UK - ‘Beauty parades' used to hire traditional investment managers don't work with transition managers, said Andrew Williams, principal at Mercer Sentinel.
"I just don't believe it's possible really to undertake a beauty parade with transition managers and ask transition managers to present for 45 minutes to an hour with questions to follow," Williams told attendees at the Global Pensions Transition Management Forum in London last week.
He said it is inevitable that additional questions will arise after the presentation that can't immediately be answered.
"To be honest with you, I've been researching transition managers for over 10 years now and I learn something new about transition managers and the industry every time I go to a meeting," he said.
Written questionnaires alone are also not enough. "Written questionnaires only tell half the story," Williams said as the questionnaire may be outdated at the time of the transition or a concept could be misunderstood.
Instead, the questionnaires should be paired with lengthy on-site meetings that takes the client through a transition lifecycle (project management, pre-trade analysis, execution and post trade reporting), Williams told delegates.
At Mercer, the onsite meetings generally take a day.
"Ideally this should last as long as possible and involve as many people from the transition management team as possible," he said.
Any evaluation process needs a robust scoring mechanism and should be tailored to the specifics of the legacy portfolio, he added.
Investors should then use the scores to get cost estimates from prospective providers.
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