Fiduciary management in the UK has long been marketed/talked about, with the promise of taking the responsibility for ever more complicated everyday investment decisions off the hands of trustees seeming almost too good to be true.
But take-up of fid man has been limited. According to a survey by Aon Hewitt (a fiduciary manager and consultancy) released yesterday, 37 per cent of respondents currently have some sort of fiduciary solution in place. This is only a slight uptick on 36 per cent in last year’s survey and 18 per cent in 2011.
Source: Aon Hewitt
Of those that have a fiduciary provider in place, 75 per cent have opted for full delegation.
But take-up of fid man has been limited. According to a survey by Aon Hewitt (a fiduciary manager and consultancy) released yesterday, 37 per cent of respondents currently have some sort of fiduciary solution in place. This is only a slight uptick on 36 per cent in last year’s survey and 18 per cent in 2011.
Source: Aon Hewitt
Of those that have a fiduciary provider in place, 75 per cent have opted for full delegation.
One criticism of fiduciary management had been the way in which suppliers are appointed. Many have said the idea that schemes would appoint a manager that is connected to an existing adviser without a beauty parade can be a conflict of interest.
According to Aon's survey, 72 per cent of respondents chose their manager through a beauty parade, compared with 69 per cent last year.
In a Pensions Expert roundtable on the subject last year, Anton Wouters, head of solutions at asset manager BNP Paribas Investment Partners, said of the Dutch market: "The initial onset of fiduciary management involved pension funds that were not sophisticated in setting up the governance of their fiduciary mandates, and so essentially gave them away without a proper governance structure."
And Christy Jesudasan, client director at fiduciary manager MN, said: "Selecting a fiduciary manager is a complex task. It requires more than an hour’s beauty parade meeting, but actual in-depth due diligence and site visits." Some standalone fiduciary managers have found it hard to get a foothold in the UK market.
Fees have also been a sticking point for some schemes, with layers of fees making delegation expensive.
It is often recommended that schemes employ an independent adviser to oversee the fiduciary manager.
"It is fundamental to be able to demonstrate ongoing supervision of a fiduciary manager," Jeremy Goodwin, partner at law firm Eversheds, said in the same roundtable discussion, but added that too many advisers could lead to difficulties in decision-making.
"One of the real dangers out there is if you start to get too many advisers. It is necessary to make it clear what the function of each of the supervisors is, such as the investment consultant not just second-guessing the fiduciary manager, but actually being involved and saying whether it is outside the parameters of what is absolutely wrong."
