Love Me Tender… Virtually
The challenge of working remotely has dealt a significant blow across the financial service industry. With operations being conducted from home, pension funds and financial service providers prioritised tasks deemed to be critical, which meant that certain “non-critical” activities were relegated down the agenda.
One task which has usually been deprioritised is the evaluation and selection processes for external providers. With site visits and personal interaction temporarily out of the question, it was presumed that developing the necessary confidence and trust to build a new relationship would be too difficult. So, understandably, many mandates that might, under normal circumstances, have been expected to be re-tendered were not. Tenders have been either delayed or awarded by default to the incumbent provider, regardless of whether they still represented the best fit for the customer. In lockdown, providers have been able to rest on their laurels.
However, as our new normal becomes increasingly familiar, innovative ways to make the most of current technology have become apparent. This makes the concept of 'virtual due diligence' now a genuine option for asset owners to consider. Avida International has developed a useful and robust methodology for conducting such exercises. The following case study offers some insights on a virtual Tender Project.
BACKGROUND: PENSION SCHEME X AND AVIDA INTERNATIONAL
Pension scheme X has DB pension plans in several European countries with invested assets totalling multiple billions. The pension plans in all countries are currently managed by an internal investment team supported by an external Fiduciary Service Provider. The Fiduciary Service Provider delivers the following services for Pension Scheme X:
Strategic Advice
Implementation Advice
Investment Manager selection and oversight
Monitoring and reporting
Risk and overlay management.
At the request of Pension Scheme X, Avida International were commissioned to help determine if the current Fiduciary Service Provider continued to represent the best-fit or whether they should be replaced by one or more competitors for provision of the above services.
PROJECT PHASE 4: CASE STUDY MEETINGS
The third phase of the selection process focused case studies on relevant actual topics with the aim to gain insights into the technical qualities of each candidate organisation and, once again, Teams and Zoom proved their worth. The relevant people from the candidates’ teams all participated, with all individuals given the opportunity to speak. One of the beauties of Zoom and, more specifically, its mute button, is that it allows individuals who might otherwise remain quiet or shy to speak up and have their moment(s) to contribute. Slides could be presented using the “Share Screen” function providing the basis for discussion. Once again, these meetings were recorded for later review and analysis by both the Avida International and Pension X teams.
PROJECT PHASE 5: CONTRACT, IMPLEMENTATION AND MORE
During the final stage of the process, it is the ability, afforded by technology, to constantly review previous sessions that adds real value to the new normal. From Step 1 to Step 4 there is a detailed paperless trail that can be repeatedly turned to. This entire process review was carried out over the course of 4 months, but thanks to technology, even the initial meetings and questionnaires remained familiar. If attentiveness to live information and action is what you want, then the virtual process certainly has much to commend it.
FINAL THOUGHTS … VIRTUAL TENDERS AS THE NORM?
The virtual tender process offers a quick, easy, but also an in-depth and constantly reviewable alternative to the traditional, physical one. Operating in the new normal need not have the limitations it was assumed to have almost a year ago. Though Pension Scheme X could be said to be a somewhat unusual example, the virtual process is nonetheless a versatile one. Avida International have demonstrated it is possible to mould and tailor such virtual processes to whatever a client may need them to be. New project phases can be added at short notice and conversations can be had quickly with little interruption. The crucial point to make is that, whilst it is bold to suggest that the new normal might be here to stay, there is little doubt that virtual processes offer another extremely workable option that our industry should fully embrace.
Our service can be modular and bespoke
For further information, contact info@avida-int.com
