David Rowley is a great journalist, I’ve just found this on wordpress. It is spot on and it asks a good question at its end. We need an authoritative source of performance data and a league table showing who is offering value for money.- Pension Plowman
In 2022 it may transpire that the DC master trusts offered by Aon, Mercer or Willis Towers Watson were the smartest purchase of employers in 2017. That they had the optimal asset allocation, governance, comms and were great value for money.
But until the market has that proof, these trusts will suffer accusations of conflicts of interest with these firms’ main consulting business. The FCA is already predicted to force the big three to separate their fiduciary management and DB advisory businesses, might the same happen here?
It need not be this way, but the marketing language that I have seen from WTW and Aon only confirms suspicions their master trusts are more about driving sales than offering great value.
Towers’ Lifesight website uses phrases such as ‘market leading administration services’, ‘cutting edge member engagement concepts’, ‘low cost, high performing investment options’ and ‘the latest innovative thinking from our specialist teams’. Aon’s literature is largely sizzle too.
The best international pension funds do not operate like this.
They talk about their performance, their investments, their scale and how they have used it to benefit members. They do not rely on marketing promises alone.
Would a fund manager be able to get away with this?
How did it get to this? Both firms are magnets for the brightest graduates and otherwise have the highest standards. They should be leading the way. My own theory is that the secrecy with which each firm guards its IP from its competitors means they do not want to give hard facts and figures out in public.
Talking of figures, the FinTech pensions aggregator PensionBee recently showed me the DC providers slowest at transferring out their customers’ pensions based over a recent time period. Willis Towers Watson was close to bottom of the class, not least as it apparently does not use Origo the industry-wide initiative to enable quick electronic transfers.
We are, it should be said, at the phoney war stage of DC in the UK. Employers have done their due diligence, balanced it with hunches, emotional reactions, fee considerations, all the usual reasons why people buy stuff, but there is no easy way for them to get comparisons of performance unless they go to their own, possibly conflicted, consultant.
In Australia, distribution of 1, 3, 5 and 10 year performance figures for super funds is public knowledge and fairly easily accessible. Funds live or die by such figures. Specialist performance ratings agencies unconnected to DC providers such as ChantWest and Superratings provide this service.
Who is going to provide this service in the UK?