Avoiding the Goldilocks
zone in investment monitoring

Our viewpoint

The Pensions Regulator has just released their new guidance on DB investment with ‘monitoring’ being highlighted as a key focus. The TPR recommend the use of a dashboard, providing an example of trustees who introduced a dashboard to review at each quarterly meeting. This is promising, but in my experience this guidance might serve to encourage trustees into the Goldilocks zone…

You see, most pension schemes arrange their trustee or investment committee meetings in a period in the middle of each quarter – not too close to the end of the previous quarter so that reporting information isn’t ready yet, and not too late so that the information is so old to be of no use. This is what I call the Goldilocks zone.

However, the problem with the Goldilocks zone is information becomes less useful with time and the monitoring is compromised missing out on the most recent, and relevant, info. So pension trustees are discussing quarterly investment reports about two months after the reporting period has ended, with little idea what’s happened since.

This issue has always bothered me, so three years ago at our fund manager seminar I set a challenge to the 100+ managers in the room… “help us help our clients by providing them with real-time visibility into how their investments are going”. Unfortunately I haven’t seen a lot of innovation in this area, but my challenge was taken up by LCP’s own technology team. And last year we released a new technology called LCP SpotLight.

LCP SpotLight allows us to show our clients the risk and return statistics of almost any performance data. So now, as well as their overall pension scheme’s assets, clients can see, over any time period, compared to any benchmark or to any other manager, what’s going on. It means we can help our clients easily evaluate how well their strategy and managers are working, to help them take advantage of opportunities or to take early, corrective action, if necessary.

It is not just about being up-to-date either, it stops us shying away from answering the hard questions. With LCP SpotLight, our clients now ask questions like, “Would we have been better off selecting another fund manager?” or “Would we have been better off staying with our previous manager?”

Learn more about how LCP SpotLight can help here

LCP SpotLight