Neil Smith, head of Performance and Cost Transparency in Aon’s Global Investment practice, said: “Aon has been a strong advocate of all forms of transparency in the investment industry and we were among the first (of a still small sample) of fiduciary managers to make our client performance publicly available. We believe the imminent launch of these cost templates is another positive step in allowing institutional investors a clearer assessment of the value generated by their asset managers. As the use of the templates is voluntary we believe investment advisers, such as Aon, have a big role to play in ensuring their initial and continued success and particularly how advisers respond to non-compliant asset managers.
“The current procedures (as highlighted by the IDWG) within the Local Government Pension Scheme Code of Transparency of non-compliance, which results in non-renewal/inability to tender for contracts, is an approach we fully expect to gain wider traction. However, based on our own analysis, we anticipate that the vast majority of asset managers we work with, will adopt the templates – and led by those based in the UK.”
Neil Smith continued: “The ability to access their costs information for the first time in a consistent format, across all asset managers and all asset classes, is just the first step for investors. The proposed level of information has never been so broadly available before. Understanding the importance, magnitude and value derived from the various cost elements will be important to ensure discussions are focused in the right areas.”
Aon has developed systems which, as well as providing a degree of education, will give its clients the ability to understand and analyse their own costs through various lenses - from the overall scheme down to individual manager level. Combining this information with cost assessment expertise, means that Aon’s clients will be fully equipped for discussions with their asset managers.
Neil Smith, continued: “In our experience, institutional investors have struggled to gather and interpret the costs incurred in the management of their assets. As a member of the IDWG, Aon has seen at first-hand the hard work and co-operation among different stakeholders to standardise which costs are disclosed and the way in which it is done.
“This standardisation, combined with more granular information, means we are confident that the transparency of all costs to investors will be improved significantly. Aon will be adopting the IDWG recommendations and will set the expectation to adhere to them for all current and prospective asset managers who invest our clients' assets. We are sure that clearer and fairer discussions between clients, their advisers and asset managers will follow as a result."
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