NAPF launches best practice principles for investment advice

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Tuesday, 14, Oct 2008 12:00

The National Association of Pension Funds (NAPF) has today launched the final version of its Best Practice Principles on investment advice to pension funds (annex 1). These have been endorsed by 12 major consultancies1.

The sixteen Principles are a key part of the NAPF’s Assessing Investment Consultants Performance toolkit2 (launched in March 2008), designed to help pension fund trustees evaluate and compare investment consultancies on a more consistent basis.

The Principles cover the key client services areas of investment advice, technical competence, communication, team working and dispute resolution, education, training and fees and administration.

It is envisaged that the Principles will be widely adopted by UK investment consultancies and help to support their professional relationships with pension fund clients.

Mark Hyde Harrison, Chairman of the NAPF’s Assessing Investment Consultants Performance Working Group, said:

“The Best Practice Principles are aimed at forging stronger relationships between investment consultants and their pension fund clients.

“I am pleased to report that twelve major investment consultancies have already formally endorsed the Principles. The intention is that they will encourage the provision of high quality investment advice to pension funds.

Finally, I extend thanks to all those consultancies who engaged with the Working Group for their contribution to the version of the Principles being launched today.”

At its Investment Conference (March 2008), the NAPF launched an independent toolkit2 to help trustees assess the performance of investment consultants. The toolkit included four assessment tools which were designed in response to some UK pension fund concerns about the difficulty in assessing and comparing investment consultants.

The assessment tools included a survey of 458 pension schemes, the Best Practice Principles, a balanced scorecard and a pro-forma for comparative data analysis.

The toolkit has been produced by a working party made up of NAPF Investment Council members, UK investment consultants and the NAPF policy team. The Chairman of the Working Party was Mark Hyde-Harrison, Chief Executive Officer of the Barclays UK Retirement Fund.

ENDS

The 12 consultancies are Aon, Barnett Waddingham, BDO Stoy Hayward Investment Management, Hewitt, HSBC Actuaries & Consultants, Hymans Robertson, Jagger & Associates, KPMG Investment Advisory, Lane Clark Peacock, Mercer, Russell Investments and Watson Wyatt.

About The National Association of Pension Funds

The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.

Journalists requiring further information, please contact

Mark Brooks 020 7808 1312 mark.brooks@napf.co.uk 07917 506683

Ruth Wharram 020 7808 1345 ruth.wharram@napf.co.uk 07825 171446

Annex 1:

The 16 Best Practice Principles on investment advice to Pension Schemes are:

To establish, on the basis of the best information available, a clear understanding of the scheme, including the issues it faces, and the position of the scheme sponsor.

To encourage and advise trustees in setting clear investment objectives in relation to the liabilities for their scheme.

To provide well-researched and objective advice that takes account of the range of appropriate solutions and is suitable for the pension scheme.

To ensure that investment advice is provided only in areas where the investment consultant is competent and, if appropriate, in accordance with regulatory requirements.

To establish processes for providing advice in order to ensure this is of consistently good quality.

To work effectively with other advisers, consultants and service providers to the pension scheme.

To facilitate dialogue and feedback between pension scheme trustees and the scheme sponsor.

To specify the fees charged in a clear and transparent form and disclose any other forms of remuneration.

To seek to ensure that all data provided is accurate and consistent.

To maintain the highest standards of professionalism and comply with all relevant professional codes.

To agree whether advice or a service is to be provided and the degree to which they are on a proactive or reactive basis.

To ensure that all delegated powers are executed effectively.

To disclose and manage any significant conflicts of interest that may arise.

To encourage and recommend suitable training which can help increase the knowledge base of and support the trustees in meeting their investment objectives.

To ensure the clarity and timeliness of all communications to trustees –written and oral – and that they are always produced with the needs of trustees in mind.

To express concepts in straightforward terms and engage in dialogue with the trustees, with the objective of promoting thorough understanding of relevant investment issues.

Ruth Wharram

Press & Communications Officer

Tel: 020 7808 1345 07825 171 446

Fax: 020 7222 7585

http://www.napf.co.uk