GLOBAL - Northern Trust has unveiled an additional service for pension funds and other clients which effectively sees it offer consultancy services to existing clients on asset, risk and regulatory management, but minus the manager selection element.
Penny Biggs, Northern Trust, said the Retirement Solutions Practice will not actually deliver advice to clients as this would require appropriate qualifications and licensing. However, a core team of 20 people, including senior specialists in each element of the business, will use their existing skills to give clients access to expertise and information on pensions, investments, pan-European pensions and regulation among other things, to help improve either the running of their business or their pension fund.
"We can never call it advice, but we have built up so much technical expertise over the years across our client base, it would have been a terrible shame not to put it together," said Biggs. "The pension funds, like everyone else, are faced with both issues and opportunities, and we're equipped to provide the insights, expertise and tools to use at their disposal to improve results. Our retirement solutions practice has evolved over 10 years, but it truly has an identity now. And in order to help our clients we will assist them with everything from tax to pooling, to asset management, to solution mitigating shortfalls in defined benefit schemes. "
The service is designed to give guidance on everything from managing risk and liabilities, such as buyouts and the technicalities of moving from DB to DC and private plans and using fiduciary management, as well as legislation and cross-border fund complexity to key changes in investment practice and thinking, so investors can work out where they are going and how to set about resolving issues.
Northern Trust has already done some innovative work over the last 18 months in relation to pooling, and anticipates the type of firms most likely to slowly build up use of its new service will be very sophisticated pension funds with in-house operations or multi-nationals perhaps seeking to create an IORP and looking to channel both DB and DC assets through it, suggested Biggs.
The retirement solutions practice was officially launched in The Netherlands today, but Northern Trust has already been approached by fund management companies to create an immediate spin-off of this and use its knowledge in fund administration and management, as well as other aspects of fund management mentioned, to ‘rent space' on its fund hosting platform.
In situations where fund managers want to concentrate on simply running money but need support on other matters around the running of a fund, Northern Trust now allows the fund to be managed on its own asset platform, according to Biggs.
"As a result of our retirement solution initiatives we have been approached by a number of managers who are asking how we can work together in terms of a fund solution [to facilitate the tax-efficient delivery of their services to institutional clients in multiple domiciles]m," said Biggs.
"We are seeking to provide a fund structure - such as a CCF - that will allow tax-advantaged institutional investors to avail themselves of the economic, scale and governance advantages of a commingled fund investment, without forgoing their individual tax-advantaged status. We refer to this as the ‘fund hosting platform'."
Similarly, certain fund managers are now tapping into Northern Trust's asset management capabilities to take a portion of the strategies they apply and incorporate it into their own offering.
"Asset managers are always looking for custody and administration from us, some are asking about the middle office services to assist them with liquidity management and risk control. But the reality of managing money in today's market means they are also very open to buying a sliver of their asset management capabilities from us too - for example in situations where they are active managers but looking to add passive offering as part of their fund range," continued Biggs.
Northern Trust anticipates the growth of the retirement solutions practice will begin slowly, having caught the attention of US and some European investors, but eventually become a global service.