Getting the client's objectives right is the central driver of P-Solve's approach to setting Investment Strategy for defined benefit schemes. By defining what success and failure look like, the strategy can be properly constructed to best meet those objectives.
We work with the client to help determine exactly what these objectives are. In order to achieve this we focus on a rolling needs analysis to understand both what is required and how much risk can be tolerated within the scheme, both from a liability, asset and employer covenant perspective. This tends to form the base of a three-way discussion between the Trustee, Actuary, and Sponsor, and ensures that all parties have a solid framework from which to understand and develop the objectives.
This process is often quite involved and can require some trustee education and further work. This methodology of creating real examples of the implications of certain risk, return and governance objectives helps our clients to frame which of their objectives are most important.
Developing Investment Strategy, the key building blocks in the development of an investment strategy to meet the objectives are:
