Willis Towers Watson has issued “A guide to delegated investment management.”

The guide answers the question “What is delegated management?” and discusses roles and responsibilities as well as required skills of all parties.

In addition, the guide addresses:

• Setting objectives;
• Implementation;
• Conflicts of interest;
• Monitoring; and
• Fees.

The firm says delegated investment management can close the gaps between the need for efficient investment strategies, real-time decision-making and the typically constrained governance budget of a pension fund committee.

It explains that delegation turns over certain functions to a third party, but it isn’t a simple outsourcing solution. Rather, it should complement the strategic responsibilities of the plan sponsor. The model is the same as when a management team acts upon a corporate board’s strategy. The plan sponsor remains in control of high-level strategy, defining the pension plan’s long-term funding objectives and return requirements relative to the liabilities, while the delegated investment manager implements the daily aspects of that strategy, including portfolio construction and operations.

The firm suggests delegated investment management can materially benefit pension plans looking to add to their investment decision-making capabilities. The industry has developed considerably over recent years, presenting pension plans with a variety of credible propositions from competing providers. As with many other professional service selections, details are important, and there are no real shortcuts.

Willis Towers Watson can be contacted at investment@willistowerswatson.com to discuss any of the concepts in the guide in greater detail.

The guide can be downloaded from here.