Transition Management Consolidates

Terry Flanagan

Abel/Noser, an independent agency brokerage firm has experienced growth in its transition management business, which it attributes partly to large banks exiting the space.

“Part of that growth comes from some of the competitors dropping out of the business over the last year and a half,” said Abel/Noser CEO Bill Conlin. “One of the reasons they dropped out is the requirement for greater transparency. A lot of the big banks, for example, have dark pools that they can run their transitions through.”

As an independent agency broker, Abel/Noser has no such conflicts of interest, Conlin said. “We’ve always acted as pure agents. In other words, our goal is to try to get a good execution, not to make money with the order flow. As transition management best practices have evolved, they have grown to look more like the model Abel/Noser has lived by since it entered the space 30 years ago.”

As the transition management industry consolidates, pension funds, endowments, sub-advised funds, and other institutional investors are scrutinizing the relationships with service providers more closely than ever before to make sure they are receiving the best value, according to Michael Iannucci, Abel/Noser’s senior vice president of transition management services.

“That manifests itself in any number of ways throughout the process,” he said. “It informs how we prepare for a trade in the pre-trade setting, it informs how we direct order flow to various venues, and it informs how we report back on our process and on our costs to our clients in the post-transition setting.”

Abel/Noser’s transition management group helps asset owners make changes to their investment allocations while minimizing transaction costs.

“Every transition mandate is different, and there is any number of permutations, any number of legacy managers, target managers, asset classes involved, but typically we have the same set of goals in every case,” Iannucci said. “We want to ensure that the transition unfolds as quickly is allowable given the circumstances. We want to ensure the window between the legacy manager allocation and a target manager allocation is as succinct as possible. We also want to ensure that we preserve asset value as best we can for the client. So those are the 2 sort of overarching goals for every transition mandate.”

A transition at minimum will involve an asset owner, their custodian bank, and a certain number of legacy and target investment managers. “Our goal, following this initial conversation, this understanding of the client’s goals, is to liaise with all the interested parties to ensure that this process happens as efficiently as possible,” said Iannucci.

Featured image via bloomua/Dollar Photo Club

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