The size of a pension scheme has a bearing on its trustees’ relationships with fund managers and consultants, according to wide-ranging new research.It was led by Iain Clacher, associate professor in accounting and finance at Leeds University Business School, in partnership with Aon.The research found that trustees of large schemes place greater emphasis on fund managers’ investment philosophy, decision-making and risk management than small scheme trustees.Small scheme trustees, in turn, focus more on past performance, costs and fees, fund size, firm size and volatility. “Size brings buying power and the ability to be selective, which is not present at smaller fund sizes,” according to the report. “As such, larger funds, and particularly those with in-house investment teams, can use the asset management industry in a strategic way.”Clacher noted that the main reasons for trustees changing fund managers were not as predicted. Investment strategy shifts and de-risking were the main reasons given, with past performance ranking third.The publication of the research comes shortly before the UK’s Financial Conduct Authority is expected to publish its final report on its investigation into the asset management industry. This includes major scrutiny of investment consultants, which the regulator wants to refer to the Competition and Markets Authority.Varied expectations of consultantsThe picture was much more mixed when it came to trustees’ relationship with investment consultants, according to the report’s authors.John Belgrove, senior partner at Aon Hewitt, said: “We found that trustees of different sized schemes look for very different things from their consultants, meaning it is hard to pin down a generalised statement of what trustees look for in their investment consultants.”“In examining this issue, it raises a key challenge for the provision of advice in circumstances where the goals of trustees and the beliefs of consultants clash,” the report said. “It is not clear how trustees would respond to advice that conflicts with their beliefs, nor is it clear that investment consultants are able to have honest conversations with trustees about such issues.”Trustees’ views of consultants ranged from them being a service provider with limited remit, to being a sounding board for trustees to road-test ideas.Interactions between trustees and consultants are complex, the report noted. “Trustees have specific goals and objectives in mind and investment consultants therefore operate within those constraints.”Some trustees felt consultants were tailoring their advice, which the report said could result in the range of options being considered not necessarily being what the investment consultant believes is the optimal strategy. Belgrove said tailoring advice would seem a key part of how trustees and consultants can work together, but warned that it was less likely to be challenged.The report can be found here.