At the beginning of any fiduciary relationship we hold in-depth discussions with the trustees to get a better understanding of their investment goals and any constraints. The most appropriate investment strategy for the trustees will depend on the outcomes of these discussions.
We capture de-risking opportunities through a customised Flight Path. The Flight Path includes pre-agreed triggers to de-risk as the funding level improves. We de-risk a scheme’s assets to the next phase of the Flight Path as soon as the funding level exceeds a trigger. At Schroders, we benefit from an extensive operational resource with an advanced implementation and risk-management platform. This ensures that the implementation of our fiduciary client’s Flight Paths is truly seamless, and that we are able to use live pricing for our trigger monitoring.
We have always thought robust governance is incredibly important. Instinctively this makes sense; a well-run and organised trustee board is more likely to make sound, well-informed decisions.
We work with our clients on a governance framework like the one shown below. This framework is divided into four key areas of decisions and activities relating to the discovery of trustees’ beliefs, translation into an investment strategy, implementing the strategy and then reviewing and adapting its appropriateness over time.
To ensure success, each decision should be considered and the owner, adviser and overseer should be identified.
The below is populated for an example Fiduciary Management client.
IRM is a risk management tool that helps trustees and sponsors identify, quantify and manage the risks that may affect them meeting their funding objectives. Instead of considering risks in isolation, the framework encourages stakeholders to assess the interdependencies of the risks.
Our scheme reporting focuses on the key factors that have affected the funding level. We include:
– Progression of the funding level
– Breakdown of the reasons behind the change in funding level
– Commentary on market movements
– Detailed performance of the growth and matching portfolios
– Portfolio positioning through time
Reporting in this way ensures that the trustees understand why they have experienced a particular outcome and allows them to adapt to circumstances more effectively.
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