As takeovers, mergers or downsizings continue, one thing is for certain - there are going to be fewer and fewer people at the coal face than ever before.
So increasingly those who look after the multinational's various pension funds must find ways of off-loading some of their existing workload in order to survive, because obtaining additional resource is not an option. It is when the very mundane, prosaic activities start to suffer, as the skills disappear and the resources are reduced, that it begins to become a concern at headquarters. For example, when management reporting data starts to come in which is inaccurate and incomplete, or when due dates are at risk, that it becomes obvious the subsidiary is struggling as a result of workload pressures and local skill loss.
Furthermore, this area is right at the heart of the pension fund because company management want to know the results in order to judge how the fund is doing and to see where the problems lie. It's at this juncture that a number of multinationals are now turning to the single global custodian concept per country for all their assets, thus getting the custodian to take some of the strain (there is also the added advantage of having improved asset segregation).
The first obvious, and sometimes difficult, task is to appoint a global custodian per country, but thereafter it should start to become easier. The custodian has all the data, plus the systems, skills and resources to produce rapid fund valuations, performance information etc. for electronic delivery to the client.
The advantages are numerous. For the subsidiary there is no pressure to have local skills because someone else now has the responsibility to produce the information - they can therefore step back and perform more of a management control role. Headquarters benefit by having access to electronic data from one source, which is timely, accurate and, importantly, consistent country by country, as the onus has now been placed on the global custodian to finalise valuations and agree manager results before reporting them to the client.
But, on top of this, custodians are increasingly looking to offer additional value-added services in areas such as tailor- made client reporting, performance attribution analysis, compliance support, local reporting etc. Seems like a win/win" situation all round!
Nevill Brooke acts as an independent adviser to international pension schemes"