LGPS 2017 - Survey of independent advisers
03 Oct 2017 - Estimated reading time: 10 mins
Our survey considers responses from 19 independent advisers to some of the largest LGPS Funds in the UK. In total, our respondents help advise over half the LGPS (in terms of assets under management). Their answers covered the key issues of scheme objectives, risks and investment beliefs together with the topical themes of LGPS Pooling and Environmental, Social and Governance (ESG) issues.
In the remainder of this report we provide detail on the responses we received, including some of the quotes that were provided. We believe our survey results give an interesting insight into the thinking of key influencers within the LGPS, most notably the points outlined below.
Objectives: 90% of respondents felt that Committees have a clear understanding of their Fund’s current investment objectives. However, only two thirds were of the view that Committees had a firm view of how their investment strategy will look once the Fund’s objectives have been achieved.
Investment beliefs: Unanimous agreement among the independent advisers that statements of investment beliefs are important and are a key part of Committee’s decision making frameworks.
Investment risks: Economic risks, most notably of not being able to generate sufficient asset returns, was identified as being the biggest investment risk that Fund’s face (85% of respondents agreed).
Employer investment strategies: Around 50% of those surveyed were of the view that individual employer strategies are likely to form an important part of the LGPS’s future.
Managing cashflow: Only 60% said that their Fund’s net cashflow positions are discussed regularly at Committee meetings.
Environmental, Social and Governance: The majority of respondents agreed that ESG is highly relevant when Funds are choosing and monitoring providers. However, some expressed a degree of scepticism, highlighting that, in their opinion, ESG matters take a disproportionately large amount of time, relative to other Fund considerations.
Asset Pooling: Around 85% of responses were concerned about the costs of setting up and transitioning to asset Pools. Nevertheless, almost 80% believe that pooling can result in Funds benefiting from greater economies of scale. There was also consensus that Committees having a greater focus on strategic decisions, may well be beneficial.
Future role of investment consultants: Around 80% of respondents see the role of investment consultants as helping Committees develop their approach to risk management.
We discuss these findings in more detail in the remainder of this report.