Accountability and added value are more important than investment consultant costs, says Cardano
Cardano, the leading investment advisor and fiduciary manager, believes that many trustees may be placing their focus in the wrong area when measuring the success of their investment consultants – by judging them on costs, rather than quantifying the consultant’s added value.
Phil Page, Client Director of Cardano UK, commented: “Trustees should certainly be questioning cost when it comes to their investment consultants, but this should not be the only yardstick by which they are measured. Most trustees’ primary goal is to achieve planned growth in their funding level in a controlled way, so why not measure the investment consultant according to their impact on this goal? The consultant may not be responsible for all areas that affect achievement of the goal, but trustees can usually quantify the value added and protection benefits in areas such as manager selection, asset allocation or liability hedging advice.
The other question that should be considered is ”who is actually accountable for the funding level results?. Trustees should discuss with their consultant who they consider to be responsible for the change in the funding level, or at least the different factors that affect the funding level. They can then review funding level performance and the reasons for this periodically, which should lead to a better focus on improving the funding level in a controlled way.
Release date 21 January 2013