How we helped our client reduce governance time and investment management fees by moving them onto a DB investment platform

Moving money between investment funds – whether to implement a strategy change, to rebalance an existing strategy or for cashflow reasons – can be a complicated and time-consuming process. DB investment platforms can simplify and speed up the process. This case study explains how one of our clients made the switch.

The background

Our client – a £140m DB scheme sponsored by an insurance company – wanted to implement asset transfers more quickly and to reduce the time they spent on investment governance. Our research identified that a DB investment platform was a good fit for this client.

Our solution

The single contract with the platform provider (rather than separate contracts with the manager of each investment fund) provided our client with access to their existing underlying funds using the platform. The trustees are still responsible for deciding on the investment strategy and for choosing which funds to invest in.

When the trustees want to move money between funds, they complete a simple dealing form and the platform provider does the rest. They benefit from speedier implementation of investment decisions, easier rebalancing of their portfolio and streamlined asset transfers. They often pay discounted investment management fees: because their assets are pooled with other platform clients, they get the benefits of bulk purchasing power.

We helped our client switch to a DB investment platform by

• providing them with training on using a platform
• running a platform selection exercise and recommending the most suitable platform for their requirements
• negotiating lower investment management fees under the platform structure
• reviewing the investment aspects of the proposed contract between the trustees and the chosen platform provider (with legal input as appropriate)
• overseeing the transition (liaising with investment managers and administrators)

The results

The scheme’s assets are now held on a DB investment platform. The switch was achieved by  re-registering the assets with the platform provider, a simple process which did not incur any transaction costs. Our client has reduced their ongoing investment management fees by 10%. The trustees are spending less time on investment governance (because the platform provider now carries out much of the investment administration on their behalf) and can make changes to their investments more speedily.