Let's call ITT off! | KPMG | UK

Let's call ITT off!

Let's call ITT off!

AKA a better way to choose your advisers

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Every few years or so, I need a bit of building work done on my house. I know I can’t do it myself so I call in an expert. I might be spending significant amounts and I have to live with the results, so I want to choose wisely. How do I go about doing this?

I’ll probably google what I want doing, find someone who looks professional and experienced, and has examples of doing similar work well (ideally with client testimonies that I can see or follow up). I’ll ask them to pop round, get their views on what I’m planning, see if they can suggest any improvements and ask them for a quote.

What I don’t do is send out a 100 question RfP asking them about their company history and their approach to plastering walls, score their answers, ask them to send through a PowerPoint presentation and interview them (I might meet the MD but not the guys who will actually be doing the work – they’d never be let near a client until they’ve signed up).

I’ll assume anyone I see can technically do the job – what I’m really looking for is evidence of how they can assess my requirements, deal there and then with my queries and suggest better ways of doing it. So long as the fees seem reasonable, they’ve got the job.

And yet…is my situation really that different to when Trustees are looking for new advisors?

OK, I accept my analogy is not perfect. As a Trustee I’m looking for someone for the long term, not a short term project. Perhaps a better analogy is finding a builder to go on a retainer for my portfolio of buy to let properties (I wish). So I do need to know we can work together and there is a good cultural fit and level of trust between us.

However, I do still have a real concern that the tried and tested approach is failing everyone, and that Trustees are not ending up with the best advisers for their situation. There are a number of reasons for saying this:

  • Producing a response and learning a script for a pitch is expensive, clunky, an inefficient use of time and doesn’t teach you anything about the adviser. Ultimately this cost probably has to be passed on to clients in some form.
  • I suspect that not everyone reads the responses fully (and I probably wouldn’t blame them – they are often the size of telephone directories); so it’s a double waste of time.
  • A written response rarely captures what advisors are like to work with in practice – which is what you will be buying.
  • Does a 30 minute presentation really tell you what someone is like? Can you gauge their depth of knowledge, their own views, what they would do when faced with a new situation? Are they simply good presenters?
  • We are often told “you were the best candidate on the day…far better than the other presenters… best proposition”… but we still don’t win. This is usually because we haven’t met you before the pitch and the Trustees just don’t feel they know us well enough to take that leap of faith (understandably, after only 30 minutes of knowing us!).

So what might an alternative approach entail? My suggestions include:

  • Spend the time instead meeting and talking to possible providers – forget the RfP! Even the basic data around firm history and people numbers – does it really matter?
  • Give them real time to discuss their ideas, ways of working and possible solutions for you. Ideally this would be 2 to 3 hours. I know it sounds a lot, but only then can you really assess their ability, expertise and what they would be like in meetings advising you. No genuinely interested provider would object to this, trust me. And you will be saving much more time than this as you no longer need to draft an RfP, mark it and so on.
  • If you like, even meet them “blind”. Only show them your situation and objectives there and then. That will really test how well they can deal with the unexpected, as opposed to trotting out a house view or scripted lines.
  • Alternatively, send them enough information to help them suggest what they would do instead – and give them time to properly walk you through it.

I honestly think this approach adds no more time for Trustees, and probably involves less time overall. I can tell you the bidders will be weeping with joy at being able to genuinely show what they can do for you. To be clear, there is still a role for independent advisers to help identify candidates, check the hygiene factors of the firms involved and sit in on the discussion if required – in fact, that may keep the presenters “honest”. And you will probably get more out of their involvement as a result.

Builders and actuaries – we’re just the same really!

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