Reintroducing Westminster Consulting By: Gabriel PotterMBA, AIFA® 2016.08.22

Continuous Improvement

Our long time clients may read the title of this article and wonder if they need an introduction.  What purpose does a reintroduction serve?  Is Westminster Consulting doing anything differently?  Has their business changed in some fundamental way? 

Well, yes and no.  Are we still in the business of providing investment consulting and fiduciary oversight?  Yes, absolutely.  When our founders, Sean Patton and Thomas Zamiara, started the firm thirteen years ago, they were looking ahead towards broader adoption of the fiduciary rule and they wanted a proactive business model which fully embraced the highest ethical standards, knowing that law and best practices would eventually catch up.  That foresight has worked in our favor as industry-peers have, sometimes reluctantly, learned that the fiduciary standard is in the best interest of clients and most attractive to investment and plan committees looking to protect themselves.  For those industry peers which have resisted improvement, the new fiduciary rules adopted this year might limit their business practices as traditional brokers providing advice to the retirement clients, whether they are businesses, institutions, or individuals.

We take pride for being ahead of the curve in this regard.  However, part of the burden of maintaining the industry best practices standard is the fact that you can never stop.  The best practices business standard isn’t a static set of rules and procedures; it is a moving target.  Thus, while Westminster Consulting’s overarching ethos hasn’t changed, there have been many additions to the oversight we provide, the services we offer, and the tools we use.

For example, one obvious change in our day-to-day business operations is apparent from the volume of information we publish.  With weekly blogs, weekly flash reports, monthly articles, and our quarterly magazine, clients and industry peers have access to timely information and durable insights on a variety of topics related to markets, our industry, and the legal environment.

So, the overarching business of Westminster Consulting hasn’t changed, but our level of service has continued to expand.  We think a reintroduction to our business and the roles we take on will help clients take greater advantage of the services we offer and it will help inform our peers and industry contacts about the work we do.

Westminster Consulting’s four roles

We have a well-earned reputation within the institutional investment community of bringing a curiosity and informed perspective to our client interaction, which allows our seasoned experts to ask the right questions in order to educate and prepare fiduciaries and investment committees to meet their responsibilities and provide the level of stewardship expected by Boards, Trustees, and Donors today.

Westminster Consulting’s business model is based on our team’s unique skill sets and experience and generally follows four lines: 1) investment consultant, 2) fiduciary counselor, 3) benefit specialist, and 4) project manager

Westminster Consulting as an INVESTMENT CONSULTANT

When investment or plan committees consider hiring a consultant, the duties they generally have in mind falls under this category:  basic investment consulting duties.  These sort of tasks include performance reporting for investments and the portfolio as a whole, due diligence of investment managers, in-depth fee analysis (including breakdowns of investment management, custodial fee, recordkeeping, taxes, charitable giving), and market commentary.  Certainly, our clients are familiar with our performance reports and investment manager due diligence reports.

Depending upon the type of client, other common investment consulting work is usually part of the package.  For instance, a defined benefit plan or an endowment / foundation will usually require a rigorous asset allocation optimization study – determining the ideal allocations of various asset classes which maximize returns for given levels of risk.  These plans with committee controlled asset allocations can take advantage of modern portfolio theory using historical data and capital market assumptions to create optimized asset allocations using traditional and exotic asset classes.  In contrast, a defined contribution plan (like a 401(k)) may allow investments within an investment lineup, but doesn’t control the allocations that each individual participant selects.  Therefore extra attention is spent on those investments within the lineup meant to provide built-in optimization and diversity, whether they are models, target date funds, or targeted risk funds.  Thus, a defined contribution plan requires greater due diligence towards QDIA (qualified default investment alternative) selections and similarly diversified investments.

Westminster Consulting as a FIDUCIARY COUNSELOR

By design, Westminster Consulting’s only clientele are institutional investments; we don’t consult to individuals or families looking to manage their wealth.  Unlike a high-net-worth individual, that means that all of our clients are managing dollars which are not in their benefit, a company manages a 401(k) lineup for their employees; a charity stewards money for the benefit of whatever goal (religious, healthcare, education, animal rights, etc.) it has set up.  In other words, all of our clients are fiduciaries.

The challenges facing investment fiduciaries go far beyond traditional investment consulting needs.  The duties of an investment fiduciary and their committees have changed dramatically from a regulatory and public perception standpoint.  Investment committees are looking for partners to assist them with not only their investment consulting needs, but to ask the right questions in order to mitigate many other and often overlooked risks.

To this end, Westminster Consulting has spent considerable resources to create, improve and further develop our proprietary web application, the Fiduciary Compliance Resource Center (FCRC).  Governance and compliance documents (meeting minutes, board reports, investment policy statements, etc.) can be drafted and/or cataloged and archived using this application.  This online tool has recently become particularly useful as an online repository for ongoing Department of Labor and IRS audits which have expanded this year as part of a new regulatory push on the retirement industry. 

Moreover, we continue to promote various in-house developed checklists for fiduciary and governance documentation, specific legal safe harbors (QDIA, 404(c)), and annual agenda calendars, for routine and ad hoc topics.

Finally, Westminster Consulting remains committed to educating our clients and peers about their responsibilities under the precepts of law and best practices.  Our training courses have been approved for continuing education credits by the National Association of State Boards of Accountancy (NASBA for C.P.A.s) and the Human Resources Certification Institute (for HR professionals).

Westminster Consulting as a BENEFIT SPECIALIST

A traditional investment consultant is limited in the advice they can give and the solutions they can provide.  A typical broker/dealer investment consultant might focus on the investments as they are, uncaring about the context of those investments because they are unable to make any changes or they are not compensated for doing so. 

In contrast, Westminster Consulting is not subject to organizational limitations.  We understand that investments do not occur in a vacuum.  A defined contribution plan may exist to advance employee loyalty and healthy turnover.  We could help implement automatic features to enhance participant engagement in these programs.  A charity’s goals may be served by actively modeling ongoing charitable giving or quarterly outflows.  A pension plan might be best managed by matching the growth of assets with the growth of liabilities or even planning a lump-sum payout to close the plan altogether.  We have the skill sets to conduct a deeper analysis and provide options on how companies funding their pension plan may look like with a decade or more of custom modeling based on actuarial assumptions and different payment scenarios. 

This type of strategic advice, where we can develop hypotheticals that may include; restructure a plan features or structured matching, or change the benefit structure of a pension plan.  Westminster Consulting utilizes a holistic consulting approach and natural curiosity to achieve this higher level of consultative service.  We utilize our own tools, such as the PRA (Pension Risk Assessment) or RCAT (Retirement Committee Assessment Test) to determine gaps in understanding and effort at the organizational level. 

Westminster Consulting as a PROJECT MANAGER

Did you know that a large number of Westminster Consulting’s ongoing clients initially approached us for a one-time project?  A variety of these duties, listed above, are available as single-time projects for clients who want to test us out before they commit to a longer engagement. 

By a large margin, the most common á la carte product we provide is an RFP or vendor search for client.  The investment industry has undergone significant cost cutting measures in the past decade and some organizations have been simply unaware that they could receive significant pricing and service concessions just by going through a formalized RFP process.  Our experience and close monitor of the industry has allowed us to extract tremendous value from vendors for the benefit of our clients. 

Moreover, since Westminster Consultants have been regular panelists and invited speakers for accounting firms, law firms, industry symposiums and conferences, we are often invited to tackle unique problems for new clients.  For one example of a unique project for which we’ve been engaged, Westminster was hired to restructure multiple levels corporate cash, with attention towards different domestic and international liquidity needs by an international company.  Another example, Westminster Consulting was hired to evaluating company stock distribution within a 401(k) plan, comparing different vehicles for this distribution for fairness and consistency.   

Are these four roles familiar to you?

Do you have a new committee secretary trying to figure out our online tool - FCRC?  Would he or she benefit from a walkthrough?  Have you been interested in a holistic review of your organization’s goals?  Most of these services are included in their ongoing agreement. Are you taking advantage of all the services we offer?  Let us know how we can help.





Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

More about Gabriel Potter
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