AUSTRALIA - Transition managers in Australia have raised concerns that the birth of a T-Charter, as is being developed for the UK market, could have the adverse effect of giving credibility to underqualified managers.
Although there is as yet no momentum for a standard of best practices for the Australian transition management market, managers raised some concerns recently at a Global Pensions round table in Sydney.
Shawn Kershler, transition manager at MLC Investment Management, said: “From what we’ve seen of the UK talks, I’d question whether the T-Charter will help clients differentiate between a good transition manager and a poor transition manager. The real risk is that it may provide poorly qualified transition managers with some sort of official approval.”
Justin Balogh, responsible for transition management product, Asia-Pacific at State Street, added: “I think a public discussion about what makes a tier one transition management provider versus a tier two provider, or a provider with acceptable business practices versus unacceptable is a healthy debate.
“The issues that are coming to the fore are indeed useful for clients to be exposed. However broadly speaking, there is a potential risk that a standard or a charter brings in providers who haven’t invested particularly well in their teams or their infrastructure but manage to elevate their standard merely because they’re signing a common document.”
However John Moore, manager of Rusell’s implementation services group in Australasia, believed the introduction of a set of standards in Australia would be a positive development for the industry.
“When you look at the investment industry, investment managers are held accountable to standards, superannuation funds are held accountable, so it makes perfect sense that transition managers are also held to a particular standard,” he said. “Without this, it is virtually impossible to compare different providers and allows this opaque structure to exist.”
Graham Dixon, managing director and head of transition management at Credit Suisse added: “I don’t think this should be a concern in Australia or the UK and a careful reading of the T-Charter should allay any such fears. On the contrary, the T-Charter will help clients to quickly identify an underqualified manager.
“To be T-Charter compliant, managers have to provide clients with a great deal of information about their transition business in the disclosure document. In comparing these disclosure documents across providers, the underqualified will quickly become apparent.”
Dixon said it was important not to overplay the role of the T-Charter, which was “just one component that helps clients select transition managers”.
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