My Thoughts

These short pieces are prompted by various pieces of news and how I feel that they will affect the Corporate Pensions community. Please feel free to send me any thoughts and comments that you may have.

Thursday 10 December 2009

Is Big Always Beautiful?

As I look at three mergers which affect the corporate pensions environment, I am asking my self - Is this in the best interest of the clients?

The mergers that have brought this to the front of my mind are BlackRock/BGI, JLT/HSBC Consultancy and a little longer ago Towers/Watsons

One of the benefits of merger put forward is the improved economies of scale. I wonder whether these benefits are passed on as lower fees or retained as higher profits?

There will undoubtedly be the opportunity for the new management to ensure that the best talent remains and that this can lead to improved offerings to clients. Of course there are no guarantees that these people will stay after the merger - times like this are great opportunities for head hunters - but every effort will be made to identify and retain the key people.

The mergers can also mean that, if there is real synergy, there can be a wider range of services to offer clients. One stop shops can be very convenient but each of the services may not be the best of breed. There will also be increased pressure to sell these new services to the clients.

There will be some upheaval within the organisations as they are merged and the various processes revised to match new working practices. The largest clients will be targeted to ensure that they are kept fully up to date with any changes. However, it is more difficult to ensure that this level of communication is maintained down to the smaller clients and they may feel that their service has declined.

There is no way we can predict how successful any of these mergers will be - what we can be sure of is that clients will see a change in the service that they receive. For this reason they should monitor the service they get and then review their findings after a reasonable period. At this point, it may be appropriate to carry out a review of the market to check that the service is relevant and competitive

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