Getting the best from your multi-asset manager

Foresters Financial wanted an independent check on whether a decade-long investment manager relationship was still delivering value.

With a renewal on the horizon and most reporting coming from the manager itself, they asked BW to take a fresh, objective look – and to help them go back to the table with a clearer brief and stronger leverage.

A long relationship that needed re-testing

It is challenging for investors to fully assess the performance and value of multi-asset managers. Reporting is often produced by the manager themselves, focuses on headline performance and risk statistics, and can be heavily data-led. More information does not necessarily make it easier to judge whether a manager is genuinely adding value.

Foresters had worked with the same investment manager for around 10 years. Over that period, the mandate and service had evolved several times as markets and the firm’s own objectives changed. With the contract period coming to an end, the Board wanted to step back and ask some straightforward questions:

• Is our manager genuinely adding value?
• Is the current mandate still fit for purpose?
• Are fees and service levels competitive in today’s market?

BW were therefore engaged to provide an independent view before entering renewal discussions.

What we did

We carried out an independent manager review that combined performance analysis with a broader look at mandate design, governance and future fit – the same kind of support we provide through our outsourced investment services.

Our work included:

• Independent performance assessment: using our in-depth knowledge of the market, we built a tailored analytical framework to assess the manager’s track record. We:
  • Analysed performance over different time periods and market conditions.
  • Compared results against relevant peer groups and benchmarks.
  • Attributed returns to different drivers to identify where genuine value was being added – and where it was not.

This gave Foresters a much clearer picture of how the manager had performed in practice, beyond headline numbers.

• Mandate and governance review: we then reviewed how well the existing mandate matched Foresters’ current objectives and future needs. This involved:
  • Clarifying the role of the multi-asset mandate within the wider business strategy.
  • Training and consideration of alternative governance options and the implications on portfolio metrics and fees.
  • Assessing the broader service level provided and whether this met their overall needs.

Going through this process enabled Foresters to articulate a clearer set of strategic requirements and governance expectations for the relationship.

• Support with re-negotiation: with that clarity in place, we helped Foresters prepare for, and conduct, a structured re-negotiation process. We:
  • Brought market insight on current pricing, service levels and alternative solutions.
  • Helped assess the service level reflecting Foresters’ needs.
  • Introduced appropriate challenge around fees, reporting, resourcing and escalation, ensuring the final terms were aligned with best practice.

This meant Foresters could enter discussions from a position of strength, backed by independent evidence and a clear view of their priorities.

What changed

The review led to a refreshed mandate and service model that better matched Foresters’ needs today, rather than simply rolling forward historic arrangements.

Key outcomes included:

• A refined mandate design: the revised mandate more clearly reflected Foresters’ objectives and risk appetite, with a better-defined role of the overall investment strategy.
• Stronger value for money: the re-negotiation delivered cost savings of more than £500,000 per year, while maintaining – and in some areas enhancing – the scope of services provided.

Ongoing oversight

Our work with Foresters has continued beyond the initial review. We are now supporting the firm in enhancing its ongoing oversight process, including:

• Focusing Board reporting on the key measures of success for the mandate.
• Streamlining the governance structure and reporing lines so Board time is better spent on strategic matters.
• Providing an independent perspective and challenge on a regular basis to ensure better challenge and keeping up with market standards.

This framework is being designed to save the Board time, while ensuring the manager relationship continues to deliver against Foresters’ objectives.

Talk to us

Foresters Financial benefitted from having an independent view of their multi-asset manager, a clearer articulation of what they needed from the relationship, and the confidence to secure better value at renewal. The new oversight framework is helping them get the best out of their manager over time.

If you’d like an independent view of your investment manager – on performance, service levels or governance options – we can help. Our team provides investment services for insurers and has the market insight, analytical tools and experience to reset mandates, introduce the right level of challenge and secure better value.

Let us help you get the most out of your manager – email Chris Powell to get started.