USS acknowledges the significant influence consultants have over smaller schemes who depend heavily on their advice and input into asset management selection and oversight. The scheme has worked on RI projects with investment consultants in the past and continues to engage with the consultant market at industry events and through the scheme's investment and advisory activities.
During the year, USS fed into discussions about responsible investment and the role of investment consultants at several fora, such as the PRI's Policy Advisory Committee and UK Pension Funds Roundtable events. Discussions noted a need for research and innovation from consultants on RI, a knowledge gap on RI between consultants' spokespersons and field consultants and the lack of tools for consultants advising on custodian appointments to assess performance on global proxy voting.
USS contributed to discussions with the PRI's Policy Advisory Committee and Sustainable Financial System's Advisory Group (which USS participated in) on the role of consultants: these helped inform the publication of the PRI's Investment Consultants Services Review in December 2017 - see https://www.unpri.org/sustainable-financial-system/investment-consultants-services-review/571.article. Both the PRI and UK Pension Fund Roundtable are continuing their focus on investment consultants in 2018. USS will continue to participate in these initiatives.
The scheme is also conscious of the potential conflicts inherent in the current investment advice market which has become more apparent as investment consultants have moved into fiduciary management services. With this in mind, USS welcomed the Financial Conduct Authority's proposed market review of the institutional investment advice industry, responding to the FCA's Asset Manager Market Study in February 2017.