Aon Consulting has divided itself in two to address the conflict of interest issue, following its creation of multi-manager products.

Adrian Swales, head of global investment consulting, says: "Our investment consulting division will be entirely separate from multi-manager and we shall be open about what we are doing. There's a wall between the two – literally. They are also separate companies. Members of each team are separately incentivised. Our research team forms a third division, advising both sides." The separate company model harks back to the one created by Stamford Associates, which is experienced in giving bespoke investment advice and multi-manager services. Swales will continue to advise his existing clients. "But I'm incentivised by interests in each of the two divisions, so I can't advise my clients to take Aon multi-manager service. All I can do is provide a list of suitable products. I have no qualms about putting forward other multi-managers – in fact, I've just put a client into Frank Russell." Swales is convinced that the separation of incentive arrangements is core to the avoidance of conflict, although other firms are convinced that joint ownerships can be made to work. The partners of Lane Clark & Peacock (LCP), for example, intend to own a 5% stake in their combined operation when their multi-manager product is wheeled out. But it points out that their new product will only be offered for defined contribution business. Paul Haines, LCP partner, says: "Where conflicts exist, we need to handle them openly." For UK equities, the Aon multi-manager service will offer Capital International, Lindsell Train, Liontrust and New Star products. US equities will use MFS/ Wellington; European, BlackRock/ Capital; Japanese, Marathon/Martin Currie; Far East, APS/Lloyd George; and corporate bonds, Aegon/ Deutsche. The multi-manager service has hired Goldman Sachs to carry out transition work and Legal & General will make sure that the integrity of scheme benchmarks is not distorted by market moves. Swales reckons the line-up will strongly appeal to small and medium-sized pension schemes who cannot afford to have access to these services on their own.