How to prepare for reviewing your investment adviser


Preparation for the review will involve: 

  1. planning the process and deciding how to manage and resource the review; 
  2. identifying key areas of focus and decision-making criteria; 
  3. where the review involves an existing fiduciary manager, ensuring that the trustee is compliant with recommendations resulting from the recent CMA review, which are expected to be implemented in 2019. 

Planning the process

Deciding how to manage the process will be critical to its success, and questions to be considered will include: 

  1. Will a consultant be used to assist with the review, or will it be undertaken in-house?  
  2. Who will help the trustee decide which investment advisers should be invited to tender? 
  3. Who will advise on and draft the request for proposals (RFP), issue documentation, respond to questions from candidates, manage receipt of submissions and summarise the responses for the trustee board?  
  4. Will candidates be given the opportunity to meet the trustee before drafting their RFP responses to discuss any questions they may have? This is usually a good opportunity to clarify any points of uncertainty and help with finalising the RFP responses.  
  5. How will the RFP responses and meetings with candidates be assessed to highlight differentiators among the candidates? Will there be a formal score sheet or will more subjective decision-making criteria be utilised? What will you need to evidence to support your decision?  

These are material tasks and require specialist knowledge. 

There may be obligations to adhere to sponsoring company procurement governance protocols and any tendering regulations which may be applicable. 

Key areas of focus and decision-making criteria

There are many reasons why a review would take place ranging from dissatisfaction with the current adviser through to a general good governance review, but being clear on what your needs are as a trustee will help you to decide what key questions to focus on.  

For example, has there been a change of investment strategy, and do you need a different skill-set? 

Questions to be considered here will include: 

  1. What key skills, level of resource and experience is the trustee looking for from an investment adviser? 
  2. Do you wish to retain a traditional investment adviser relationship or move to a fiduciary manager? 
  3. Is the trustee aiming to eventually move to a buyout and therefore is that a key skill-set the adviser should have? 
  4. How important to the trustee is assessing how asset managers consider ESG factors when making investments, and therefore is this a key capability the investment adviser should have? 
  5. How will a new adviser react to your existing portfolio? Does your scheme have the governance resource to implement and manage any new strategies they are likely to recommend? If not, can the adviser provide governance support under a delegated model? 
  6. Will the adviser charge the trustee to diligence any existing asset managers it may not be familiar with, and is this acceptable? 
  7. Do you have a concern / preference for your actuary and investment adviser being from the same company? 
  8. Do you want an investment adviser that has asset manager research capability across several countries? 

Answering the questions listed above will help you focus on what outcome you want.  

Failure to plan is planning to fail. 

Find out more about Brian

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Brian Kilpatrick


United Kingdom