Investment consultancy

A good investment consultant will bring knowledge of both markets and fund managers to a scheme.

Trustees have a legal responsibility to monitor their scheme assets at all times, and an independent view of investment performance can be invaluable.

Trustees must also comply with an ever-expanding volume of legislation around scheme investments. To make sure they meet those mounting requirements, most schemes look to an investment consultant.

However, investment consultancy is far from a one-size-fits-all service. Each scheme has its own challenges and risks, calling for a bespoke balance of returns and risks.

How can First Actuarial help with scheme investments?

We specialise in advising small and medium pension schemes (below £500m). Our consultancy services – including the funds we research – reflect that focus.

At the heart of our investment consultancy are two key questions – where is that scheme now and where is it heading?

Some schemes are still open to accrual, so we need to consider their active members. Some trustees have strong views in areas like the environment, which we must take into account in our recommendations. And some schemes are small, limiting the range of investment asset classes they can use.

And what are the long-term objectives? Maybe it’s low dependency or buy-out, for example. How long will it take to get the scheme to that position?

We listen to our clients, and then we lead them through a four-part process to align their investments with the direction they want to take.

Part 1 | Setting a strategy

We start by looking at the scheme’s funding position. A scheme that has yet to achieve full funding is likely to need reasonably high returns, for example. Whereas an investment strategy for a fully funded scheme tends to be more cautious, to protect the strong funding position. We also consider the long-term target of the scheme.

We then look at the current strategy and its expected returns and associated risks. How will those risks change if we make changes to the investment strategy? We use modelling tools to help trustees assess their investment strategy and gauge the risks and returns involved.

And what changes can we make to the strategy as the scheme progresses to its long-term target? Over time, we help trustees consider adjustments, locking in funding gains and reducing risk as they progress towards their long-term target.

Part 2 | Monitoring performance

Within our Client Hub, we provide a modelling tool which will give you a clear picture of your scheme’s funding position, with daily monitoring. Trustees can also obtain up-to-date asset valuations and details of funds held on the Client Hub.

Many trustees set triggers so they can adjust the asset allocation if the funding position improves sooner than expected. When a trigger is breached, we can implement pre-agreed asset allocation changes quickly.

Part 3 | Investment management research

We research a range of asset classes – including equities, corporate bonds, ESG-focused equity and Liability Driven Investment (LDI). We follow this four-stage research process with any fund we consider:

Information and insight gathering – Using highly reputable global data covering almost 80,000 fund vehicles.
Bespoke screening – Combining external sources with our own professional experience to filter out funds that have downside risks or are otherwise unsuitable.
Meetings with fund management teams – Deepening our understanding of how funds are managed, and assessing their suitability for our clients.
Independent review of findings – Presenting our recommendations to our Investment Rating Committee, which provides independent oversight and challenge.

We maintain ‘buy lists’ for the asset classes that we deem suitable for small and medium pension schemes.

Part 4 | Transition management

If not well planned and managed, a transition of assets can prove very costly, as even the smallest oversight can lead to significant losses.

We have a dedicated team led by specialists with decades of experience in managing transitions between a wide range of investment managers and asset classes.

Despite the potential complexity involved, we make the transition process as straightforward as possible for trustees. We produce a plan, follow proven processes, and keep transaction costs as low and timescales as short as possible.

Why First Actuarial?

We are a well established investment team – formed over a decade ago – with experienced authorised consultants. Our Head of Investment Services has 25 years of pensions experience and has been working as an investment consultant since 2008. Our other senior investment consultants have similar levels of experience.

Across the team, we’re all driven to do the right thing for our clients at all times, even if that doesn’t earn us the highest fees. We focus on providing advice that is in the best interests of the scheme.

If a simple, low-cost solution – such as a cost-effective fund platform – is suitable, then that is what we recommend. An automated approach also frees up more time for what we do best – understanding the needs of our clients and providing human guidance and advice in clear, straightforward language.

This reflects the company’s client-first approach. We take the time to listen to our clients and develop a clear strategy on that basis. We offer a range of options to meet different objectives and budgets – from simple market-based yield triggers to bespoke funding monitoring on a daily basis.

None of our staff have chargeable hours targets, and we are not incentivised to ‘sell’ investment products to our clients.

We’re a close-knit team – that’s one of our biggest strengths and our clients benefit from that. We have regular market discussions, where consultants and researchers contribute market intelligence together with insights from trustees and fund managers. Our transition specialists can then pick up any issues affecting transactions and market liquidity. All of this gives our investment consultants a broad and detailed view of market developments at all times.

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Investment consultancy

A good investment consultant will bring knowledge of both markets and fund managers to a scheme.