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Tender or "Pretender"? - CMA Scrutiny and Pension Fund Procurement
One of the key recommendations in the CMA’s Provisional Decision report is a new mandatory requirement. UK pension funds should, they say, conduct a “competitive tender” when appointing a fiduciary manager.
For investors and anyone involved in selecting investment managers, this recommendation raises three thorny questions. One: what does “competitive tender” actually mean? Two: how cumbersome are they? Three: are there implications for other types of manager selection?
This short paper reveals some of the key debates and dynamics.
IN THIS PAPER
What is a competitive tender? The CMA says that only 34% of investors conducted a formal tender for their fiduciary managers, but key providers often claim that the majority of their clients have chosen them through a “tender.” Find out the key features that we believe a good competitive tender should offer.
What are the pros and cons of competitive tendering? Popular myths and practical experiences at a glance.
What makes a good fiduciary manager? View a simplified scoring framework as well as potential questions and issues that should be addressed.
With the CMA likely to recommend mandatory tenders for fiduciary mangement services as part of its market investigation on Investment Consultants, now is the time for pension fund managers and trustees to consider the implications for their manager selection activity and governance.
This note primarily considers fiduciary manager selection, but also addresses key considerations around tendering for non-fiduciary manager selection, where similar “conflict of interest” considerations are increasingly evident.
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