Advice sure isn't what it used to be -- thoughts on the Aon/WTW merger (part 2)

22 September 2020 Posted by: Sally Bridgeland Posted In: Trustee Boards/Investment Committees, outsourcing, Fund management

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What would you get if you merged every independent advisory organisation into one body? A huge increase in industry systemic risk.

While I have a keen sense of humour, this is not intended as a joke.

The maturing UK pension fund industry is currently being shunted in this direction with the proposed merger of industry advisory giants AON and Willis Towers Watson. Two of the biggest consultants becoming one and the consequent shrinking of advice options for funds, has consequences.

Ever since this announcement my Avida International colleagues and I have been exploring the potential implications with a number of the larger pension funds. Some of the feedback provides interesting food for thought.


Firstly there are those who are relatively relaxed about the development. Here are a few examples.

  • The bigger pension funds with in house teams already shop around and use consultants for specialist advice: they are less reliant on a single adviser

  • A number of the larger pension funds rely on their in-house investment teams for advice and the major consultants are used primarily to sense-check any recommendations so there is no critical dependency

  • Larger funds will be able to source smaller consultants to fill any gaps


However, there were some who expressed concerns regarding what advice might look like after the merger. The following quotation neatly captures that point.

“With every merger the different nuances of the previous firms are lost, and so advice gets more commoditised, generic and watered down. There is no longer the same focus on the needs of the pension scheme.”

Arguably the most interesting bit of feedback came from a very seasoned industry professional who expressed a broader concern.

“The old model (involving amongst other things ALM, fund ideas and fund manager selection, implementation, and monitoring) feels quite tired. Funds require help identifying solutions to their problems and in handling the increasing avalanche of regulations they are being faced with.”

The world of pension funds will change dramatically over the next decade. Larger funds are already very different from each other, reflecting their particular covenants and in-house skills.  The decisions trustees make are harder and more final.  There’s still a need for thoughtful, tailored advice.  Let’s hope it will always be there.

Major mergers UK pension advisors

Read more on the AON / Willis towers watson merger:

A Pinch of Salt: Thoughts on the Aon/ WTW part 1

Is Big Really Beautiful? 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