the value and duties of an

asset consultant

Rob MacMahon\Martin Poole

agenda

~ PF130

~ what is an asset consultant?

~ what services do they offer?

~ when to use an asset consultant

~ will funds pay extra?

~ how do EB consultants work together

with an asset consultant?

~ assessing asset consultants

~ discussion

PF130

~ best governance structures

~ stakeholders need to understand their

role and the when to use expert

advisors

~ board orientation and education

~ risk management and internal

controls

~ investment performance and

communications

definitions

1. asset consultant

2. investment strategy document

3. fiduciary duty

4. quantitative manager analysis

5. qualitative manager analysis

6. implemented consulting

7. co-fiduciary

what is an asset consultant?

~ investment experts

~ by your side

~ analyse fund membership

~ help trustees & EB consultants

discuss and make investment

decisions

~ work with other providers where

necessary e.g. communications

content and strategy

understanding our roles

to achieve your fund goals reliably over time

- no conflict of interest, one common goal

objectives &

goals

fund structure

develop &

implement

investment

strategy

member records

board of

management/

trustees

benefit

consultants

administration

asset

consultant

actuary

asset

manager

specialist asset

class

investment

statutory role,

valuations,

strategy approval

services asset consultants offer

investment

manager review &

recommendation

investment

governance

investment governance

workshop

compliance with PF130

investment strategy

review &

development

analysis & investment

strategy development

workshop

investment philosophy

workshop

analysis & manager

workshop

asset manager

quantitative &

qualitative analysis

implementation of

investment strategy

member

knowledge &

understanding

member education

communication

trustee knowledge &

understandingtrustee seminars

trustee training

implemented

consulting

end-to-end advice &

implementation

value added services

fiduciary duty & investments: good governance

when to use an asset consultant...

at any stage in the process

setting investment objectives

developing investment strategy

selecting asset managers

implementing and monitoring

reporting to members & trustees

review

governance

framework

when to call an asset consultant

~ new fund

~ any large change to

membership/corporate action

~ review of membership and

investment strategy development

~ review of asset managers

~ trustee training for investments

~ investment communications strategy

will funds pay extra?

~ access to investment funds at good

cost is critical

~ best governance structures are not

without cost

~ asset consultants can use their

influence when implementing

~ total cost (relative to risk) to member key

~ more appropriate funds

benefits / obligations

~ fiduciary liability

~ compliance with PF130

~ governance adds 1-2%p.a. in performance

~ long term benefit for members~ appropriate investment funds

~ long term education programmes

~ members’ faith in trustees

~ peace of mind

~ the fund is receiving advice!

asset consultants: how are they paid

~ for just advice / single service~ agreed rand based fee per service

~ monthly retainer or % of assets

~ for implemented solution~ % assets or retainer

~ could be recovered from asset manager

~ general guideline: convenience and value

assessing asset consultants

working together

~ understanding areas of expertise

~ collaboration for our clients best

interests

~ independence and transparency

~ long term working relationships

~ effective communications

~ consulting opportunities

discussion

poor decisions

worrying times

legal case 1

~ administrators, Estate Richards vs.

Nichol & another

~ the trustees of a retirement fund must

seek advice on matters on which they

are not expert

~ apply their minds to all the information

at their disposal

legal case 2

~ Jowell vs. Bramwell-Jones & Others

1998

~ if trustees do not have the knowledge or

skill for investment decisions they must

secure expert advice

~ the adviser then becomes liable