US - Mercer is to abandon its US Transition and Recapture Services business in the second part of its clear-out to rid the operation of perceived conflicts of interest.
Mercer IC will close Mercer TRS, its affiliated brokerage operation, during the first quarter of 2005. The decision to close the business was motivated by the US Securities and Exchange Commission’s ongoing probe into investment consultants.
In late October 2004, Mercer announced that it was to draw the curtain on its Global Investment Forum, a subscription based series of conferences. The last conference was held in early December 2004 in Tokyo.
“The decision to discontinue these operations was made in light of the current environment, particularly the increased desire on the part of institutional investors to avoid any potential perception of conflicts regarding their investment consultants,” said Barry McInerney, US practice leader at Mercer Investment Consulting.
“We believe that adjusting our business model in this way reaffirms the alignment of our interests with those of our clients and indicates the depth of our commitment to serving our clients’ interests first.”Paul Sachs, the head of Mercer TRS will join Mercer Investment Consulting as senior investment consultant.
Mercer TRS employs four people, according to the firm. Mercer TRS was founded in 1997 as a service for Mercer clients looking to reduce commission costs. It is a division of Marsh & McLennan Securities Corporation, a registered broker/dealer of Marsh & McLennan.
The range of services was “intentionally limited to client-directed brokerage,” according to Mercer. “It has never accepted soft dollars or provided any services to managers.
Clients who elected to use Mercer TRS’ services did so independently by providing written instructions to their investment managers.”
While Mercer TRS is a division of MMC Securities Corporation, at least some of its income was attributed to Mercer Inc., Marsh & McLennan’s consulting practices. In its 2003 annual report, MMC noted that of Mercer’s 2003 earnings “a relatively small amount of revenue is derived from brokerage commissions in connection with a registered securitiesbroker/dealer”.
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