critically important, that wasn’t part of traditional consulting, is understanding the employee perspective,” says Aselstine. He adds that it’s very important to anticipate and plan for employees’ reactions when considering changes to benefits or to the plan design.
Some of the changes that consultants and their clients would like to see will only be possible through legislative reform. Pension consultants and actuaries won’t say exactly what they’re expecting from the Ontario Expert Commission on Pensions and other related initiatives. But they’re hoping for increased flexibility from a plan design perspective and better harmonization of pension legislation across the country.
Pitcher, for one, is hopeful that the various commissions’ results will open up room for alternative vehicles—for example, flexible pension plans, hybrid plans and the new tax-free savings account. “What we’re looking for, from the legislators, is having an environment that will allow this creativity to flourish.” More flexible legislation would give plan sponsors more options for designing and delivering pension benefits. “That’s what most of us in the business want,” says Burke. “We just want plan sponsors to be able to have a reasonable choice of vehicles that best meet their needs and not be driven one way or another because of inappropriate regulation or legislation.”
Steve Gendron, principal with Eckler Ltd., is also optimistic that we’ll see some tangible results. “I think everybody’s on the same page; it’s just a matter of getting some consensus. I think it’s going to be an interesting time over the next three to five years, as to how we all go about achieving that common objective.”
The business model for pension and benefits consulting will also evolve into a more open and collaborative approach, consultants say. Since clients are looking for help with a wider spectrum of business issues and HR challenges—which may involve diverse areas such as communication, administration, compensation and total rewards—a range of resources will be needed. This means we’ll see more collaboration between different providers in the future, even if they’re direct competitors. “We may, as firms, compete with one another for a client’s business, but at the end of the day, we all have a common interest,” says Pitcher. Consulting firms will need to work more closely with other consultants, insurers and service providers because their clients will demand it. “It’s for the best interests of our common clients,” says Guay. “So we won’t have the choice— we’ll have to work in collaboration.”
The benefits for the plan sponsor are clear. But if the consulting business is truly all about the client, then all parties should support this shared model. “If we’re all there for the same reason— which is to provide the best solution we possibly can for an organization,” says Billinger, “then the solution is going to be superb.”
Create a co-operative environment in which competitors work together to solve a client’s broad-ranging business issues? Now that’s a bright idea.
Alyssa Hodder is managing editor of Benefits Canada. alyssa.hodder@rci.rogers.com
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© Copyright 2008 Rogers Publishing Ltd. This article first appeared in the August 2008 edition of BENEFITS CANADA magazine.
