Mercer issued a short survey (15 questions) in November of 2011 to assess how organizations are making investment decisions, how they are executing those decisions and their preferences toward investment outsourcing. This survey is a follow up to Mercer’s 2010 Investment Decision-Making Survey and provides some year-over-year trend data.
KEY FINDINGS: MAKING AND EXECUTING INVESTMENT DECISIONS
- Seventy-six percent of respondents indicated that they are either “somewhat comfortable, but need help” or “very comfortable” making investment decisions. Endowments and foundations are more comfortable making decisions relative to the average respondent.
- The majority of respondents (65%) take less than three months to make a decision on asset allocation or manager changes. However, one-third of respondents take more than three months to make a decision, of which 11% take six months to a year.
- The largest impediments to delays in making decisions have been market volatility (26%) and not enough expertise (20%).
- 27% percent of respondents believe that they have missed investment opportunities due to the time it takes to make or implement investment decisions, a 6% increase from our 2010 survey. The percentage was higher for defined benefit plans at 31%.
- The majority of the respondents (44%) take about one to three months to execute an asset allocation or manager change. However, 21% take more than three months. These results are similar to responses from our 2010 survey.
- The largest impediments to delays in executing asset allocation/manager changes are insufficient staff (18%) and market volatility (15%).
- About half (51%) of respondents have one or no full-time person managing their investments, and 89% have no plans to change staffing levels in the next year.
- The majority of organizations have four to six people on their investment committee/board. This is especially true for organizations with under $50 million in assets, as 75% cited having four to six people.
ROLE OF OUTSOURCING
- About one-fifth (21%) of organizations have considered outsourcing in the past 12 months, while 13% are considering outsourcing in the next 12 months.
- 41% of respondents with assets below $500 million are considering outsourcing. Interestingly, 31% of organizations with assets in the $501 million to $1 billion range are also considering outsourcing.
Mercer is a leading global provider of investment services, and offers customized guidance at every stage of the investment decision, risk management and investment monitoring process. We have been dedicated to meeting the needs of clients for more than 30 years, and we work with the fiduciaries of pension funds, foundations, endowments and other investors in some 35 countries. We assist with every aspect of institutional investing (and retail portfolios in some geographies), from strategy, structure and implementation to ongoing fiduciary management.