Top tips for trustees undertaking transitions

Top tips for trustees undertaking transitions

Richard Butcher, managing director at PTL, a provider of independent trustee and governance services to corporate pension schemes and non-pensions trusts, delivers a rundown of the key considerations for trustees to bear in mind when it comes to transitions.

Okay, you’ve made the big decision. It’s been tough. It’s been demanding. But you’ve made it. Whether you’re moving your assets because you’ve fallen out with or lost faith in your current asset manager or because your asset allocation needs have changed you now have the final hurdle to clear: the transition.

First rule:

Don’t lose sight of the transition. It’s easy to think you’ve done the heavy lifting with the decisions you’ve already made – and you have. But unless you get the plumbing right, the sink will make a mess. The transition process is a chance to lose a lot of value, so pay it some attention.

Second rule:

Think about what you want. This is always the logical place to begin a process. If you spend more time defining the project, the answers often become apparent. Planning saves money and reduces risk.

Third rule:

Your consultant will, invariably, offer to do the transition management for you. That can be fine and they might well do a good job, but they are not the only game in town. Look at others. It may or may not be more expensive but (a) it keeps your consultants on their toes (no bad thing generally – but specifically useful here to make sure you pay a fair price) and (b) you may find a different transition manager more suited to your needs.

Fourth rule:

Set out and agree with them what you expect them to achieve and for how much. This document (and it should be a document) should embody some of the outputs from the second rule.

Fifth rule:

Embrace cost. Transitions always cost, directly in fees or indirectly in out of market exposure or dealing costs. The trick is to optimise the costs.

This column features in the Transition Management Guide 2019. Download the full guide here.

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