ARLINGTON, Va., June 26, 2017 (GLOBE NEWSWIRE) -- Self-awareness, an understanding of peers’ practices and adaptability are central to the evolutionary success experienced by the world’s leading asset owners, according to new research conducted by leading global advisory, broking and solutions company, Willis Towers Watson (NASDAQ:WLTW), and sponsored by the Australian sovereign wealth fund, Future Fund.
The paper, Smart leadership. Sound followership, seeks to benchmark and compare practices across 15 world-leading asset owners chosen from across the North America; Europe, the Middle East and Africa; and Asia Pacific regions and based on their global reputation; strong governance; significant size; and thoughtful, outward-looking perspectives. It was produced by the Investment Organizational Effectiveness team at Willis Towers Watson, a group that works with asset owners across the world with a focus on ensuring processes, practices and resources are optimized and fully aligned to give investors the best possible chance of attaining their investment objectives.
“With the uncertain and often volatile outlook in capital markets playing on the minds of asset owners in recent years, we have seen a plethora of investment strategy innovations undertaken by the investment community,” said Steve Carlson, head of Investment, North America, Willis Towers Watson. “These have sought to maximize and optimize outcomes through, for example, new approaches to risk diversification. However, there is a growing recognition by those at the forefront of industry thinking that an ability to adapt to a fast-changing landscape is critical, and that this is best achieved by sharing and implementing best practice.
“Funds which are able to demonstrate more effective decisions through improved cognitive diversity and board-executive engagement, combined with better sustainability and risk management, are the ones emerging as leaders at the vanguard of the global asset owner industry.”
Key findings of the paper include:
- The importance of diversity. Research is revealing that biases in investment decision-making settings are more numerous and deeply embedded than investors readily recognize. Using diversity effectively can help reduce the impact of biases.
- Sustainability and long-horizon investing is currently too shallow. Sustainability is a critically important emergent subject, yet opportunities are being missed in the overlapping areas of sustainability; environmental, social and governance; stewardship; and long-horizon investing.
- Boards are having trouble being strategic. Boards seem strong in interpreting their funds’ mandates and in ensuring executive accountability, but less so in their development of a strategic dialogue with their executives. This is work in progress, revealing an opportunity for organizations to improve.
- Risk management is key as the business landscape is changing. To manage risks, there is merit in scenario analysis. Studying the investment ecosystem, not just the markets, is critical to anticipate some transformational changes ahead.
- Funds are evolving their mix of internal and external intellectual property. There can be a better grasp of how to optimize the value chain, including the nature of external strategic relationships. Technology and increased sophistication make network opportunities across funds potentially more valuable than ever.
“The overriding lesson from this study is that self-awareness and cognizance of peer groups has played an intrinsic role in the evolution taking place across the world’s leading asset owners,” said Carlson. “We believe this will only become more important into the future, particularly given the scarcity of investments that meet the current risk and return targets of many funds.”
About Willis Towers Watson Investment
Willis Towers Watson’s Investment business is focused on creating financial value for institutional investors through its expertise in risk assessment, strategic asset allocation, fiduciary management and investment manager selection. It has over 900 colleagues worldwide, assets under advisory of over US$2.3 trillion and over US$87 billion of assets under management.
About Willis Towers Watson
Willis Towers Watson (NASDAQ:WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas ─ the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.