The Mercer Sentinel Group of Mercer Investment Consulting has launched a new transition management research and consulting service. They describe it as “the first truly global transition manager research capability.”
Mercer says badly handled transitions – whether initiated for reasons of performance, changed outlook for investment opportunities, or the need to rebalance a portfolio – can result in substantial trading and operational costs and significantly reduce the investment performance of a portfolio.
“A transition can be the largest one-off operational cost to which investors will be exposed, and the risks can be quite significant,” says Stacy Scapino, global leader of the Mercer Sentinel Group. “Transition oversight requires considerable experience, expertise and knowledge to ensure a controlled and cost-effective implementation and to avoid erosion of alpha.”
Mercer says it has a database containing data and research on local and global transition managers in accordance with a proprietary 10-factor analytical framework, covering over 150 standards and criteria.
The firm says the benchmark focuses on attributes and internal controls that distinguish well-run, efficient transition managers from those that could expose a client to increased risks and costs. It also makes onsite due diligence visits wherever trading, operations and controls are located.
For investors carrying out regular transition manager selections, the Mercer Sentinel Group draws up panels of pre-approved transition managers with fully negotiated contracts and terms of appointment.
The firm says the panel enables investors to move quickly in restructuring events and to focus on the strategy, controls and costs for each transition, rather than reviewing the base qualifications of the entire marketplace each time.
A transition manager panel is initially established through a traditional search process using Mercer’s 10-factor analysis with a focus on creating a team with complementary skills that address an investor’s particular needs. The panel is regularly reviewed through ongoing research and monitoring, utilizing dedicated resources.