- Summary & Methodology
- Provider Ratings
- Transition Manager Profiles
- Abel Noser
- BlackRock
- Citi
- Loop Capital
- Macquarie
- Northern Trust
- Pavilion
- Penserra
- Russell
- State Street
- Industry Trends
Past Surveys
Which providers have taken gold, silver, and bronze in this year’s industry-leading survey? And where are the next challenges and opportunities for the sector going to arise?
Still full of the Olympic spirit, CIO is awarding the gold medal to investment bank Macquarie.
The Australian firm was rated “excellent” in 86% of transitions, higher than any other global provider in the survey. It also charges the lowest commission, its clients said, and is comfortably the top operator in its home region (Asia/Pacific), beating global giants Citi, State Street, and Russell Investments.
Our silver medal goes to Pavilion. The North American-focused group consistently provides low cost estimates—offering the cheapest estimate 70% of the time, according to clients—although it is not as competitive on commission charges. More importantly, Pavilion regularly delivers on these estimates: it is beaten only by Citi when it comes to cost performance versus estimate. So it’s no surprise that Pavilion ties for first for client satisfaction in the US.
Bronze goes jointly to Russell and BlackRock. While not necessarily top of any individual category, the pair score consistently highly for client satisfaction and are competitive on commission and total cost estimates—and are close behind Pavilion on performance versus cost estimates.
What can our transition management players learn from this year’s survey to take forward to 2017? Getting on a list of approved providers is the main route to securing new business: 65% of clients said this was how they chose their transition manager. Commission-based remuneration is still the overwhelming favorite, but a flat-fee approach is gaining popularity. Business is getting harder to come by, however. The proportions of transitions conducted due to fund structuring or asset allocation shifts has fallen dramatically in the past five years—perhaps investors have completed post-crisis overhauls and are looking to the long term. (Manager performance is, as ever, the main reason for change.)
What’s more likely, consultants say, is that the rise of alternatives is posing a challenge. Alongside the simple repositioning of equity or bond allocations, pension funds are buying into private equity, private debt, infrastructure, and real estate—all areas in which transition management has yet to make significant impact.
Are small projects where the future of transitions lies? The rise of specialists Loop Capital and Abel Noser—both on the podium when it comes to US-only business—indicates this may be the case.
Perhaps the future is not with defined benefit pensions at all. “We’re not seeing defined contribution (DC) funds making much use of transition management at the moment, but with the amount of money going in it’ll only be a matter of time,” says Andrew Williams, principal at Mercer’s transition arm. The next realm for transition management competition could very well be DC. —Nick Reeve
Methodology
From 22 July through 19 August, Chief Investment Officer solicited clients of transition management services to rate the performance of the transition managers they used in the previous 12 month period. Via an online questionnaire, respondents had the ability to rate up to 15 managers at once from a list, as well as the opportunity to write in and rate other managers not listed. By the survey’s close, a total of 200 responses were collected, representing a total of 514 ratings among 16 transition managers.
In order to be included on any league table, a provider needed at least 10 total responses.
A provider having at least five responses in each of any two regions is eligible for the global league table. Providers qualifying in just one region are considered regional. Six providers qualified for global ratings and four qualified as regional.
Minimum responses needed by region in order for a rating in that region are: United States (10); Canada (5); UK/Europe/MENA (5); and Asia/Pacific (5).