VALUE FOR MONEY

and not a penny less

Overview

When an independent governance committee asked us that question we wondered about it ourselves.

The Team

Patrick O’Sullivan
Jinesh Patel
Lydia Fearn

Strategies Assessed
160

Are members getting value for money?

When an independent governance committee asked us that question we wondered about it ourselves. We put ourselves in the shoes of the IGC and brainstormed what this means and how we could measure it. After some finessing, we produced a quantitative analysis of measuring value for money across investment strategies.

Quantitative values in a qualitative marketplace
Knowing that you’re obtaining value for money for your members is an important responsibility for trustees and independence governance committee (IGC)s. There is no standard definition of value for money, and all trustees or IGCs have had to set out what it means for them. Which is why we were very eager to get involved when the IGC of one of the UK’s largest pension providers asked us to help them identify a way of measuring value for money across their investment portfolio. With no clear definition of what value for money means, no established method for measuring it, and a large number of investment strategies to consider, this was a challenge. One we were enthusiastic about, and determined to resolve.

Looking beyond performance

Performance is an obvious measure and can’t be ignored, but it’s not the sole indicator of value. We had to dig deeper, understand what was important to our client, and, crucially, identify the features that could impact on outcomes for members across all generations.

We looked at several areas, including:

  • Wider fund strategies and their propensity to deliver the expected returns for the risk taken;
  • The fine detail of the asset mix; and of course
  • Charges

 

Using this sort of information, we were able to map funds against an objective framework to help assess value-for-money in over 160 strategies.

To our knowledge, this was the first exercise of its kind. It provided the answers our client needed, and we continue to work with them to refine the model to ensure their members receive value for money.

A clearer picture emerges

Our design provided the IGC with a clear and consistent picture, enabling them to delve deeper into those investment strategies that may not be giving value for money.  This allowed the IGC to understand in greater depth why certain strategies were not scoring well, and determine if any action was needed.

Redington has been a key part of developing the value for money framework, and their technology has helped to ensure the IGC can easily distil the analysis.”
Rene Poisson, chair of Standard Life IGC

Find Out More

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