Pavilion, an employee-owned global investment services firm,
offers institutional investment consulting through Pavilion Advisory Group,
whose consultants provide tailored advice, strategies and solutions for
institutional clients.
When the transaction is complete, Plan Sponsor Advisors’
operations will be merged with Pavilion Advisory Group Inc. Plan Sponsor Advisors will maintain its name
on a co-branded basis with Pavilion over the near term, with plans to assume
the Pavilion Advisory Group name in the future.
Plan Sponsor Advisors, an investment and retirement benefit
consultancy, was recognized as a Top 100 Retirement Plan Adviser by
PLANADVISER in 2013, as a multioffice team with more than $10
billion in assets under advisement.
Founded in 2002 and with offices in Chicago and
Indianapolis, Plan Sponsor Advisors provides fiduciary and non-fiduciary
consulting services to publicly traded and privately held companies including
global corporations, major healthcare systems and family-owned businesses. Over 90% of its revenue is derived from defined
contribution plan sponsors. Plan Sponsor Advisors advises on more than $22 billion
in retirement plan assets.
News of the acquisition comes on the heels of Pavilion’s May 29 announcement of the planned acquisition of LP Capital Advisors, a
Sacramento, California, investment consulting firm with expertise in
alternative asset classes.
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“Unsticking the Status Quo: The Role of Diversity in
Investment Committee Effectiveness” examines how investment committees define
and value diversity, as well as the impact of diversity on the committee’s
effectiveness. The paper notes that investment committee structures thus far have
been oriented toward building a diverse committee on the basis of the members’
professional background experience, but cautions that this should not be the
only diversity factor at play.
First, committees need to understand what diversity means,
which can be challenging since there are different types of diversity. Catherine
D. Gordon, author of the paper and principal for Vanguard’s Investment Strategy
Group, tells PLANADVISER, “On the one hand, you have social diversity, which
relates to age, gender, ethnicity and other such factors. You also have
information-processing diversity, where you have people from different experiential
backgrounds and who may offer more creative solutions.”
The key, says the Valley Forge, Pennsylvania-based Gordon,
is to try and combine the best elements of each approach. Socially diverse
committees may sometimes be able to work more quickly and efficiently. However,
even though committees with information-processing diversity may take longer to
reach a consensus, the multiple viewpoints can foster better decisionmaking
skills and more creative solutions. The complexity of the tasks that need to be
accomplished may dictate which elements of these approaches are the most useful.
The paper observes that for a committee to evolve
positively, members must be willing to embrace change, including changes in membership
and in the group’s makeup. Understanding the dynamics of an investment
committee and the biases of individual members are important steps in advancing
the diversity of such committees. Having a more diverse committee, with members
possessing differing viewpoints, may also lead to the development of better
conflict resolution skills.
Another reason diversity is important, says
Gordon, is when too many people on a committee think alike, the ‘groupthink’
element may kick in, even in situations where a dissenting voice may be needed.
“In terms of professional background, sometimes it’s just as important to have
members that may not have as much investment experience and can look at things
from a different perspective, playing a devil’s advocate role.”
Discussing the topic of diversity with committees can also
prompt related changes. Gordon recalls how one client started to discuss
diversity and, looking around the meeting room, realized that many of the
committee members were within the same age range and that several were
approaching retirement. “In this case, the discussion was fruitful in that it
spurred the client into enacting some succession planning measures, which
included mixing up the age range and bringing in some younger members.”
Gordon adds that a mix of age ranges can also be useful in bringing
about a balance between the technological and skill sets of younger committee
members and the experienced perspective of older committee members, who may
possess a kind of institutional memory, having seen certain market trends unfold
before.
In terms of how size affects an investment committee, Gordon
says, “Six to 10 members is usually a good number. Beyond 10, things start to
get a bit unruly.”
Gordon says, “Most organizations
already address diversity in the work force, so the same standards should apply
with committees.” Gordon recognizes that certain members of the organization’s
management, such as the chief counsel or CEO, and certain skills sets may be
required to be part of a committee. However, she advises that membership should
not be excluded for individuals that fall outside of these required parameters.
Competition for talent is also a reason to maintain
diversity within a committee and the organization in general, says Gordon. “You
don’t want to exclude a huge talent pool by not being diverse enough. Just
because someone doesn’t have the usual Treasury or finance background, it doesn’t
mean that they can’t ask great and useful questions.”
The paper notes that to fully realize the benefits of a
diverse group of individuals, committees must continually evaluate their team’s
structure and incorporate mechanisms to avoid the pitfalls such as those
previously discussed.
Data discussed in the paper came from a joint survey of plan
sponsors and committee members done in 2013 by Vanguard and Market Strategies
International. The full text of the paper can be downloaded here.