Nearly half of plan sponsors looking for transition managers do not use a formal search process, according to a new Greenwich Associates survey. Only 10% use a formal RFP process; 45% do not use a formal search process; and 44% seek the advice of their investment consultant, according to the survey of 194 public and corporate pension executives.
Pension executives use up to six criteria In choosing a transition manager, the most important being trade execution, low cost and manager responsiveness, according to the report. The other main criteria are depth of experience, project management skills and perceived absence of conflicts of interest.
The Greenwich survey found 31% use their existing global custodian to handle money manager transitions; 20% use an agency broker, 13%, an existing passive manager; 7%, a principal broker; 4%, a new custodian; 4%, a new active manager; 3%, an existing active manager; and 2%, a new passive manager. Remaining respondents were not sure or did not reply.
Greenwich consultants recommend pension executives pull together a shortlist of transition managers - selected when the plan is not in the middle of a manager switch - to call on when a transition is needed.
