3 traps to avoid when being reviewed by your pension scheme


As our recent “Pension Scheme Procurement Timeline” infographic shows, a scheme’s first tasks are to establish whether it needs an asset manager and, if so, what type of service it wants from them.

But, if the scheme has already used an external asset manager, their first task will instead be to conduct a review.

Reviews are important exercises for asset managers. Success means business. And yet, according to a recent Professional Pensions poll, some managers aren’t getting the review process right.

That potentially puts their mandates at risk, opening the way for reselections that could favour the competition.

This week’s blog post looks at some of the behaviours which you, as an asset manager, should avoid falling into at all costs when being reviewed.  

Don’t just take our word for it – these are what pension schemes themselves say!

Pension schemes can feel frustrated by asset managers when it comes to conducting performance reviews. So what behaviours should those managers avoid?

According to a recent Professional Pensions poll, 92% of pension schemes now use an external asset manager.

The task of reviewing those managers isn’t easy. Most respondents to our poll said that they look back over anywhere between three and five years when reviewing their asset manager. That’s an awful lot of information to make sense of.

It’s not surprising then that 90% of schemes get an adviser or consultant to help them out. But, even with this additional help, the process can still be maddening.

According to our poll, these are their main pet hates.

1. Spin doctoring

Naturally you want portray yourself in the best light. But if you think that pension schemes can’t detect when you’re being economical with the facts, think again. They well understand the need to “get underneath the headlines” as one respondent put it.

Failing to impress the Board might risk the mandate, but, according to our poll, spin is no safe haven either. Spin can contaminate your whole image, undermining trust even in those things that you’ve done well.

2. Comparing apples with oranges

For pension schemes, the review process boils down to one simple question: could I get a better deal elsewhere?

Our poll suggests that answering that question is fiendishly difficult in practice. Comparing different managers in a meaningful way is anything but easy.

This suggests that managers are, in the words of one respondent, “choosing the most favourable basis on which to report” instead of giving schemes the data they ask for and presenting it in the most helpful format.

3. Jargon

A perennial bugbear of scheme trustees in particular, there really is nothing like a good dose of jargon for causing alienation, confusion and distrust.

The review period is a time for communication, not just information, but it would appear that not everyone has got this message. If you don’t bother to explain your performance in clear terms, not only do your risk vexing your client, you may also leave the door open to more articulate competitors.

In summary, self-serving tactics ultimately won’t serve you!


In our next blog post, we’ll look at the top three things that asset managers can do to help pension schemes during a performance review.