GLOBAL - The fee structures of asset management firms are a threat to their own survival, claimed an article in Watson Wyatt's Global Investment Review 2007.
The article suggested asset managers take steps to change their remuneration structures, which “tend to favour” themselves rather than their clients.
The four steps recommended included: aligning interests with both their clients and their employees; incentivising employees through “appropriately structured compensation”, preferably equity; co-investing alongside clients; and putting in place a “well-designed” performance fee.
Roger Urwin, global head of Investment Consulting at Watson Wyatt, commented: “In the new investment services marketplace, with mainstream firms adapting and competing with absolute return firms, organisational and compensation alignments to motivate people in the pursuit of value have become paramount.
“Increasing specialisation by risk, style and asset class should push such alignment considerations to the top of the investment agenda.
“Whichever way you look at it, the price of delivering retirement security to pensioners is dauntingly high. But the cost – in human terms and to corporate reputations – of not rising to the challenge is even higher.”
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers