Coyle Hamilton is number two in Irish pensions consultancy positioned behind the largest player Mercer in business volumes by a distance. The Dublin-based firm, with operations in two other Irish cities, has a staff of 60 against the nearly 500 that Mercer has. But Coyles are unimpressed.
“At the time of the merger of Sedgwick and Mercer two years ago, we said we weren’t perturbed and nothing has made us change our minds since,” says Joe Byrne, group actuary and deputy managing director of the management–controlled. The view then was that as the second biggest firm and one of the few remaining, sizeable and independent operators, the firm reckoned it could do well from the work that Mercer would be conflicted from handling, particularly in mergers and acquisition work, where it would find it difficult to act on both sides. This, Byrne says, has transpired.
“Our strategy going forward is to build up our intellectual capital. We want to expand our actuarial team of 12 people and our legal team of four. It’s all to do with getting expertise on board.” But the boom conditions in the Irish labour market has staff turnover at record highs is making this difficult to do, though most of the pressure is at the administration rather than the consulting end, recruitment is not easy – a novel experience for many Irish employers.
The aim, however, is to focus on the higher level professional services end, while maintaining our administration capabilities, says Byrne. “We want to emphasise the consulting as against the retail side,in particular looking at the human resources and dealing with compensation matters, share schemes and profit sharing.”
As part of the drive to widen services, it acquired a health and safety training company, as in a move into the employee wellbeing consulting market, says Byrne.”For clients this covers the three areas of attracting, motivating and retaining staff.”
But the investment consulting side of the business is being boosted. “Here, Mercer has been gaining a lot of government work and we are keen, as are others, to obtain a share of that business too.” With the exodus by pension funds from Irish equities over the next few, years, there are queues of foreign asset managers wanting to seize the opening for mandates. So the consulting arena is widening as never before.
A forte of the practice has been an emphasis on the legal aspects of trustee work and this area is being developed, as is the ability to meet empolyee benefit communication needs of sponsors and plans, including organising intranet sites. “We now have two graphic designers and two web developers working on presenting material in the right way in the communication practice.”
Byrne sees big changes coming through on communication as a result of the internet “where it is very like an online banking service”. “So we are looking at the area of DC administration to see how it will develop.” The market might decline to just three or four significant players in pensions administration, of whom the firm hopes to be one.
In a new departure for the Irish market, the economic boom has created many high net worth individuals and Coyles see this as another area worth pursuing. “But we have to be selective about the business we take on. In particular we would like to win a bigger share of the large pension fund market. Though that business does not move too often.” But as the main independent player left in the Irish market servicing the defined benefit market, it regards it self as well positioned. M&A business has picked up in the last few years, following the Mercer move, he adds. “Where there are pension disputes, then someone else has to act usually on the other side. This is a growing area for us.”
The new pensions legislation will undoubtedly make matters more complex and the changes it will require will impose a significant service element on consultants, he says. “All firms are under pressure in terms of compliance, with the Celtic tiger economy. The more business you have the more difficult it is to service it. So we could be facing an even bigger constraint on resources.” But the somewhat smaller firms may find themselves benefiting from being more nimble, he adds.
The company has grasped firmly the DC opportunities, says Byrne, but this is not going to be the easy ride it was up to now, as the DC challenges for consultants running administration systems are going to become more complex. The next generation of internet-enabled software is going to require substantial commitment if they want to continue in the business. Consultants were able to deliver DC schemes more cost effectively than life companies, which maybe catching up with their delivery systems.
In the new world of personal retirement savings accounts (PRSA) and the approved retirement funds, the insurance companies are ready for the challenge. Consultants may find that clients want a group PRSA, with the addition of risk benefit in life and disability cover as well as spouse’s benefits. “There will be opportunities for consultants to add value and provide more cost effective solutions,” says Byrne.
As a network member of both Asinta and Euracs, Coyles finds a lot of the independent advisers in the UK especially like to work with them.