Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. DEFINED BENEFIT
April 04, 2016 01:00 AM

Managers, consultants prepare for U.K. change

Firms pump up resources to win business from public pension fund consolidation

Sophie Baker
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Sam Gervaise-Jones expects LGPS funds to adopt a setup of selecting firms on a project basis.

    Money managers and consultants are adding resources, aiming to ensure they'll have the expertise to capture business as nearly £200 billion ($289 billion) in local government pension scheme assets are pooled into at least six British wealth funds.

    Specifically, a number of industry players say they have reinforced or refocused efforts on the 89 England and Wales local authority pension funds.

    Last month, JLT Employee Benefits named Andrien Meyers to the new role of senior investment consultant. Mr. Meyers has been treasury and pensions manager at the London Borough of Lambeth, whose pension fund has £1 billion in assets. At the time, a spokeswoman said the appointment reflected the firm's ambition to expand its investment consultant business in the public sector.

    Mr. Meyers will join the firm later this year.

    JLT has been expanding teams — both through recruitment and internal transfer — to “ensure we have the resources to assist not just our existing clients but the new pools themselves as they are formed,” said Kieran Harkin, Manchester, England-based head of LGPS investment at the firm.

    England and Wales' LGPS funds are due to submit final details in July on how they intend to pool their assets into at least six British wealth funds, under changes announced by the U.K.'s chancellor for the exchequer, George Osborne, last year. The idea is to save millions of pounds in costs by pooling these assets into new funds — each with at least £25 billion of assets — and to increase allocations to infrastructure.

    Pension fund executives, their money managers and investment consultants, will have to strike a careful balance in order not to lose sight of the diseconomies of scale. One risk is of capacity issues, particularly in some alternative investment opportunities that greater governance structures will bring to LGPS funds. Hiring and firing of money managers could also become more difficult, warned Simon Hill, London-based chief investment officer and senior investment consultant at Xerox HR Services, formerly known as Buck Consultants.

    “From the point of view of markets, any conglomerate of power — particularly where there is political interference — is worrying,” added Mr. Hill. Any big moves by these huge pools of assets could distort markets, particularly in liquidity- and opportunity-constrained asset classes such as infrastructure. “Managers often report to us that they are waiting to find the right assets — mezzanine debt, emerging markets debt — they can be very illiquid markets, and managers may feel pressures by the greater weight of assets that they are responsible for, to maybe (dilute) their criteria to get invested,” he said.

    The move has been identified as both an “opportunity and a risk” by sources in money management, because one of the aims is to reduce management fees across the pension funds.

    “It is a very challenging time for both LGPS (funds) and asset managers, but there are some great opportunities on both sides to really work in partnership together, for the benefit of the pension schemes,” said Euan MacLaren, head of U.K. and Ireland institutional business at Natixis Global Asset Management in London. The money manager, which works with 11 LGPS funds across five affiliate companies, representing about $2 billion of assets, at the end of last year reorganized the institutional business, “partly to take account of what the LGPS are going to be doing,” said Mr. MacLaren.

    All LGPS clients were transferred to Will Fox-Robinson, director, U.K. institutional business with responsibility for LGPS, to give clients a “dedicated route, consistent understanding and message of what we can work with them on,” Mr. MacLaren said. “By having someone dedicated to that area, we are able to have the knowledge across the board of what each pool is doing, and the challenges for each.”

    Mr. MacLaren said the firm is not expanding the team, but Mr. Fox-Robinson can draw on Mr. MacLaren and other NGAM resources.

    Asset pooling will give money managers the opportunity to work with LGPS clients to which they have not had exposure previously.

    “We think pooling is an opportunity for us, as an organization, to deliver more to LGPS clients,” said David Curtis, London-based head of U.K. institutional business at Goldman Sachs Asset Management. He said there is an opportunity for greater provision of risk technology, broad insights, and other resources. “We have increased our resourcing for our LGPS business, and we are being very prominent in terms of activity and seeing people — we are being part of the discussion. We hope it is good for the industry and think there is more we can deliver to (a pooled set of schemes) than to a more fragmented market. For us it is certainly an opportunity to engage with our current clients and schemes where we have less established relationships to help them consider ways to meet their investment objectives for the future.” GSAM has $1.25 trillion of assets under supervision.

    Panel structure

    Sources agreed the investment pools likely will depend on a panel of investment consultants and money managers from which LGPS clients will choose their providers, rather than the existing model of opting for one money manager to run a specific allocation. Operating under a panel structure has already begun to take off among the LGPS, with a number of multiprovider frameworks launched.

    “I would anticipate (LGPS funds) moving more toward a setup whereby they will select the right or best partner for any given piece of work that needs doing. That might be a consultant, or a fund manager, or anyone else,” said Sam Gervaise-Jones, London-based senior consultant, head of client consulting, U.K. and Ireland at consultant bfinance, which works with more than 40 of the LGPS funds.

    While bfinance is increasing resources, these are not necessarily directly focused on just LGPS funds. “bfinance as a company has always — and this is important for the LGPS — focused on working with people on a project basis, or as an extension of their own resources, as opposed to most consultants that shoot for full relationships,” Mr. Gervaise-Jones added.

    One expected outcome of pooling is for LGPS funds to increase in-house expertise, much like larger pools of assets in the U.S. and Canada have done, said Mr. Hill.

    “We would increasingly see those external advisers, whether from investment managers or consultants, develop into more specialized roles, or more project-based roles, where they do a particular project around an asset class or a particular search.” He said that is akin to a U.S. consulting model, with a more project-based relationship between consultants and their clients. “That sort of arrangement allows specialized providers, who may be strong in one area and not another, to prosper and survive,” said Mr. Hill.

    He said Xerox HR Services is an “independent observer” because it is not involved with LGPS clients “in any significant way.” He does not see the firm's plans changing with regard to the pooling of assets. n

    Related Articles
    Managing director of private markets named at bfinance
    U.K. pension plans submit proposals for pooling assets, cost savings
    Managers trim fees to keep U.K. fund assets
    Recommended for You
    Liability-driven investing leads to full funding
    R.I. treasurer seeks transparency laws for church plans
    R.I. treasurer seeks transparency laws for church plans
    Public pension funds adopt cost-sharing mechanisms to stem volatility
    Public pension funds adopt cost-sharing mechanisms to stem volatility
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 23, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference