MJ Hudson is pleased to announce the publication of its UK and European Transition Management Review. The Review (click here for a full copy) has been written by Steve Webster, a Senior Adviser at MJ Hudson with over 20 years’ experience of institutional transition management.
Following a period of rationalisation there are now only seven firms offering transition management services to clients in the UK and Europe. Steve has undertaken a detailed survey of all providers to assess the relative strengths and weaknesses of each firm. The Review offers MJ Hudson clients unique insight into the services provided and how these can be best utilised when implementing a transition exercise.
The Review builds on a number of key and potentially worrying considerations:
- There is a common perception among investors that transition management is a commoditised service chosen principally on price. In reality, not only are there significant variances in the capabilities of the current providers, headline prices may not even be directly comparable.
- The number of transition managers has halved over the last 10 years reflecting a challenging operating environment for these businesses. As a result, investors now have less choice and less pricing power.
- There is a lack of sufficient technically proficient expertise to provide investors with informed advice and oversight in this complex area.
The review also finds that standards of reporting and transparency differ significantly between providers. This suggests that many investors are not aware of the full cost (explicit and implicit) of a transition exercise or able to assess whether they are paying more than they should be. This is important which you consider that even a well-managed transition can be expensive, but the impact of a poorly managed event can severe.
Other key findings, while not exclusive, considered shortcomings and inconsistences in revenue disclosure, management of fixed income trading, management of foreign exchange and possibly most relevant, approach to risk management.
The Financial Conduct Authority’s recent publication of its Asset Management Market Study highlighted the need for greater cost transparency in the asset management industry. Those with fiduciary responsibility will increasingly be expected to identify all the investment and transition costs that apply to their clients.
MJ Hudson offers a range of transition advisory services, including transition manager selection, monitoring and oversight and transition cost analysis. We will update our Review on a regular basis to ensure our clients are empowered to achieve better transition outcomes.