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IPE special report May 2018

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NTGA arrival to challenge consultants (amended)

GLOBAL - (Amended) Asset management houses and consultants are not doing enough to ensure they meet pension funds' individual investment needs, according to a new head at Northern Trust Global Advisors who intends to take on the firms' services.

North Trust Global Advisers (NTGA) has appointed former IBM pension fund director Martin Jack to spearhead a shift into tailored investment offerings and the space usually held by consultants as he believes fund houses and consultants now offer too vague a service to pension funds.

Having worked at IBM as director of Retirement Funds for Europe, Middle East and Africa (EMEA) as well as principal of IBM's internal investment and pensions consultancy practice, known as Rfe, until February, Jack was employed as a consultant to NTGA earlier this year to review its Manager of Manager to recommendations about its services.

What the company learned through their experience with Jack, however, is asset managers now offer such a broad range of investment options many pension funds are finding they need additional guidance to know which investment solutions they should adopt.

"I'm convinced there is a change needed in asset management as I got quite frustrated by the level of support from our suppliers and I believe Northern Trust can take advantage of that," said Jack.

"There is a terrible disconnect between the products offered by the industry and the service pension funds need. For example, I was sitting as a trustee on a board and consultants were sent in to help the pension fund decide how to increase their allocation to alternative investments. They came in with 21 different sub-classes of alternatives, in various risk categories. But it was very confusing and months on they are still trying to get their heads around it. The consultants may have thought they were doing their jobs laying out all of the options but it was very complicated," said Jack.

As a result, NTGA has now employed Jack as managing director to oversee the growth of its manager of manager business further into Europe and widening its service offering, to ensure pension fund clients have investment solutions tailored specifically to their needs.

"We will offer clients solutions designed for them rather than those packages [investment firms and consultants] want to sell," he continued.

Until now, Northern Trust tended to be known mainly for its delivery of custody while asset management services tended to be led through its Chicago-based Northern Trust Global Investments.

The company is keen to address this and build its presence in the European pensions market, so this is being done by bringing NTGA's liability-driven investments closer to the emerging investment strategies employed at NTGA.

Changes to NTGA's investment strategy and business direction also mean Tony Earnshaw, who drove the Manager of Managers (MoM) operation from $300m in 1998 to over $3bn today, is taking on a newly-created role as director of International Investment Strategy for the MoM group, to look at the promotion of solutions-based investing. Earnshaw will report to Jack and the two will continue to work closely together.

At the same time, Jack is keen to continue to grow the Manager of Managers business and expand business potential in Europe through bespoke investment solutions.

"As an industry, we need to have the skills of consultants to engage the customers so we will address this. The consulting industry is almost moving in the other direction and going into asset management so we intend to cut across that," added Jack.

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