“It is no use saying, ‘We are doing our best.’ You
have got to succeed in doing what is necessary.”
Sir Winston Churchill
Asset management consulting is the only service Chartwell provides to clients. Our service goal is to help our clients to develop and implement successful fund management practices and strategies. To accomplish this goal, we support our clients with a full range of institutional investment services.
While we naturally customize service delivery to fit client needs, our full-service strategic advice is typically available to clients as part of the following Service Cycle:
In addition to the traditional asset management consulting projects, many of our clients rely on Chartwell for related financial consulting projects. These include:
Investment policy statements provide clients and their investment managers(s) with a blueprint for structuring the investment program. The following elements should be included in a comprehensive investment policy statement:
Historic investment studies have demonstrated that a portfolio’s strategic asset allocation is responsible for 75-90% of a fund’s total return. Policy formulation and asset/liability analysis is an integrated two-step process. First one completes the asset allocation study itself, followed by development and adoption of an investment policy consistent with the study’s findings.
We help institutional investors identify a strategic asset allocation policy that represents the synthesis of optimal portfolio construction methods, forward-looking capital markets and asset class assumptions, and detailed expected liability/spending profiles. Our research group develops a set of input assumptions that we recommend our clients use for strategic asset allocation studies. These assumptions are based on a combination of:
|Financial theory||Capital market history|
|Current yield curves||Market expectations for inflation|
Our asset allocation assumptions are strategic in nature — they do not attempt to anticipate or trade on short-term market volatility. Rather, we aim to capture the very powerful long-term diversification benefits present among primary and secondary asset classes.
During each study’s initial phase, we help our clients develop and deliver various critical inputs pertaining to their risk tolerance, return expectations and the liability structure of their fund, including:
(for defined benefit plans)
(for defined benefit plans)
|Cash Flows and Contribution Patterns||Allowable Asset Classes|
|Investment Time Horizon||Investment Restrictions|
(for Endowments and Foundations)
Early in 1995, we pioneered the concept of an integrated spending model (“ISM”) for endowments and foundations. This captures the full range of cash flows opportunities and obligations faced by these organizations as asset allocation inputs, including investment return, program development, capital spending, debt service, and operating budgets. This ensures our multi-period forecasts will ultimately capture the “real world” asset volatility associated with varying investment returns and spending patterns. The result is a very careful, “granular” analysis of integrated returns and spending, which is especially useful in setting a strategic asset allocation policy specifically matched to each eleemosynary’s specific needs.
Once a client has finalized a strategic target asset mix and affirmed a comprehensive investment policy, their current investment management team should be reviewed in light of its capabilities to successfully implement the new investment plan. When evaluating the current efficacy of each existing investment manger or fund, many traditional performance evaluation tools are used (index comparisons, universe rankings, etc). Beyond this, Chartwell looks closely at the following attributes in assessing the current management team:
We seek to provide invaluable assistance in support of our clients’ efforts to assemble a management team with complimentary skills and little style redundancy, thereby offering strong upside participation and sound downside protection in volatile markets.
Chartwell conducts every manager search independently. Once we have identified key selection criteria with our client, the screening process begins against a full database (includes over 4000 managers). By starting every manager search with a screening of the full database, we do not “miss” a manager with a superior developing record. However, we’ve also found that various commercial databases are only a good place to start the search process. Accordingly, Chartwell regularly conducts due diligence meetings with 200+ managers/mutual fund companies annually. We evaluate managers by looking at the people, process, and performance of the overall firm and the relevant investment “product.”
Each search normally incorporates the following steps:
Unlike other consulting organizations, our client fees must cover all costs of the manager search process. Chartwell Consulting does not accept any direct or indirect revenue from investment managers to be included in any searches we conduct on behalf of clients. Additionally, the manager databases Chartwell licenses do not require investment managers to pay any direct or indirect fees for inclusion or searches. Our manager recommendations are a function of carrying out the above process completely, and solely, in support of our client’s best interests.
Performance evaluation is an ongoing process, not an event. Performance should be evaluated on a quarterly basis to ensure each manager is adding value and successfully implementing its “share” of the investment strategy. Chartwell’s performance reporting system has the capability of analyzing manager and portfolio performance many different ways. In our customized reports for clients, we review the client’s asset structure, any rebalancing requirements, provided performance attribution on individual managers, and recommendations for any changes that may be warranted. Our goal in performance evaluation is to interpret, rather than merely provided data. The interpretation turns a performance report into a valuable fund management tool, not just a piece of documentation. To view a sample performance report, click here.
In a typical client report we provide:
Regular performance review meetings take place quarterly or as needed by the client, based on staff or committee preferences.
When working with plan sponsors, we often begin with determining the best structure for their 401(k) plan. Specific services include:
Employee Education and Communications
A number of Chartwell’s 401(k) clients engage us to develop and conduct employee investment education and ongoing communications meetings. Virtually all defined contribution service providers include initial enrollment meetings as part of their full-service platform offerings. Some will conduct periodic update meetings at the request of clients, particularly if there have been substantial changes to the plan or the addition of many new employees/participants.
Despite the ready availability of DC service provider education and employee communication programs, Chartwell has often been asked to create and deliver customized investment education programs for the employees of our defined contribution plan clients. Our clients and their employees have found the DC provider programs to be lacking in communicating the best information/education to plan participants regarding how they should manage their own accounts.
As a result, a number of our clients have engaged Chartwell to provide semi-annual or annual investment education meetings. We customize the programs based on information our clients provide us regarding the pressing issues at their organizations. Examples of the investment themes we have covered for a variety of clients in the past include:
The majority of Chartwell’s clients would describe us as extensions of their financial staff or investment/finance committees. When dealing with mid-sized plans and funds, finance departments or investment staffs tend to be small and committees meet too infrequently. They rely on their consultants as “part-time” staff. Our clients rely on Chartwell to provide them with the investment expertise they may lack, or do not have the time to fully address internally. Serving as an extension to staff and a sounding board is a position with which we have a great deal of experience.
Some clients request our assistance in “training” their financial staff or committees in specific investment related areas. These include, but are not limited to:
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Last update: January 29, 2011