Investment Platform. A low cost governance solution for pension scheme investment

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1 Investment Platform A low cost governance solution for pension scheme investment Please read the important regulatory notice on the final page before reading this document.

2 Contents An ever-changing investment landscape 1 Benefits of investment platforms 2 Concerns of investing through a platform 5 Punter Southall Investment Consulting

3 An ever-changing investment landscape Over the last decade in the UK we have seen the fallout from one of the worst financial crises in over 100 years, the introduction of many new and complex asset classes and an explosion in the number of investment funds available into which pension schemes can invest. In this constantly-changing environment pension scheme trustees are not only challenged by the complexity and time required to evaluate investments, but they are also required to do this with a limited governance budget. Punter Southall s approach to investment consulting has been to take a low cost governance approach, advising clients to focus on the issues that will have the most impact such as determining the approach for asset allocation and limiting the number of investment managers. Punter Southall s approach to investment consulting Asset allocation is the most important factor and accounts for c.90% of variability in returns Costs are one factor trustees can control Diversification in return seeking assets is crucial Active management can work in certain key asset classes Unwanted and unrewarded risks should be hedged as much as possible Schemes resources are scarce. Spend resources where real value can be added Evolving low cost governance a new approach Balancing the costs and benefits of investment decisions is always a challenge for trustees. During our research into how we might develop our investment approach further we have identified investment platforms as a low cost governance solution. Most investment platforms are offered by product providers and accordingly can create conflicts of interest. We have identified an investment platform provided by Mobius Life as offering an optimal solution for the majority of our clients which avoids such conflicts. Accessing an investment platform is simple, governance is effective and streamlined and there is no complicated transition process or management fees between funds. A low cost governance solution for pension scheme investment 1

4 Benefits of Investment Platforms Getting started easy access 1 Trustees complete a single application form to establish their investment account and the Punter Southall central team takes care of account set-up and ongoing support. All existing investment funds that are owned by the pension 2 scheme are simply re-registered onto the platform with no need to change existing asset managers or products, although, once on the platform it may be the ideal time to optimise your scheme assets across a broader range of asset managers. 3 The platform has the capacity to invest in a wide range of investment funds. Benefits to you Single account set up Transfer of existing funds Access to many investment funds in one place Ongoing monitoring Benefits to you 1 Investment platforms can provide access to an online portal to allow them to see daily-updated fund performance figures and valuations for their pension scheme assets, giving trustees the ability to review their portfolio at a time that suits them. 2 By centralising all investment information on the platform, investment governance system can be built to deliver low cost and timely investment monitoring to pension schemes. Online portal Investment governance reporting Simplified fees Benefits to you 1 A single fee covering manager research & ratings, investment administration, governance and transition management is deducted quarterly from the assets via the platform. Single fee 2 Punter Southall Investment Consulting

5 Benefits of Punter Southall Investment Platform Our research into investment platforms led us to the conclusion that Mobius Life s platform was likely to be a good solution for the majority of our clients. Benefits to you 1 The investment platform is structured as a life company so trustees purchase a single policy and all other asset manager administration and documentation is taken care of by the platform. 2 Before an investment fund is made available on the platform, full operational, risk and performance due diligence is completed to ensure it is a suitable asset for pension scheme users of the platform. 3 On an ongoing basis Punter Southall Investment Consulting will monitor all investment funds on the platform where clients are invested, meeting with asset managers on a regular basis to ensure they are delivering as expected and reporting any issues to platform clients. Trustees only need to complete a single switch form to move 4 money between different managers or funds on the platform. The money will move within the platform structure on the next available dealing date, with no complicated transition management process, reducing risks involved in transitions. 5 The platform maintains a single account per fund and fee basis, to which the scheme s assets are added, which means that the platform is able to negotiate discounts on asset manager annual management fees for the benefit of all platform clients. All the funds available on the investment platform are 6 accessed by means of a life policy to provide the most beneficial tax treatment for UK pension schemes. The platform reclaims the additional withholding tax when possible, which may not be available in other fund structures. 7 Punter Southall fees are incorporated into the structure as an insurance intermediation service which is VAT exempt. Single policy document Full investment fund due diligence Ongoing investment monitoring Single switch form with significantly lower transition management fees Bulk buying power Beneficial tax treatment VAT exemption A low cost governance solution for pension scheme investment 3

6 Punter Southall Investment Platform The new online investment platform, provides clients with access to daily-updated fund performance figures and valuations for their pension scheme. The platform also offers access to multiple investment managers and funds, with clients receiving investment governance reports designed to help trustees evaluate their investment strategy and fund performance. It also provides clients with the capacity to invest in thousands of different funds, including the full range of Punter Southall buy-rated funds and managers. Key benefits of the platform include: Single policy document Full due diligence of investment funds Ongoing performance monitoring Single switch form with significantly reduced transition management fee Bulk buying power Beneficial tax treatment as all funds are accessed by means of a life policy VAT exemption on advice About our partners Mobius Life Mobius Life is a UK life insurance company and institutional investment platform, established in 1996, with over 6.8 billion assets (as at 1st March 2016) under administration. It delivers madeto-measure investment administration and life company services to DB and DC pension funds, asset managers and other institutions. It enables clients and their advisers to implement their investment strategies efficiently and cost effectively. 4 Punter Southall Investment Consulting

7 Concerns of investing through a platform As with any financial product, an investment platform does have some risks. In particular an investment through the platform will expose the investor to credit risk should Mobius Life fail. Investing through an investment platform will mean pension funds are one step further removed from their asset managers which may mean it is harder to interact with them. Having a single fee approach may make it difficult for the trustees to discern the individual costs of each service. Clients are reminded to consider all the risks which will be outlined in the platform documentation. Find out more Danny Vassiliades danny.vassiliades@puntersouthall.com Alternatively, please speak to your usual Punter Southall contact A low cost governance solution for pension scheme investment 5

8 About Punter Southall Group We are an independently owned actuarial, pensions administration, investment and financial advisory organisation. Our clients are pension scheme trustees and employers from a broad spectrum of businesses, charities and institutions and range in size from owner managed businesses to industry-wide schemes. Punter Southall Investment Consulting has offices across the UK. For further information, visit our website at Awards, Affiliations and Sponsorships Supporter of This document constitutes a financial promotion and for the purposes of S21 of the Financial Services and Markets Act 2000 has been issued by Punter Southall Investment Consulting Ltd which is authorised and regulated by the Financial Conduct Authority under FRN: Please note that all material produced by Punter Southall Investment Consulting is directed at, and intended solely for the consideration of, professional clients as defined in the FCA Rules. If you are not a professional client you should not seek to place any reliance upon the contents. The information contained herein has been prepared by Punter Southall Investment Consulting and may be based on sources that are believed to be reliable but have not been independently verified. Without seeking to avoid any obligations under the UK regulatory system, no warranty is given as to the completeness or accuracy of any such third party data. Please remember that nothing contained herein constitutes investment advice nor should it be relied on as such. Please remember that past performance is not necessarily a guide to future returns and that investments by their nature contain an element of risk to both capital and income. Punter Southall Punter Southall Investment Consulting is a trading name of Punter Southall Investment Consulting Limited. Registered office: 11 Strand, London WC2N 5HR. Registered in England and Wales No Punter Southall Investment Consulting Limited is authorised and regulated by the Financial Conduct Authority (FCA) with FCA reference number This document should not be distributed to any third parties and is not intended to, and must not be, relied upon by them. Unauthorised copying of this document is prohibited. A Punter Southall Group company _8