UK - IPN's sister title, Global Pensions, has revealed that some consultants' claims of holding independent beauty parades for manager-of-manager products are flawed due to the firms protecting their proprietary manager research.
Previously, some consulting firms that offer a manager-of-manager service have claimed to this magazine that they partly manage their internal conflicts by holding beauty parades for shortlisted manager-of-manager providers and allow their pension fund clients to pick the best on the market.
But some of these consulting firms are not independently evaluating each others’ manager research, so therefore they cannot compile a complete shortlist. The reason is clear. These consulting firms compete with each and some do not allow access to their manager research. Any consulting firm allowing a rival firm into its office to trawl through its manager research would be faced with a loss of competitive advantage as a result.
“Aon will not let us in to see them,” said Ian Burton, a senior consultant responsible for manager-of-manager research at Mercer Investment Consulting, which has manager-of-manager provider Attica as its ‘preferred provider’ for Mercer 360.
“If they would let us in we would go in. I can understand Aon’s point because effectively, although Mercer do not have a manager-of-manager product, we clearly do our own manager research,” he added.
“They think they will be giving away some of their intellectual capital. Plus we provide investment consulting advice to Attica and Escher and I suspect that they think there is a conflict of interest.”
But Burton added that io investors, part of Sanlam Financial Services which has consulting firm PSolve and Punter Southall also within the group, “has tended to act more like a stand-alone manager and they have invited us to research them.”
Ian McKinlay, principal at Aon Consulting, which offers in-house manager-of-managers via Aon Asset Management, said: “If the client wants manager-of-managers we will initially put forward our own but we go through a full consultative process and if, for whatever reason, they don’t want us, we are then into a beauty parade.
“We do research other products. Attica is really open. The one where we get a lot of resistance is Stamford … They won’t let us close enough to their process. They are really quite secretive about it.”
But McKinlay noted that Mercer does not research Aon’s product. “We do not believe it is appropriate to allow direct competitors to research us.”
Tommy Garvey, head of institutional business at Aon Asset Management said it is a business decision not to allow Mercer into its office. “The impression I get with Mercer is that they only put forward one preferred provider [Attica] ... why would I see anyone that will not give me any business?”
Nick Watts, head of the European investment practice at Watson Wyatt, which does not directly provide this service, declined to answer whether specific manager-of-manager providers allow access, but said: “We will only put forward propositions to our client if we have researched them ... Clients have said ‘what about X?’ But we have said, actually, we do not know X and we have not researched them.”
Adrian Drake, principal of consulting firm PSolve, said: “If we thought there was a need for researching the long only manager-of-manager universe, then Attica would like us to go and research them so they could be on our shortlists. They’d make a commercial decision on how much they need to disclose for us to make our judgement. This is not currently done .”
McKinlay also noted that “there is a place for someone to come in and independently audit
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