Investment consultancy: taking a dynamic approach

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1 Investment consultancy: taking a dynamic approach The current environment The increasing volatility of investment markets and heightened regulatory control means that pension fund investment has remained top of the agenda for companies and trustees alike, as they strive to manage pension cost and risk. Quantum Advisory provides a range of investment consulting services, tailored to meet your specific requirements: Member communications Independent monitoring service Investment training Governance Objective and strategy setting service Manager selection Manager research Governance In the post-myners era, the ability to demonstrate good governance is paramount. We will work with you to help ensure that your scheme s investment strategy remains compliant and fit for purpose. We regularly assist in the establishment and running of investment sub-committees, prepare Statements of Investment Principles and maintain Myners compliance checklists. Good governance is central to our investment consulting service.

2 Objective and strategy setting service We will work with you to select investments which: Provide the potential for future returns consistent with scheme funding requirements We liaise with the Scheme Actuary to establish both the level of return required to meet scheme funding assumptions as well as the cash-flow and other parameters around which the return must be achieved. Minimise exposure to risk within those requirements We do this by utilising a range of mathematical models to determine the most efficient combination of asset types and classes and then sense-check from an objective stand-point. Give value for money in terms of costs and ongoing charges We are able to select institutional, retail and discretionary investment management vehicles in order to provide a wide selection of products from the investment marketplace. We also subscribe to specialist agencies for market data enabling our systems to take account of the full market using up to the minute information. Take account of your personal appetite for potential loss Our know your client processes are designed to assess and understand critical psychological tolerances of those with responsibility for making scheme investment decisions in order to ensure that there is consistency between expectation of return and attitude to risk. Demonstrate an appropriate track record in relation to a range of performances including return, volatility and maximum loss Our systems enable us to establish an extensive range of performance indicators for the whole market for collective investment funds using up to the minute data. This enables us to measure and report on fund performance in relation to sector averages and asset indices, as well as being able to calculate and analyse value at risk and other investment efficiency measures.

3 Have been evaluated for a range of risks including currency, liquidity, strategy and publicity Our investment fund selection process is designed to mitigate risks arising from the concentration of exposures to particular holdings, collective funds and fund management groups, as well as asset types and geographical sectors. We achieve this by analysing market data to look at major individual holdings within any particular collective investment funds, and to access specialist assessment of the manager s current strategy and outlook. Selected case study Review of pension fund investments We were asked by the sponsor of a large pension scheme to assist with negotiations with the scheme s trustee about the pension scheme funds and their investment possibilities. Both parties were keen to ensure that the funds produced good growth but that they were protected from too much risk. Our advice involved a range of modelling tools to assess the potential assets and liabilities of the pension scheme funds. It also incorporated a discussion on the sponsor s balance of power in relation to shaping benefit provision for the future. Our solution, which was agreed between both parties, included a diversified investment portfolio which both trustee and sponsor believed would make the best of growth opportunities and protect the funds from movements in inflation and interest rates.

4 Manager selection While manager selection is secondary to objective setting and strategy setting, it remains a key component of a successful scheme investment structure. We provide objective advice based on extensive manager research to find the appropriate manager to fit your objectives. Our rigorous manager selection process combines in-depth analysis with detailed research. Past performance is not necessarily a guide to the future, and although we analyse past performance, we put far greater emphasis on finding managers who have the skill and resources to outperform in the future. Preferred managers undergo detailed analysis relating to their corporate structure, investment process, resources and risk management to help us build confidence in their ability to meet our clients investment objectives. Manager research In addition to our in-house investment team, we utilise the global advisory services of RMB Asset Management (RMBAM). They provide key input on tactical asset allocation advice and manager research for traditional and alternative asset classes. We have direct access to RMBAM s investment team of over 20 independent, full-time investment professionals in the UK who cover manager / investment research globally. Monitoring In line with recognised best practice, we provide an independent monitoring service to: help manage the service you receive from your investment manager ensure that the chosen strategy is correctly implemented track the manager s continued suitability, and trigger a review if appropriate For investment clients, we deliver bespoke quarterly reports which highlight short-term underperformance, longer-term achievements and any significant changes at the investment firms where clients are invested.

5 Trustee training and communication As consultants, we see ourselves as experts, teachers and guardians. Our goal is to help the trustees undertake their duties with confidence. The depth of understanding required to achieve this will vary from one trustee to another. Through the advice we give and the training we arrange, we aim to filter issues into their varying degree of complexity and then communicate and discuss these issues in a targeted way tailored to the needs of the trustees. Where necessary we will go into technical detail; in other cases, we will illustrate themes using examples. In summary, our approach is to: distil the key issues and level of technical detail that needs to be addressed with clients communicate these in a straightforward and open way. Who we are Established in 2000, Quantum Advisory is an independent, owner-managed actuarial and employee benefits consultancy that provides straight-talking, no-nonsense advice to employers and pension scheme trustees, all at a competitive price. We design, maintain and review pension schemes and related employee benefits so that they operate efficiently and effectively and are valued by employees. This means that you can get on with doing the things that you do best, therefore saving you time and money.

6 Experience it for yourself To find out more about how we can help with your scheme investments, contact Robert Davies, Investment Partner on , or him at Products and services Actuarial services Administration of defined contribution and defined benefit pension schemes Banking, accounting and pensioner payroll Company advice Employee benefits consultancy Governance Investment consultancy Pension and employee benefit communications Risk benefits advice Pension scheme wind up Secretarial services to trustees Trustee training Your local contact We have offices in Amersham, Birmingham, Cardiff and London. Call us to see how we can help with your pension and employee benefit challenges. Karen Kendall St Clements House 27/28 Clements Lane London EC4N 7AE Andrew Reid-Jones Summers House Pascal Close, St Mellons Cardiff CF3 0LW David Deidun One Victoria Square Birmingham B1 1BD Rhidian Williams St Mary s Court, The Broadway Amersham Bucks HP7 0UT rhidian.williams@quantumadvisory.co.uk Quantum Actuarial LLP, trading as Quantum Advisory, Registration Number: OC & Quantum Advisory Limited, Company Number: , registered in England and Wales. Quantum Actuarial LLP is authorised and regulated by the Financial Conduct Authority. Registered office: Quantum House, Pascal Close, St Mellons, Cardiff CF3 0LW. A list of all members is available for inspection at our registered office.