GLOBAL - The relationship between pension funds and their consultants is changing with scheme managers often asking their advisers to be more proactive with their investment advice, industry experts said.
Consultants in Europe and the US told Global Pensions their clients want them to come to them with more forward-looking innovations.
Mercer head of European investment consulting Tom Geraghty said: "We're going to have to be much more proactive in the advice that we put forward to plans... There's a clear need on the part of clients for advice on what some of these short-term opportunities are... We haven't done enough of that in the past."
Outside observers noticed the same trend. Schroders head of strategic solutions Neil Walton said: "Consultants' interaction with pension funds is changing dramatically. There is a strong move to increase proactivity and lead pension clients to be more opportunistic in their asset allocation. The aim is to make clients more responsive to investment opportunities as market conditions change."
At least one pension fund manager said this will lead to a long-term shift in the way consultants operate.
California Public Employees' Retirement System fixed income portfolio manager Eric Busay said: "The market is forward-looking more than backwards looking. Consultants have typically been study-oriented, which implies backward looking. The skill set of the future will have to include a forward looking component. I think you will see consultants being more forward looking because of this."
Busay anticipates more pension funds will incorporate the use of third parties to work alongside consultants when making investment decisions. In some cases it could be the asset managers, or other types of analytics providers.
The Pension Protection Fund (PPF) is consulting on proposals to charge a "risk reflective" levy for commercial defined benefit (DB) consolidation vehicles.
The funding gap across FTSE 350 schemes could be slashed by as much as £275bn if schemes look beyond traditional ways of creating value. Victoria Ticha examines how
There will be "many flavours" of defined benefit (DB) consolidators but consolidation will only be the right answer for a minority of schemes, Alan Rubenstein says.
Work and Pensions Committee (WPC) chairman Frank Field has questioned the regulator on what lessons it can learn from the experience of the Kodak Pension Plan No.2 (KPP2).