A Pinch Of Salt -- Thoughts On The Aon/WTW Merger

Bart Heenk, Sep 17, 2020 10:53:17 AM

A pinch of salt!

Perhaps it’s because I’ve worked in the financial industry for all of my career?

There comes a time when an event occurs and one needs to speak out.

When a merger or acquisition occurs in our industry it’s typically because “it’s in the best interest of clients”. To be fair, this tends to be a principal rationale used to justify such corporate activity regardless of sector.

Recently it was announced that AON and Willis Towers Watson had agreed to merge their business globally and a key element of the justification was, yes you've guessed it, that it would benefit their clients.

Immediately my colleagues and I decided to do a little bit of investigative work, by hosting a roundtable discussion with a number of large potentially impacted UK pension funds to elicit their opinions.

bad news for pension funds

Specifically in relation to the issue of pension administration, the consensus was clear - this event is seen as bad news for pension funds, at least in the short term. The consulting community, already struggling to provide good quality administration, may now lose one of its largest players.  Having already exited administration in the US and in Europe, the feeling amongst those we spoke with is that AON - who are effectively taking over WTW - may decide to do likewise in the UK.  Not that there wasn’t sympathy amongst our audience; pension administration is a low margin  activity, so such a move might be an entirely reasonable business decision to take.

This is not to conclude that pension administration as a business is doomed, for the disruptive impact that new technologies will have needs to be considered. But changing administrator is not a straightforward process.

Therefore, it can certainly be argued that the merger represents bad news for pension funds in the short-term.

So, unless I’m missing something here, the routine “this move is in the best interest of clients” narrative may be particularly difficult to justify in this instance.

 

More on the aon / wtw merger:

Advice sure isn't what it used to be -- thoughts on the Aon/ WTW merger part 1

The WTW/ Aon merger: Synergy! A 1970's disco perspective

The WTW/ Aon merger: You have more power than you think

The Aon/ WTW merger: A Keynesian perspective

The WTW/ Aon merger: To B or not to Plan B

The WTW/ Aon merger: A customer temperature update

The WTW / Aon merger: UK Pension Plans' Virgil van Dijk moment

The WTW / Aon merger: Talk About Governance

 

Read the full report on the Aon / WTW merger

 

 

Is Big Really Beautiful?  Notes on the discussion on  the AON/WTW merger  Download the full report Time for Plan B?  Our second report on the discussion on  the Willis Towers Watson / Aon merger  Download the full report

TOPICS:

FEATURED RESOURCES

Related Articles

Does your pension fund board need to learn how to delegate better?

Nov 10, 2021 1:10:54 PM

Delegation is undoubtedly a vital part of good governance, when it goes well it can be the defining..

Read More

Does the break-up of the Aon/WTW merger mean anything for pension funds? (Hint: yes it does!)

Jul 30, 2021 11:18:48 AM

As you will have heard, the recent Aon and Willis Tower Watson merger has fallen through. The..

Read More

Are your Chairs doing the right thing for your pension fund?

Jul 27, 2021 11:31:03 AM

The second blog on our Deadly Sins series is about Chairs, their boards and the potential pitfalls..

Read More

Your Fiduciary Manager has more sway than you think!

Jul 19, 2021 10:46:10 AM

A question which all pension funds should consider is whether their Fiduciary Manager has any..

Read More