Welcome to the latest survey of the UK’s fiduciary management market conducted by IC Select. This is the first time we’ve published findings from our annual surveys, and we hope they contain useful insights into unfolding trends in the sector. This report draws on analysis contained in previous surveys as well as our most recent survey to give a broader picture of the fiduciary management market extending over five years, and in some instances longer.
This article was published in Pensions Expert, b| September 7, 2021
Data crunch: The average size of a pension scheme taking on a fiduciary manager rose by around 80 per cent during the Covid-19 pandemic, suggesting the flexibility afforded by the model was particularly attractive in turbulent market conditions, according to research from IC Select.
The pandemic accelerated an existing trend, the research found, as the UK fiduciary management market has grown by 14 per cent a year over the past five years by number of clients, with assets under management up 22 per cent a year over the same period.
Independent oversight of investment consultants and fiduciary managers remains low among defined benefit pension funds, despite mounting regulatory pressure and scrutiny of trustees.
This missing governance gap should be a priority considering investments account for 80 per cent of the total cost of pension fund ownership, and therefore should matter most to both sponsors and members.
Industry research shows independent fiduciary manager oversight remains low at around 22 per cent of funds, in contrast to more than 70 per cent of funds that now use independent evaluators to undertake selection exercises.
The situation in advisory relationships is even more alarming. Independent oversight of investment advisers is almost non-existent, despite these having the greatest impact on whether a pension scheme can meet its liabilities.
- The CMA Review highlighted the lack of demand side challenge by trustees of their investment advisers.
- As far as setting consultant objectives, trustees still seem to be 'kicking the can down the road'.
- It’s not sufficient for trustees to allow investment consultants to set, and mark, their own homework.
Andy Clarkson, operations specialist at IC Select, joins Professional Pensions editor and Schroders fiduciary management professionals to discuss progress in this important but complex area.
The presentation and Q & A discussed the concept of transaction costs through a fiduciary lens, why best execution is critical to managing transaction costs and explored how trustees should use and interpret transaction cost information – highlighting the common pitfalls to avoid when using transaction cost figures.
Key takeaways were the importance of disclosure and transparency which build trust in your investment provider and asking questions.
Professional Pensions Webinar link: Tune in now