Fund Managers ‘Intimidating’ Pensions

(May 24, 2012)  —  Some fund managers are purposefully bamboozling pension fund investors, who are struggling to see the bigger picture when allocating capital, industry experts have claimed.

Some asset management teams wilfully talk at too high a level when touting their products and services, panellists at a roundtable discussion in London on pension fund governance said today.

Toby Nangle, Head of Multi Asset and Asset Allocation at Threadneedle Investments, said: “As a trustee of a DC pension scheme and a grant-giving charity, I have seen first-hand that some fund managers try to intimidate trustees.”

Nangle said he had experience of some fund managers, who were unaware of his financial background, trying to mislead boards over their products and services.

“It has given me a fascinating perspective on how badly fund managers communicate,” said Nangle.

The panellists were discussing the role of trustees and pension fund investors more broadly to coincide with the publication of ‘The Trustee Guide to Investment’, penned by two Cass Business School fellows: Andrew Clare and Chris Wagstaff. Both have experience of being on pension fund investment boards.

The panel, which included two additional pension fund trustees Karen Wake, formerly Head of UK Pensions at Credit Suisse and Giles Payne, Director at HR Trustees, was hosted at Threadneedle Investments London headquarters and was chaired by Dawid Konotey-Ahulu Co-Founder of consulting firm Redington.

Wagstaff said trustees needed to be better educated so they could question what they were being told.

He said: “Trustees are often starting from a very low base in terms of their investment knowledge – a lot of boards need better financial education as they need to be in charge of high level decsions. They have to understand and be able to drill down into the detail so they can be more nimble and ready to act in changing circumstances.”

Payne added that sub-committees containing smaller groups of better financially educated trustees could be a way to create a more streamlined process, but only if they were given ultimate autonomy to make decisions.

Clare said: “The people on these boards need to understand about how assets and investment will fit together. Looking at the fees paid to asset managers, consultants and advisers, it seems crazy that pension funds are still not yet paying for proper training for trustees in financial matters. It is time consuming and it costs, but it is worth it.”

Nangle concluded: “A pension fund is often the first or second largest asset a company owns, so I am constantly surprised that there is no required qualification for those appointed to look after it.”