Objective Setting – what now?

10th February, 2020

  • Trustees will have been busy setting objectives for their investment consultants towards the end of last year following the Competition and Markets Authority (CMA) Order which came into force on 10 December 2019. Given that this deadline has passed, and objectives have been set – what now?

    These objectives should not be treated as a ‘set and forget’ type exercise. The purpose is to ensure that investment consultants are actually providing the services that they have agreed,  improving the information trustees have to make and ensuring that trustees are receiving good value for the services they are paying for.


    Trustees should, therefore, look to assess their investment consultant’s performance against the objectives that have been set, possibly using a scorecard approach. This could be done on an annual basis. Communicating the results of this assessment with the investment consultant is key to ensuring they know areas where improvement is needed, but also where praise is due. If they fall short of the mark after attempts to address any issues, then an alternative investment consultant could be considered.

    Ongoing review

    Trustees are required to review the objectives set at least every three years and after any significant change to the scheme’s investment strategy and objectives. Trustees should be asking themselves:

    • Has the investment strategy changed?
    • Do the objectives remain appropriate?
    • Could the objectives be refined to make them more measurable?
    • Have the investment services received from the consultant changed?

    These questions will help to determine if any objectives need to be refreshed, new ones added, or existing ones removed (if the investment consultant is no longer providing a particular service on which an objective has been set).

    The requirement to review every three years is similar to that required for reviewing and updating the Statement of Investment Principles (SIP), so each time the SIP is reviewed or updated it could also be combined with reviewing the objectives that have been set.

    Record keeping

    Trustees will need to document compliance with the CMA Order, so keeping records of objectives and any assessment against these is important, e.g. meeting minutes, copies of scorecards if used etc.

    The CMA Order outlines that trustees will need to send an annual statement to the CMA to confirm they have complied with the relevant rules set out in the CMA Order. However, compliance with this is going to be monitored by The Pensions Regulator once the CMA Order is formally put into legislation, which is expected to be in April 2020. It is anticipated that compliance will form part of the annual Scheme Return, but further details are yet to be published on this aspect.

    In summary

    To get the best out of their investment consultant, trustees should be monitoring them against the set objectives and highlighting areas where improvements are needed. This will hopefully drive more informed decision making and enable the trustees to get better value for money.

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    • Published bySusan McFarlane

      Susan leads the marketing function for Dalriada Trustees Limited, and our sister company, Spence & Partners.  The marketing team handles all promotional activity for the companies including business development, marketing, events and PR. Susan joined the business in January 2013, having...

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