This post we’re going to review the first meeting in the model, the Governance Meeting. This stand alone event is probably a new concept for many advisors and employers but sets the stage for a successful advisory year. A key aspect of the advisory model is to create differentiation from the advisor, the provider and the policies that are in place. While the advisors should be accountable for the whole relationship, the advisor needs to build their own independent value proposition to their clients. As you may have guessed, the Governance Meeting is the perfect time to do just that. The timing of the Governance Meeting is key, several months after the renewal meeting but many months before impending rate changes for next year, think of this like your first quarter.
The Governance Meeting is also a terrific starting point with a new client, building a base of understanding and formalizing a new process. The meeting however is equally important for all clients each year. Organizations are dynamic, expanding and contracting in many ways from industrial or economic forces, execution of strategy, technological disruption and consumer trends to name a few. Advisors who are responsible for delivering advice should never assume the employer they spoke to last year is facing the same challenges and environment a year later. With that said, let's take a look at the proposed components and details of the Governance Meeting.
- Advisor Evaluation
A great starting point to frame the meeting is to offer a quick evaluation of past events, advice (recommendations and considerations), services and support over the prior year and even throughout your entire relationship with the client. This provides both advisor and client an anchor for the accumulated value as well as an easy record to transfer to new contacts. It’s not uncommon for HR Managers, CFOs, Leadership or even Shareholders to turnover from year to year and this record can clearly demonstrate the value proposition that this advisor and their firm have delivered and will continue to deliver over the upcoming year. With the value proposition clearly on display and the appreciation from the client flowing this is the perfect time to layout the next component.
- Commission Disclosure
Regardless of the future regulatory or industry association environments that may compel future forms of disclosure, CloudAdvisors believes in disclosure of commission, with supporting context, directly by the advisor to their client every year. Fundamentally, advisors, as they will have just demonstrated in the evaluation, continually deliver a lot of value to clients each year and should be fairly compensated. It’s important that clients understand the mechanism for how advisors are compensated as well as how much they are compensated in exchange for the advice and services delivered. As commission varies greatly with fee schedules, payouts, bonuses as well as fluctuation for commissions based on premiums each month, it’s important that the advisor and client feel the level of disclosure provides the client sufficient transparency to evaluate the relationship. Wherever possible it is also helpful for advisors to highlight standard commission ranges for additional context so that advisors and clients can match based on scope and depth of advisory services compared to commissions. Advisors and clients may agree on any level of commission provided it’s disclosed and the client feels they are getting great value in exchange. Enough said, with those two pieces out of the way it’s time to shift gears and get the advisory year started!
- Governance Review Checklist
As you may have guessed it, this is the heart of the meeting, and it serves the purpose of challenging assumptions and strengthening a foundation with the advisor and client on the same page. This simple process can be seen as tedious or even time wasting but undoubtedly every time it’s performed at least one valuable and actionable insight, often many, fall onto the table for both sides. The governance review checklist can take many forms but we’re proposing a rapid fire question and answer style that digs in the corners and challenges every fact you think you know about your client, after all, people and businesses change at a rapid pace and the advisor isn’t always the first to know. Some of the sections include: Basic Group Information, Know Your Client Details, Financial / Ownership Structure, Employee Structure (Canada, US, Globally), Human Resources / Policy and Procedure, Taxable Benefits, Compensation Objectives and Philosophy, Partners and Vendors (Related Professionals and Services). The whole process shouldn’t take long with an emphasis to use the checklist as a guideline for the conversation, letting the client share more about the business past, present and future and allowing the advisor to glean key details that may change their approach for the year.
To name a few discovered examples:
Are there employees in other countries or business travellers you didn’t know about?
What does the financial / ownership structure infer about risk tolerance for the organization?
What HR practices have benefits wording or may relate to eligibility of certain policies?
What “benefits” are employers offering outside of traditional insurance and how does this relate to objectives and compensation philosophy?
When going through the process, it’s important to ask questions, listen and take notes, now is not necessarily the right time to jump in with advice. There may be urgent issues to address but let the discovery unfold naturally and build towards the next steps.
So why is this the most valuable time between an advisor and client all year? The Governance Meeting is a purely proactive assessment that uncovers risks and opportunities that neither side knew were there, or worse, assumed dormant. For any client that has ever fired an advisor and for every advisor that has lost clients you can likely trace the problem back to something that could have been addressed months or years before it became a pain point.
To close the meeting it’s time to begin outlining the strategic plan. Remember, we aren’t facing the urgency of renewal and have time to strategize with the client. This may be a time to introduce other services such as benchmarking, employee surveys or engagement tactics like benefit committees and focus groups. When it comes time to provide advice, the best advice will come from using everything we know about a group and their people to form a recommendation. With new insight in hand, the advisor and client will be ready to schedule the next meeting in the advisory model, the plan audit. Next post we’ll unpack the plan audit meeting, it’s value and how the advisor can bring it all into focus.
If you’d like to learn more details about the how CloudAdvisors can organize your data and automate reports for you in these three components please contact us for a demo. CloudAdvisors offers the platform to track and manage Governance Meetings including: Timeline, automated Advisor Review and Disclosure Reports as well as Governance Checklists. Visit www.cloudadvisors.ca to contact us and see how you could become #poweredbyCloudAdvisors.
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