UK - Investment and actuarial consultant Bacon & Woodrow has pledged that it will not be following the industry trend of launching a multi-manager product.
The manager of managers product has added another devotee to its ranks when William M. Mercer launched its Mercer 360 multi-manager service.
It is offering a complete strategy, asset allocation and investment management for pension schemes in association with Attica Asset Management - a move which has again raised concerns about a possible conflict of interest.
Bacon & Woodrow head of UK investment consulting practice Anthony Ashton, however, said his firm had eschewed the multi-manager route.
B&W is putting the final touches to a more hands-on service which will help trustees through decision-making processes without divesting them of investment decision through outsourcing.
Ashton said company research had shown that this what what clients really wanted from investment consultants. Ashton said this in-house approach was his interpretation of the Myners proposal for trustees to become more familiar with the investment process.
William M. Mercer head of investment consulting practice Andrew Kirton said the 360 product had been driven by Myners and that small schemes would be most attracted to its new product.
He said: “We expect most of the clients that go into the service to have less than £20m under management – the median one will be around 10m in size.”
The new joint service with Attica brings into the open the close links between the two firms.
Several ex-Mercer employees hold senior positions at Attica, including the two founding directors, Guy Davies and Derrick Dunne. It has been suggested that Mercer has created a serious conflict of interest over its independence in recommending multi-managers to clients.
In particular, Mercer provides manager research services to both Attica Asset Management and rival multi-manager Escher Investments.
Frank Russell - which has been running a similar service for two years - said that conflicts of interests could be overcome.
Managing director of institutional investment service Jon Bailie said: “The way we start off a relationship is to make sure clients believe in multi manager otherwise they should not be a client.
“To avoid conflict we have those conversations right up front when a clients signs up.”
And Bailie added that he believed the Mercer move was part of an industry-wide trend which is gaining momentum.
He said: “You are getting vertical integration in the industry. Consultants are integrating with fund management and simultaneous investment firms are building solution groups for asset allocation.”
“In the future financial service firms will provide a much wider range of services.”
And he claimed it was a myth that the manager of manager approach was only suitable for the smaller pension fund. Large funds with limited resources for investment management or those from within companies that a culture of out sourcing were also suited to a manager of managers style, according to Bailie.
By David Rowley
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