Professional trustee growth: the need for diverse recruitment and efficient working

Following a strong period of market growth, professional trustees have mixed views on their firm's future trajectories. Sustaining historic growth levels needs recruitment strategies that continue to attract diverse skills, perspectives and experience, and efficient working practices to support firms’ growth. This blog explores professional trustees' differing perspectives on their strategic direction and focus on diversity and efficiency.

Strategic resourcing

Some firms’ recruitment plans are conservative in the light of their growth expectations. They're thinking about not only how many people they have, but also their expertise and the overall make-up of the firm. The regulatory position on one trustee taking on multiple appointments also affects recruitment needs, and firms are keeping a close eye on this. 

On the other hand, others are investing in further recruitment to meet growth ambitions. This is essential for those aiming to take on larger scheme appointments, expand their in-house service offering or diversify into new areas. As firms develop differently from each other, we expect the pace, and possibly the type of recruitment to vary too. Bold growth by some firms may create a challenging recruitment market for others. 

As well as an eye on recruitment to support growth, the maturing market means there’s a lot of turnover in trustee appointments too. Retaining appointments is as important as winning new ones, meaning resourcing considerations increasingly include succession planning and aligning people to the right opportunities. 

The professional trustee market is established, and the pensions industry understands its role and differences between the firms. One professional trustee said that this meant their firm is getting fewer speculative recruitment enquiries. This is driving a talent pipeline that is smaller than it used to be, but the talent pool is more focused and aligned with the firms’ approach. Firms should remain vigilant that their approach still attracts a diverse pool of candidates. 

Embedding diversity and challenge

The professional trustees we spoke to said they do have diversity of skills in mind when hiring and often look for specific expertise. It’s in their interest to do this, as a diverse firm can be flexible as people leave or as it takes on new appointments; it’s also well positioned to diversify its business in the future. To support this, some firms are looking at expanding existing trustees’ experience across their portfolio to further enable agility and people movement. 

Diversity is especially important for schemes with a sole trustee arrangement. Sole trusteeship doesn’t imply a single trustee, but there have been concerns that the governance approach potentially lacks diversity of thought. The latest revisions to the APPT’s sole trustee code of practice now requires trustees to give consideration to how diverse views and challenge can be introduced into the decision-making process. Attracting a broad range of skills, perspectives and experience is the first step to facilitating that. 

Once recruited, many firms, especially large ones, have structures and policies to enhance diversity by using the team behind the appointed trustee director for a scheme. For sole trustee appointments, they can bring in additional colleagues to help with complex decisions, for example. Some firms go further, with specialism centres, peer councils or governance boards that help with day-to-day scheme management and decision-making. Firms also acknowledge that their policies can’t be so prescriptive and streamlined as to dampen individual styles and approaches from coming through – which would run counter to the aim of diversity. 

Maintaining efficiency

Scheme sponsors are targeting efficient pensions spend and compliance costs are increasing. We questioned whether this was putting any tension on maintaining diversity in decision making, processes and policies, particularly for sole trustee appointments.  

It was reassuring to hear that firms were clear that efficiency comes second to diversity, drawing a line around driving efficiency from streamlining team structures and resourcing strategies.  

However, professional trustees are acutely aware of employers’ budgets driving a need for efficient pensions spend, leading to reviews of trustee appointments and shaping endgame planning. Small schemes in particular are talking about consolidation and some professional trustee firms are responding by creating their own consolidators. Other firms are responding by seeking operational efficiencies, often drawing on the approach of DB master trusts, and offering more services in-house.  

Efficiency could also help to manage governance regulations, which are raising the bar for professionals. There was a suggestion the review of the sole trustee regulation could include a higher hurdle for accreditation, and in turn lighter ongoing compliance reporting. For sole trustee appointments in particular, firms have greater autonomy to streamline compliance for governance requirements. Many have developed in-house frameworks to support TPR’s general code, for example. 

Technology is another driver of efficiency for sole trustees – we’ll explore this topic in our next instalment. 

If you’d like to discuss these changes in more detail, please get in touch.