Describe how you measure, track or otherwise demonstrate your value on asset allocation activities.
Mercer encourages its clients to actively engage with us to understand and evaluate the quality of our asset allocation advice.
All of our clients, regardless of their size and the service being provided, receive appropriate and tailored materials on the performance of the advice that we provide (often shown through case studies of existing clients relevant in size and experience to them).
At the outset of a client relationship, we establish a “journey plan” reflecting the client’s objectives, strategy and timeframes. With each client, we consider how our advice and service is appropriate for their particular circumstances and we work with them to arrive at a suitable strategy taking into account factors such as their risk tolerance, liquidity needs and tolerances relating to governance and complexity, as well as, where relevant, the fit with the client’s wider portfolio and, for Defined Benefit (DB) pension schemes, the covenant available. We then monitor the performance of our client’s investments so that we are well-placed to report to the client and they in turn can assess and challenge our performance.
For DB schemes, we monitor the performance of our clients’ assets relative to their liabilities to identify the change in pension scheme funding level and the underlying reasons for this change – for example, whether it is caused by asset growth (which will be a function of strategic decisions, manager performance or funding inflows) or liability movements (which could be driven by changes in interest rates, expected inflation, or demographic factors). Our monitoring takes both quantitative and qualitative factors into account, including, where appropriate, comparisons against appropriate peer groups so that clients are able to benchmark the performance of their scheme against other comparable schemes.