Articles - What next for IGCs

Independent Governance Committees (IGCs) are now around 18 months old. If they were babies, they’d be around the stage of walking or “cruising”, recognising themselves in the mirror and starting to develop their own personalities. A criticism of IGCs is they haven’t been as independent as some commentators would have liked. The reality is this; IGCs are just finding their feet, getting confident and learning that they aren’t simply an extension of their parents.

 By Jinesh Patel, Vice President of Defined Contribution at Redington
 It was always going to take time and, until now, much of the IGC focus has been on gathering and absorbing the right data to allow them to make their own informed decisions.
 As they move into the next reporting cycle, I believe we will start to see IGCs being clearer with their parents on what they want.
 Defining Value for Money
 This will remain a really clear focus. IGCs need to get a handle on how they actually define this. It can’t simply be about cost; it needs to be about value.
 Having a clear framework that everyone can understand and create proper value based assessments on will be vital to ensure consistency.
 Data will continue to be a challenge. The FCA paper on transaction costs is an area IGCs will need to get their heads around. They will once again be bombarded by data.
 How can they ensure this is put to good use?
 How will IGCs assess the value of an investment where full data is available against one that isn’t?
 Plus, some transactions costs are sensible and necessary to ensure the fund delivers strong outcomes. Others, such as legal and marketing costs, may have a more suitable home than within the fund itself.
 Being able to make sense of all this data and share it consistently, even across IGCs, will be vital for the success and growth and development of the IGC.
 Let’s hope IGCs are better at sharing than the typical 2-year-old.
 I think we will start to see increasing independence from IGCs. On the whole, they have most of the data they need. It will now be a case of tracking and sharing improvements. The concept is still in relative infancy; both IGC and parent are feeling their way into this new relationship.
 Expect to see much more challenging conversations between IGCs and parents in 2017.
 As IGCs enter into the “terrible twos” stage, it might not be porridge on the wall time, but I do expect there to be more tests, as patience with parents not delivering may wear thin quickly.
 The bottom line is this; an IGC and its parent need to work together, but for sure must also operate independently.
 The IGC won’t have the privilege of growing up and being nurtured as a normal child. There is huge pressure on them to perform and deliver real change to member outcomes.
 I’m confident if they work together more, share best practice and genuinely hold parents to account, we will see member outcomes improve over time.

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