A survey conducted by LCP has found that only one fifth of pension schemes appointing a fiduciary manager use an independent adviser to review and monitor their performance.
In the survey of more than 100 pension scheme managers and trustees, LCP found that although 63% of respondents received advice from an independent third party on which fiduciary manager to appoint, only 20% of respondents received third party advice on monitoring the continued performance of their scheme’s fiduciary manager, leaving many schemes without independent oversight of the appointed manager.
Furthermore, despite the appointment of managers being relatively unchartered territory for many, when it comes to assessing a range of providers, 41% only considered one fiduciary manager. Moreover, 79% of respondents with fiduciary managers stated the main challenge they face is being able to identify a suitable replacement or managing the complex transition process to another manager should the need arise.
57% of respondents stated they want to see a change in the regulation of fiduciary management following the FCA review of the asset management industry. Over half of these people would like to see new regulations or disclosure rules around the selection process of fiduciary managers, whilst a third want to see a requirement for independent firms to oversee advice provided by the fiduciary manager.
Clay Lambiotte, investment partner at LCP, comments: “The lack of independent oversight of fiduciary management is clearly a growing concern. Whilst this can be an attractive form of investment delegation, managers and trustees must not overlook the pitfalls. There can be inherent conflicts involved in the process – whether due to fees and assets under management, or simply a lack of oversight.
“The FCA review has a wide remit, but it is clear that scheme managers and trustees want more regulation and transparency over fiduciary management.”