As mask mandates lift and life gets back to normal, defined benefit plan sponsors and institutional asset managers are looking forward to re-engaging with each other in person.

During the first year of the coronavirus pandemic, institutional asset managers and defined benefit plan sponsors — like everyone else — stayed connected virtually, but the vast number of web meetings meant the novelty soon wore off. We grew tired of reminding people that they were on mute and began to drift apart.

As things get back to normal and airport delays are reduced, plan sponsors are eager to reconnect with asset managers to gain their insights to stay aware of new and relevant investment solutions. Unfortunately, given the overwhelming demand for their time, making room to develop relationships with asset management firms can seem like a luxury.

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An initial meeting with an asset manager should give DB plan sponsors enough information to know if maintaining the relationship is worth their time. The goal of this meeting should be to provide the asset manager with a clear understanding of the current focus and challenges facing the pension plan. The meeting should be about building the foundation of a long-term relationship rather than a specific mandate focus.

Based on this understanding, asset managers should be respectful of your time and provide only relevant and topical insights rather than mass marketing material and requesting non pertinent meetings to fill up their schedules. A free lunch is always appreciated, but with hybrid work environments, calendars are very tight when we are in the office.

Premier asset managers are now developing strategic relationships with key clients in a proactive way. These partnerships are mutually beneficial. DB plan sponsors can benefit from fee aggregation, the sharing of insights and the creation of customized investment solutions. In turn, the asset managers will have a better understanding of the specific strategic challenges faced by their plans and may be awarded additional mandates.

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The effective asset manager seeks to differentiate their firm from its competitors and provide honest and meaningful points relevant to the DB plan. Asset managers have embraced utilizing client portfolio managers to interact with the plan sponsor. In delivering specific strategy updates, it is vital that they demonstrate their extensive investment management experience and clearly articulate the nuances of the portfolio and its holdings. However, it is important that a relationship with an asset management firm extends to the actual portfolio manager and to senior management. Beyond the need for transparency, this enables plan sponsors to deliver feedback without their only being one point of contact.

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In Canada, the majority of institutional asset managers require relationship managers to combine business development, client servicing and consultant relations functions. When these roles become separated, silos can form between these functions, corroding the co-ordination and speed of the flow of information. The lack of an efficient internal communication structure tends to create internal dissent, something that doesn’t tend to go hand-in-hand with transparent client relations. Asset management firms now employ client relation management databases in an attempt to ensure that all team members are fully informed of all prior client discussions. As a result, one should fully expect that your relationship manager is fully informed of all prior interactions with the asset management firm.

While not necessarily enough to concern plan sponsors during a first meeting, once hired, communications breakdowns can be much more serious. A key responsibility of asset managers is providing efficient access to accurate reporting data. As situations arise, they must also be ready to ensure quick resolutions and address the root causes of issues in a timely manner.

While demands and expectations placed on asset managers will continue to evolve, one thing will never change: they must establish a foundation of trust to build mutually beneficial relationships with plan sponsors.

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