The brief reminded the industry how lucrative offering transition management services can be, and the industry is seeing more interest in the service than ever before.
As Gerry O’Kane explains on pages 54 and 55, the move from balanced to specialist management has led numerous pension plans to embark on highly complex transitions from one manager to multi-manager strategies, requiring specialists to assist with the process.
Further, scandals in the US mutual fund industry has led schemes to transfer billions of dollars of assets from the accused managers, again calling on transition managers to aide smooth transfers.
It is therefore unsurprising, as Tim Wilkinson of Citigroup notes on pages 56, 57 and 59, that more managers, custodians and other relevant parties are making moves to offer the service.
But there is more to transition management than simply moving a set of assets from one manager to another, and those who offer the service face numerous challenges.
The purpose of using a specialist transition manager is to reduce risk and improve efficiency when switching assets between managers, explain Mark Keleher, Julie Dickson and Jamie Cashman from Mellon Transition Management Services. Unless the provider is a specialist in transition management, it is unlikely that clients will enjoy the smoothest transfer of assets.
But those that do specialise in transition management have been spurred on by the burgeoning interest in the service and are working to make it even more efficient and to reduce risk.
The complexities of transition management and the challenges that providers face are highlighted throughout this special focus. Transition managers are aware that their mandates are essentially short term, but how they tackle the transition is crucial to the ongoing success of the client’s fund.
The transition management sector now has the chance to really demonstrate how it adds value and providers appear to be grasping that opportunity with enthusiasm.
Gill Wadsworth, deputy editor, gill.wadsworth@ft.com
