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Advisory services

Helping the pensions world become safer, more secure and more sustainable

If you want to make a pension safe, you need to understand the covenant. You need to understand how good or bad the company is behind your pension scheme and what risks might cause a problem. You might also need to think about the journey plan. And you might need a contingency plan for things that might go wrong along the way. With our advisory services for pension schemes we help people understand that these things play out over decades. We help them deal with long-term risks.

The challenge in pensions is always between putting money into the pension scheme on the one hand, and relying on investments to generate future income on the other hand. Obviously, you need to put in some money to have the investments in the first place. But how much do you put in the pot? And how much do you rely on the pot growing on the back of investment performance?

Advisory services for pension schemes - poles in water

Balancing act

There’s a constant tension between the sponsor of the pension scheme (who would naturally prefer to rely on investment markets to do most of the work) and the trustees, who would often like to see the sponsor putting some cash into the scheme. The question is: what does the sponsor do with its cash? Put it into the pension fund? Pay a dividend to shareholders? Or invest in the business? Clearly, you don’t want to kill the golden goose by taking too much money out of the business. At the same time, you don’t want the sponsor company to pay out too much in dividends or to borrow too much from the banks. So it’s a constant balancing act.

Navigating the long-term risks

One of the challenges is helping people to understand and navigate some of these long-term risks and to acknowledge that taking action now is the right thing to do – and the smart thing to do. It’s all about planning for uncertainties. After all, it’s seductive to think that things will probably remain as they are, but major changes – like a pandemic – can kick in at any moment. It’s rather like maintaining your house: you can leave the roof unfixed and your windows unpainted, and they may well be fine for a year or two. But do you really want to wait for the rain to come in during the next big storm?

More sustainable

The same applies to ESG risks: ESG is a long-term risk playing out over a long time horizon. You need to take action today to avert a risk tomorrow.

We do things differently: we challenge you

We do things differently in two ways. Firstly, we accept that there’s an instinctive human bias towards inaction. Which is why we challenge people to think uncomfortable thoughts occasionally, and to look ahead at what could happen. That means doing things like pre-mortems (what could hit you in the future?) rather than post-mortems when you’ve already been hit.

And we don’t hide behind models

Secondly, many of our colleagues in the advisory market are selling themselves and their advisory products. That generally means selling stochastic financial modelling, where different scenarios are run through complicated mathematical models on how investment markets might perform and how your pension fund might react to this. One of the ways in which we stand out from our competitors is in that we don’t really believe that we as humans can model the complexity of the world. Any model is a gross simplification.

 

Here at Cardano Advisory, we have the humility to acknowledge that we don’t understand everything. We recognise that there’s very little that we can actually control. And therefore, what we need to do is to consider different scenarios, do contingency planning, and have a diverse group of people thinking different thoughts and challenging the status quo. We haven’t built an Excel spreadsheet that we claim is going to solve every problem and that we can sell you off the shelf. Of course, we do analysis, but it’s about analysing real risks that we perceive at a particular point in time.

Our vision: partnership leading to better outcomes

We believe in following a process rather than selling an off-the-shelf product. Following that process in partnership with us will lead to better outcomes. The reason why we have a market-leading reputation in our field is precisely because we’ve achieved extremely good outcomes for our clients. People come to us because of that best-in-class covenant capability and our understanding of how to manage capital allocation to support long-term risks such as pension scheme funding and net zero transition. We’ve achieved some really phenomenal outcomes for our clients, particularly in high-pressure, high-stakes transaction scenarios.

 

Working closely with trustees, sponsors, investors and other stakeholders across a wide range of sectors, we provide innovative solutions to deliver safer financial futures.

Our unique strengths: building deep relationships

  • We build deep relationships: we ‘keep in touch’, and understand your history and where you are going.
  • Covenant advice is the tool through which we achieve that deep understanding of our clients. So we’re able to help when it really matters.
  • We have a multi-disciplinary skill set and value all forms of diversity, including cognitive diversity, as critical to delivering holistic solutions that work.
  • We are proud to work with schemes and sponsors of all sizes, sometimes supporting household names and high-profile transactions.
  • We are the advisory arm of a leading pensions and sustainability investment management group, allowing us to offer our clients a unique perspective and set of resources.

The nitty-gritty: pensions are what we do

In short, we are a leading provider of covenant and related advisory services for pension schemes, both defined benefit (DB) and defined contribution (DC). Over the years we have broadened our services as the market has evolved and we now have specialists in other related areas including corporate finance, journey planning, litigation support, restructuring and risk transfer.

We are the largest specialist provider of pensions and corporate finance advisory services in the market, advising over 400 clients, both sponsors and trustees, with combined pensions assets approaching £327 billion, ranging from £2 million to over £20 billion.

We provide a range of services to trustees, sponsors, investors and The Pensions Regulator, including covenant assessments and monitoring, scheme-specific funding support, advice around corporate transformations and restructuring, and expert witness advice.

We formerly operated under the name of Lincoln Pensions (founded in late 2007 as a division of the global mid-market investment bank, Lincoln International), which became part of the Cardano Group in October 2016. The Cardano Group is a Dutch-headquartered investment and risk management specialist established in 2000.

Read more about our four service areas:

Funding and journey planning

Journey planning involves setting a scheme’s long-term target, the time to take in getting there and the risk that can be run along the way. In all these decisions, the reliability of the employer covenant (now and in the future) is key. Employer covenant is the ultimate backstop for your scheme’s journey to the full funding of member benefits.

 

Corporate finance

If your company finds itself involved in a major corporate deal or a restructuring process, it’s worth remembering that defined benefit (DB) pension schemes can have a big impact on your value. Nevertheless, provided it is managed correctly, pensions risk can be mitigated and value can be unlocked.

 

 

 

Covenant and sustainability

For defined benefit pension schemes we provide covenant and related advisory services, that have been broadened over the years as the market has evolved. Our specialisation includes corporate finance, journey planning, litigation, restructuring and risk transfer.

Investment advisory

With a comprehensive investment advice our aim is to help our clients capture opportunities, minimise risk and achieve their financial goals as efficiently as possible. Alongside it, we also take on shorter-term strategic advisory projects for both trustees and sponsors. These often involve optimising investments in terms of sustainability and ESG.