The sudden and unexpected transition to virtual meetings from on-site visits forced organizations to re-examine nearly every stage of their manager selection process — a development that's led to enhancements designed to foster better decision-making and results.
First and foremost, both investment managers and plan sponsors are spending more time on planning and preparing for upcoming due diligence meetings. Not surprisingly, the elimination of travel has created more time for better information gathering. Increasingly, organizations are conducting their own qualitative and quantitative analysis of data and information provided prior to the meeting — a higher level of analysis that's unquestionably generated better questions and meeting agendas.
Before the pandemic, a plan sponsor might only be in town for a single day and it was standard practice to schedule one long in-person meeting. With the added flexibility of virtual meetings, these marathon sessions can be broken up into a series of shorter, smaller sessions scheduled across several days. This format has proven to enhance engagement, facilitate more discussions between the organization and the investment manager, and allow professionals from different offices the opportunity to participate in targeted discussions.
Virtual meetings also provide plan sponsors and investment managers the ability to message their own teams in parallel in real time as a meeting is taking place. Often, this communication helps to guide discussions toward what matters most for all parties.
Finally, the unprecedented events created by COVID-19 provide plan sponsors with a rare opportunity to compare how managers are responding to a common challenge, particularly as it relates to the effectiveness of their business-continuity plans. The pandemic has created similar challenges for every asset management firm. Evaluating how firms have responded can offer valuable new insights into their governance, leadership, culture, research capabilities, and ultimately, investment processes.
While the recent trajectory of COVID-19 cases in the U.S. and Europe suggest plan sponsors will be required to conduct manager due diligence virtually well into 2021, the amazing journey traveled during the past 10 months will undoubtedly leave a lasting mark on how manager research and screening is conducted for years to come. Given the pace at which new challenges have been overcome and tactics and techniques have been developed to navigate the current environment, due diligence in a post-pandemic working environment will likely look like a hybrid of past and present approaches.
Fred DeSerio is head of sales and country head of Nikko Asset Management Americas, based in New York. This content represents the views of the author. It was submitted and edited under Pensions & Investments guidelines but is not a product of P&I's editorial team.