TRUSTEE TRAINING

Rampant bull

Too much complexity, too much searching for the perfect solution befuddles trustees and impairs their training. To get a move on, keep it simple. The FSB should be the standard-bearer.

Trustee training is all over the place. For a supposed “national priority”, that’s rather dismal. Each time it seems that the bull is being taken by the horns, it escapes to run in directions of its choosing.

Enough already with the consultation. It’s been going on for years. Trustee training, being the bedfellow of broader consumer financial education whose need is screamingly obvious, must have a matador to control the bull. None is better placed to shoulder this responsibility than the Financial Services Board (FSB).

One of the FSB’s three statutory functions is “to promote programmes and initiatives by financial institutions and bodies representing the financial services industry to inform and educate users . . .” Also, the FSB is now taking the initiative to launch a national consumer financial education framework. Trustee training, although omitted from the FSB’s latest discussion document published in January, is its natural adjunct.

In fact, it’s integral. For millions of consumers, savings are mainly if not exclusively through retirement funds alone. Funds are run by trustees who are beholden to communicate with members. Unless trustees know what they’re obliged to communicate, and members understand what they’re entitled to expect, the process falls flat.

Especially because the great majority of SA funds are defined contribution, where members have investment choice and are exposed to risk, participation that flows from two-way communication is basic. The need for consumer education is multiplied by the need for trustee training; trustees must know what consumers are supposed know, and have a plethora of duties besides.

Back in 2003, at the Growth & Development Summit, Inseta was briefed to prioritise trustee training. It surveyed trustees’ skills, developed unit standards and sought to identify trainers. Since then, confusion has reigned. While the FSB notes in its discussion paper that consumer education programmes “that are currently being implemented are generally fragmented and lack impact”, the abundance of fragmentation and dearth of impact is all the more pronounced in trustee education programmes.

“Far more could be accomplished by having a coordinated and exclusive effort with regard to consumer financial education,” says the FSB. “This suggests a focused, systemic programme of education that is centrally coordinated, has high levels of accountability and which will monitor, evaluate and measure the programmes being implemented.” Ditto for trustee training too.

Do a reality check on the current state of trustee training:

• It’s mainly offered by service providers. Unions contend that it’s tainted because it degenerates into product promotion. This claim, more often than not, is demonstrable bunkum. Not only are independent trainers usually engaged, but it would be self-defeating for service providers to subvert the training for a selfish motive. They wouldn’t get trustees to attend. The most service providers can hope is that their efforts generate goodwill for them from their clients;
• Somebody must pay for the training. If it’s not the service providers, it would have to be the funds. Which would the funds prefer? Trustees who complain about “tainted” training seem to have no problem with getting service providers to sponsor their own training, inclusive of meals and drinks;
• The number of independent trainers, accredited by Inseta to conduct training based on unit standards, can be counted on the fingers of a hand. Compare this with the number of trustees, running into thousands, and consider the rapid churn. The average trustee is in the job for three years, whereupon training of the successor again starts from scratch;
• There’s no consensus on whether, at the conclusion of a training programme, trustees should be assessed on what they’ve learned. This follows an absence of consensus, in the first place, on what trustees should be taught (ie the content of training programmes). And if the trustees are assessed, is it contended that they be disqualified as trustees? Or what?
• To be trained as a trustee requires not only money but also time. In the UK, the revised Myners report estimated the amount of time for adequate training at about 22 working days a year. Imagine employers giving employee trustees a month off each year. Similarly, imagine aspirant and incumbent trustees sacrificing their evenings and weekends. Nobody seems to have much idea how much time off work is reasonable for trustees to attend training and to perform their duties as trustees, or how much time is reasonable for trustees to be properly trained;
• Which in turn raises the vexed issue of payment. Typically, trustees of occupational funds receive no payment (at least in cash from the fund) additional to their wages or salaries as employees. Of course, there are perks (like football tickets from service providers). It’s a far cry to suggest that that there can be agreement on the principle of a fee – unions are particularly adamant that trusteeship is a service to members, not an income generator for individuals – and a further cry to establish the amount of a fee that will serve fairly to incentivise and recompense;
• Which, in its turn, raises more fundamental issues. Like why people will want to become trustees at all, let alone spend time on training courses. An entire industry, controlling billions of other people’s rands, is predicated on an assumption that altruistic individuals are available in sufficient numbers to perform trusteeship duties at the standards required and to accept personal liability should they slip.

There is an alternative. It’s to have fewer funds, and to have them run by professional trustees.

But let this be Plan Z, not even Plan B, because it would undermine the existing Plan A. This is intended, in the structure and function of fund boards, to maximise the linkages for member participation and engagement. The more remote the member and the trustee from one another, the more remote the linkages.

Vitally, for Plan A to work requires consumer education as much as it does trustee training. Consumer education seems in hand, provided the FSB-led initiative takes off. Trustee training can take off too, provided a pudding isn’t made of it. At bottom, to be a trustee requires (apart from time) an innate integrity and an acquired confidence to ask the service providers he or she selects the right questions and to assess them for the right answers.

If only there were somebody to take the bull by the horns. If only...