This document provides tips to maximize the value received from financial service providers like professional advisors, insurance brokers, and employee benefits programs. It advises reviewing these services regularly to ensure competitive costs and appropriate coverage. Independent assessments are recommended to benchmark arrangements and identify potential savings. Open communication between clients and their advisors is important to agree on goals, responsibilities, reporting, and ensure services represent reasonable value. Comparing options in the market helps establish fair pricing.

1. Is your business costing you?
find extra profit
A guide to maximising value from
financial services providers
Issue 4: Professional Services, Insurance
and Employee benefits
Expense Reduction
Analysts

2. Introduction
Few companies these days have the resources or expertise to
manage all of their business functions in-house. We all depend on
a range of outsourced professional advisors and service providers
to maintain the vital processes, especially finance-related, which
underpin the operation and staffing of our organisations.
But all this professional advice comes at a It includes tips and advice on the
cost and, as with every other cost base following areas:
within your business, it may be larger than
you think and larger than it needs to be. • Professional advisors – why an open and
honest relationship between client and
This guide - the fourth in our series looking advisor will deliver value
at different areas of cost reduction - aims to
provide a range of practical advice and • Insurance – as well as a competitive
examples from experts in the financial premium, how do you negotiate the
services field to help ensure your business is complex broking market to ensure you’re
managing its costs effectively and efficiently. receiving the right levels of cover and
service too?
• Employee benefits – is your current
package an effective tool for motivating
and retaining key staff?
02 Introduction

3. Insurance
A successful programme is about far more than just a competitive
premium, how do you negotiate the complex broking market to
ensure you’re receiving the right levels of cover and service too?
The insurance market is a complex one, often built on entrenched
personal relationships. This means that the sort of competitive
pitch or price comparison exercise that you might carry out when
purchasing certain types of product or service simply don’t work
where insurance is concerned.
1 Avoid the ‘incumbency’ factor 2 Don’t confuse the market
If your broker has successfully retained your Whilst inviting a number of brokers to look
business without major changes to the at your business might seem the logical
programme over a number of years, there response to point one above, in reality this
may be a reluctance to change the status quo strategy risks restricting the quality of
for fear of admitting there were gaps or responses you receive as insurers, faced with
deficiencies in the existing cover. This can similar – but not identical – presentations
obviously lead to a lack of innovation with supplied by competing brokers may simply
the result that you may not be purchasing decline to quote for your business at all.
the most appropriate and up-to-date cover
the market currently has to offer. Further, if your incumbent broker feels
threatened by the competition, it may simply
prevent others from accessing the market by
“Expense Reduction Analysts saved approaching as many insurers as possible. It
us time and money and provided the is a quirk of the insurance industry that, once
totally objective confirmation that an insurer has quoted on a particular piece of
our cover and programme were in business, it is then obliged to offer the same
order that we were seeking.” quotation to all other presentations of the
Purchasing Manager, Tower Hamlets College same case.
Insurance 03

4. Insurance
Furthermore, says Expense Reduction Analysts Insurance
consultant, Scott Ingham, market rates for certain classes of
insurance have been falling for some years now, so it has been
relatively easy for insurance brokers to offer attractive premiums
which may disguise the actual value of the overall package of price,
cover and service you’re receiving.
Scott explains the reasons why the only real way to benchmark your
insurance arrangements, is to use an independent assessor which is
neither a broker or an insurer.
3 Presentation matters “Expense Reduction Analysts
The insurance market sets its prices on the provided us with access to
basis of its perceived exposure to risk. So significant knowledge, technical
you will only be getting the best results if expertise and experience of the
all your efforts to reduce risk in your insurance market which is not readily
organisation are being accurately reflected available to any organisation when
in the presentations your broker makes to they undertake this type of
the market on your behalf. Unless the time insurance review on their own.”
and investment you are making and the Deputy General Counsel, Volkswagen Group UK Ltd.
positive impact this is having on your
claims experience and exposure to risk is
properly presented then the benefit of such
work will be lost.
04 Insurance

5. Professional Services
Unlike death and taxes, fees notes from your professional advisers
are not inevitable and immutable, says Expense Reduction Analysts
consultant and specialist in financial services, Paul Seddon, and a
fatalistic approach to professional fees can only hinder the relationship
between client and adviser. Instead, an open and honest relationship is
critical to obtaining value for money. Paul offers the following tips to
get the best value from your external professional advice:
1 Set the goalposts clearly 3 Keep talking…
A successful client-adviser relationship Don’t run the risk of frustration building up
depends on both parties sharing a common and eventually exploding into a breakdown
goal. The client needs to have a clear view of the relationship because you have failed to
of the outcomes they want to see and be tackle perceived poor value or performance
able to communicate that effectively to during the project.
their adviser so that there is an absolute
shared understanding before the Avoid this by insisting on a clear and proper
project commences. fee estimate up front (where fees are to be
billed on a time basis), followed by
2 Agree who does what – and when transparent reporting on costs and timely
The very reason for commissioning external warning of changes in expectations. Don’t
advice is to supplement and enhance the shrink from asking you adviser to explain in
expertise within the organisation itself. Any whatever level of detail you require why the
client therefore needs to be happy that their time and/or the rates charged are reasonable.
adviser is only spending time on matters that
are (i) necessary to achieving the agreed 4 Compare the market
outcome and (ii) not within the client’s own Ultimately, if you do not think your adviser’s
competence or resources account is reasonable, test it in the market.
This is a positive for both sides as, without
Your adviser should be expected to provide a a flourishing market, it is not possible to
formal agreement of terms and conditions establish market rates for work and so
and a project plan that specifies key dates to satisfy all concerned that costs
and outcomes, as well as clearly outlining the are reasonable.
roles and responsibilities of both parties. Professional Services 05

6. Employee benefits
Is your current package fully up-to-date, competitive and operating
as an effective tool for motivating and retaining your key staff?
Your people are your most valuable asset and the employee benefits
you provide should go a long way to helping you retain and motivate
them. But, with an ever growing range of products and a bewildering
array of providers, it’s easy to pay more than you need and yet still
have a package that isn’t valued by your staff and doesn’t deliver
against your business objectives.
Scott Ingham provides the following advice:
1 Don’t delay 2 Bespoke benefits
If you haven’t reviewed your package for Every business and its staff is different. So
some time, there will almost certainly be make sure that the cover you are buying is
premium savings and cover refinements tailored to your individual organisation and
to be gained. properly serves your business objectives.
Recent developments mean that once
Unlike your general business insurances, you standard approaches don’t necessarily
can choose to review your employee benefits deliver the best results today. For example,
package at any time, meaning that available now might well be the time to look at
improvements and potential cost savings can whether replacing your private medical
be realised very quickly and start to impact insurance (PMI), cover with a cash-plan
on your bottom line all the sooner. might offer a more effective, cost-efficient
solution. Equally, it’s worth asking the
question whether the rates you are currently
paying for fundamental cover such as death-
in-service are still competitive when set
against your current risk profile?
06 Employee benefits

7. The cornerstone of most employee benefits Expense Reduction Analysts is the world’s
packages is the provision of Private Medical largest cost management consultancy and
Insurance (PMI) for staff. However, this is focuses on reducing non-core operating
also one of the most common areas in which costs for private, not-for-profit and public
employers find the cover in which they are sector organisations.
investing is not delivering the required
benefits. Does your company recognise any Handling an annual supplier spend of millions
of the following scenarios? of pounds on behalf of clients in all sectors, the
consultants at Expense Reduction Analysts use
• Limited penetration – in most cases, their significant purchasing influence to
younger employees are not members of achieve optimum value from suppliers, often
PMI schemes but they are also the most successfully retaining incumbents and using
active and prone to sports-related injuries in expert analysis and market intelligence to
particular. Dependency on the NHS for combat ‘contract fatigue’.
these key team members could mean
delays of several weeks and subsequent Expense Reduction Analysts has 170
impact on productivity at work consultants across the UK, as well as
having a global influence in over 35 countries
• Increased short term sickness leave – specialising in more than 100 non-core
whilst staff are signed off by their GP business expenditure categories.
pending further consultation, the business
needs to make unexpected adjustments to Other topics covered in our series
resourcing and work programmes to cover of cost reduction guides include:
the absence Issue 1 – Property and Premises
Issue 2 – Banking and Finance
• Associated ‘healthcare’ costs – it’s not just Issue 3 – Back Office Supplies
the cost of running the PMI scheme itself
that costs your business but the additional For more information contact
administrative or resourcing issues of Expense Reduction Analysts
servicing regulatory regimes such as the on: 02380 829 737
Display Screen Equipment regulations
(DSE) or counselling services such as or visit our website at:
Employee Assistance Programmes (EAP) www.expense-reduction.co.uk 07

8. find extra profit
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Expense Reduction
Analysts
www.expense-reduction.co.uk