Step up to the platform

Benefit platforms can transform the way a client views a corporate adviser\'s service offering. Helen Monks checks out what to look for under the bonnet when choosing your platform provider

Corporate advisers’ choice of online benefit platform can have a huge impact on the success of their client relationships. Choose well and advisers can help integrate their clients’ entire HR, payroll and benefits functions, boost take-up and bolster staff retention, a service that can be of huge importance to SME clients in particular.

Choose without due research and an intermediary risks introducing a disappointing system that requires unexpected manual administration and expensive updates.

By not choosing their platform partners carefully, advisers might also unwittingly risk introducing a rival benefit consultancy, with the technology recommended acting as the Trojan horse used by a competing firm to ride into your client’s business.

The scope of online platforms can incorporate a number of key functions including pension enrolment and management, flexible benefits and total reward communications, not to mention absence management and affinity schemes. Platforms linking HR and payroll with product providers can also incorporate an intranet website for employees.

There are a number of leading lights in the field, some specialising in approaching corporations direct and selecting a few large advisers to partner with, such as Vebnet, while others offer technology-only services to advisers, such as Staffcare. A third hybrid category is those companies that can supply technology to advisers whilst also running their own advisory operation, a camp that houses Thomsons Online Benefits.

So what does the platform novice look for when deciding where to spend his technology pound?

The look and feel of the employees’ experience of a platform and its manifestation on a company’s intranet is undoubtedly important in propping up take-up rates. But experts warn that some advisers are at risk of being hood-winked into buying-in systems that have an impressive member-facing side, but in reality have less than bedazzling functionality.

David Birch, head of sales and client services at Aegon Benefit Solutions says: “There’s a lot of smoke and mirrors in the way systems are often presented. Most advisers would not describe themselves as technical experts and the fact is anyone can build a few screen shots showing a total reward statement, for example.

“Many platforms can end up seeming the same, so what advisers really need to do is understand how a platform works not in terms of what the employee sees, but how the back office works. Is it really capable of doing what the salesperson says it can, or is it going to leave you with disappointed clients?”

Advisers need to be confident that behind the scenes a platform’s functioning does not rely heavily on manual data input, for example, and that all parts of the system – the client, the adviser and product providers – can swap and use the same data with ease.

Alistair Denton, managing director of Motivano says advisers need to be clear on the way in which data is imported and exported between scheme providers, the platform and the intermediary: “Something as simple as asking what format files are in and establishing how far they are compatible with the other links in the chain can prevent problems later on.”

Ian McKenna, director of Financial Technology Research Centre says intermediaries should also factor into their platform decision-making how many product providers have feeds into the system: “Ask which products are linked and also whether their information is being delivered in a standardised format,” he says.

In the absence of hiring in a technical expert to sit in on platform presentations, advisers can cut through the sales puff by asking for a series of nuts and bolts demonstrations.

Instead of simply being shown what the member sees, Birch recommends asking the platform consultant to take advisers through exactly how the system deals with joiners and leavers, how the platform might generate management information reports using the data held in the system, and how someone using the system might change an individual member’s eligibility status, for example.

Marcus Underhill, a director at Vebnet says: “There is a real need to be absolutely clear that the platform will do exactly what it says on the tin. You need to have clarity on what you expect the scope of the system to be.”

Underhill’s suggested questions include enquiring whether the system has a single sign-on capacity, which means individuals do not need special access codes or passwords to each different element of platform, but can just log on and then access all their benefits information.

Once you have established the nitty-gritty of what a platform promises and how far it can deliver on this, Underhill says advisers must then look at other differentiators: “These may include experience, customer service levels, degree of automation of processes, client turnover, breadth of product and innovation.”

One further point Underhill makes is that he expects consolidation of platform providers over the coming year and suggests advisers should factor this into their decision-making to avoid any future upheaval: “Financial security is important. There are some loss-making providers out there who are not growing and so they will either fold or be sold. IFAs need to protect themselves against this,” he says.

One or more provider?
Phil Hollingdale, chief executive officer of Staffcare says among the earliest decisions advisers must make is whether or not they will work with a panel of system providers or work consistently with just one provider.

He says many advisers place great importance on the notion of them being independent of one provider, but argues the value they attach to this is misplaced: “Some advisers feel the independence element is important and would rather have a mish-mash of providers, but I can’t really see the benefit of not working with a common platform for all your clients, where you can, for example, instantly message all the relevant members across all schemes with year-end tax news, or new products and services.”

Birch argues that how clients perceive an adviser choosing one provider over using a number of suppliers depends on how the adviser presents it: “It could be important to the adviser to be seen to be independent technologically, but if they found one they liked and wanted to stick with, they could say they’ve worked with a number of systems and having compared them on the clients behalf, have gone for this one preferred system as part of their role as an advisor with a technology partner.”

Birch highlights one further problem for advisers who outsource their administration: work with three different systems and they will have to train staff three times over.

Opting for a platform that allows advisers to white-label as their own is one way of quashing questions of independence before they have even formed in a client’s mind.

Hollingdale says: “With a white-labelled platform you can go to market with something in your own brand that is part of the solution. It’s like going to your bank and asking for online banking: they don’t say to you, do you want the Dell or some other system, they say, “You bank with us and this is it how it works”. It’s cleaner this way and clients prefer a one-stop-shop approach.”

Also, should advisers decide to go for the white label approach, they can then know their logo is going to be on employees’ desktops, which can prove a powerful foundation for the process of getting employees’ hearts and minds. Finally, advisers must be realistic over how far they are capable of mastering the inner workings of more than one system and maximizing what those platforms are capable of doing for clients.

It may be better to get to know one solid universal system very well than getting to know three systems which seem perfectly tailored for three different clients less well and fail to help them get the most out of their platform.

Comparing costs
There are essentially three main ways platforms are priced: on the basis of the initial, physical set-up, on the license fee for each employee and through ongoing servicing fees.

While a platform provider’s basic package may seem well-priced, advisers need to be confident that costs are not going to creep up if the system needs updating.

If, for example, a client re-brands and wants their new logo carried over the employee-facing plank of the platform it may be the only way this can be achieved is to pay someone at the provider to upload the new look. In this situation it might be worth thinking about alternatives.

Birch says: “Ask the platform provider how reliant you and the client will be on them to change things. Will you have to pay someone £200 an hour each time you need a change, making the basic package you bought not as cost-effective as you’d originally thought?”

Benefit consultants, having established with clients the required scope of any system, need to know the precise cost at each stage of implementation and also likely costs into the future.

Underhill warns platform-shoppers to be wary: “Beware of hidden costs. Nothing is ever free. Get the provider to give references of other IFAs to see if they are happy and if costs met their expectations. Ideally the IFA should get a breakdown of not only what is included but what is expected of them. An inexperienced adviser may be committing themselves to do something that they cannot and ultimately they will pay the provider more to fix.”

Areas where problems of this nature might arise include the development of the interface between the respective parties feeding into the platform.

To help unearth how far a platform is value for money and how innovative or otherwise a provider is, Underhill also suggests that advisers ask what would a client get for a 50 per cent more expensive system than the one they want and one 50 per cent less expensive to indicate where the value lies.

He also adds that advisers should ask if upgrades are free: “At Vebnet we have for three years now released new functionality quarterly and given this to all clients within their license fee agreements. So our license fee really does cover innovation,” says Underhill.

Where price might be a problem for clients there are options to consider which can get around this obstacle.

For example Aegon Benefit Solutions’ package includes one where the technology is “free” upfront, with the cost then built into the annual management charge: “Instead of 0.7 per cent, the AMC will be 0.75 per cent. It’s a great tool to get over the barrier of financial director sign-off where budget is a big barrier,” says Birch.

Riding the technology Trojan horse
Being able to recommend a platform to a client business, in particular where that business is in need of technology that can bring together disparate functions like payroll, absence management and benefits, is an obvious win for a corporate adviser.

“It’s a softer route, getting the technology in first and then taking on the benefits once the IFA is nicely positioned. The platform can be a great door-opener”, says Hollingdale.

However, some experts argue letting competitors near your client can be something of a Trojan horse.

In recent years there has been debate over how far platform providers use their technology, as introduced by an adviser, as a foundation from which to launch their own bids to then take over the advisory element of the business, usurping the original intermediary for their own consultants.

Hollingdale believes some employee benefit technology providers are actually more interested in providing benefit consultancy than technology, and are benefit consultants by the back door. Birch also agrees this goes on.

Tony Nevin is managing director of Serenity Flex, a firm specialising in benefits strategy consulting and which works with advisory businesses as outsourced flex and platform experts. His clients include IFAs with between 20 and 200 consultants and he also says many of these partners have found themselves in situations where business risked being poached by a platform provider.

If there are gaps in a firm’s expertise and the business seems vulnerable to poaching by either technology providers’ EBCs or any other, then calling in an extra set of expert hands might help your business ride the technology Trojan horse: “Working as a white-labelled expert contractor, if technology providers pose a Trojan horse, then consultants that can oversee the process might be seen as white knight riding it for IFA businesses,” says Nevin.

The 100 per cent watertight way to protect yourself from Trojan horse issues of this sort is simply ignore any platform provider that also runs an employee benefit consultancy.

Alternatively, it may be possible to incorporate such businesses into your platform decision-making process by being absolutely clear what is expected from the relationship.

Motivano’s Alistair Denton says that to avoid future conflicts and to make the most out of your partnership, clear communication is crucial: “Be clear about each party’s responsibilities from the start.”

But is this in fact over-egging the problem, when it could be argued that technology and consultancy hybrids would be mad to poach clients, as they would stop getting new business?

Michael Whitfield, managing director of Thomsons Online Benefits says: “Relationships are all about trust, and with the likes of the partners we work with, such as Alexander Forbes and Jelf, there is no question of us trying to take existing clients away from them.

“However, if we’re going up against each other for new business, then it’s fair game.” Whitfield also adds that his firm’s relationships with IFA partners are backed up by contractural agreements, and bullishly makes the point that he would not actually choose to partner with many corporate advisers at this moment in time: “If some of them are so worried about platform providers coming in and taking the business away from them, they have to ask themselves why are they vulnerable. So many corporate advisers are product peddlers whose businesses are not ready to work with a platform, they only pay lip services to it. We only want to work with solution- and service-focused partners, not box tickers.”

Future platform trends – amazon in the office

“You will be seeing a lot more profile recognition and associated professional messaging”
Phil Hollingdale, chief executive officer, Staffcare

Looking ahead, advisers should watch out for a number of innovation trends in platform technology and factor them in when weighing up their options.

Hollingdale says we can expect to see a more Amazon-style approach to worksite marketing: “You’ll be seeing a lot more profile recognition and associated promotional messaging, something akin to when you buy something from Amazon and it says something like: “People like you also like this,” and make a further suggestion.”

An example of this working in practice might be that an employee adds a new dependant to their profile. On recognising this, the platform might send a prompting message to both the adviser and the employee to open up a discussion on, say, life insurance or school fees planning.

Underhill agrees the future of platforms will be about evermore personalisation of the employee’s experience: “How do you make the consumer experience different? Segmentation of audiences will continue to develop where there is different content and tone of voice for different groups of people.”

The rise of social networking through sites such as Facebook will also continue to influence platform development, with Hollingdale predicting greater staff communication through those systems which build-in Facebook-esque facilities: “Communications around who’s doing what when increases eyeball time and gives the adviser greater market intelligence, you can know what people are looking at and how long they are staying to look at it,” he says.

In the coming years, experts also predict there will be a far greater emphasis on employees being made aware of their retirement options, possibly backed up by a legal imperative, making the role of platforms in enhancing take-up even more vital: “It might not be that far-fetched to imagine a time in the future when those who failed to join their employers’ pension scheme go on to sue their bosses for not communicating how important it was and how they’d be losing out,” says McKenna.

McKenna also expects there will be a greater focus on the capacity for platforms to help self-educate scheme members about their pensions and benefits choices: “Members will be given a number of options and the adviser will come further down the line. This isn’t a threat to advisers – it’s just about working in the most effective way.”