Trustees have ultimate responsibility for any investment of funds under their care. They may choose to delegate the day-to-day management of the investments to a relevant professional, who will only act on their instructions. However, the trustee remains accountable for ensuring that the investment approach is appropriate and that a suitable professional has been appointed to meet the trust’s requirements.
Working with an independent adviser who is regulated by the Financial Conduct Authority can help alleviate some of the trustees’ responsibilities. The independent adviser will ensure that there is a suitable and efficient process in place to assess the marketplace of investment managers without bias and, critically for the trustees, ensure that there is evidence of a transparent and robust process.
Once the initial investment manager due-diligence process has taken place, the suitability of the investment strategy and the investment manager should be reviewed annually. As the investment manager is unable to provide an independent viewpoint, a regulated independent adviser can be appointed to provide continuing oversight of the investment strategy and deliver an annual suitability report to the trustees. This report should confirm the ongoing suitability of the investment strategy and the investment manager or make recommendations to enhance the suitability.
When and how to review your investment manager
There are many factors that may influence the selection of a suitable investment manager, but the task of reviewing every potential manager, in order to select the right one, is a significant duty.
An independent adviser can offer a robust process which quantifies how investment managers will be reviewed and compared. They will provide a shortlist and detailed report for review, with a recommendation for the trustees’ consideration.
Factors for consideration may include:
a) risk controls;
b) returns (versus an appropriate benchmark or against their peers);
c) investment processes;
d) the resources of the company to support operations;
e) the company reputation; and
f) the fees and expenses applicable.
In some situations, a single investment manager might not meet all of the trustees’ requirements. Therefore, it may be necessary to consider how best to blend a number of managers, utilising their individual strengths and specialisms and thereby ensuring greater diversity and risk is not compounded.
How the Partners Wealth Management Manager Select Service can help
Our Manager Select Service leverages our investment manager analysis to provide trustees with independent professional advice in the selection of suitable investment strategies that meet their beneficiaries’ objectives. With a focus on key attributes such as risk controls, performance monitoring, sustainable/ESG considerations, and costs, our clients receive comprehensive advice and due diligence on the selected managers. Additionally, our expertise and expertise enable us to advise on the efficient blending of different investment strategies and managers in order to enhance diversification and reduce risk. Assisted by market leading technology, this can be achieved without increasing administrative requirements or costs and, in many circumstances, the ongoing administration may be reduced resulting in a more efficient final cost than utilising a single discretionary manager.
The service is available for trusts with a range of requirements, including currencies such as GBP/EUR/USD, UK or offshore custody, sustainable considerations and US tax reporting requirements.
Our service does not stop after the initial selection, but offers continuous advice and oversight, providing trustees with a robust process to ensure the investments remain suitable. Our manager analysis is refreshed quarterly, driving a traffic light system to indicate where managers continue to perform as expected, if there are items that need consideration, or if there are performance or implementation factors that steer us to recommend switching to an alternative manager.
Our annual report to trustees can be used as evidence of ongoing suitability of the selected investment managers and provide verification of when and why action has been recommended.
If you would like to learn more about how our independent investment manager selection service can help you support your investment process and potentially enhance the investment strategy, please contact Nathan Prior.
Nathan Prior
Partner, Head of PWM International
nprior@partnerswealthmanagement.co.uk
020 7444 4053
The contents of the article have been prepared solely for information purposes. The article contains information on financial products and services and such information is designed for and addressed solely to individuals seeking generic industry information.