Fiduciary management

Breaking down information barriers in fiduciary management to increase transparency and improve engagement

Choosing to adopt fiduciary management is a big decision for pension schemes and is not for everyone - we help you decide if it is right for you. As well as regularly meeting with managers and other industry participants to ensure our clients are receiving excellent service, we provide:

  • A full oversight service.
  • Impartial and specialist investment advice.
  • An internal network to call on the necessary expertise if required.

How we can help you

  • We get to know you and your investment beliefs.
  • We couple this knowledge with our strategy and governance expertise to advise you on what approach is appropriate for you.
  • Our offering includes interactive training sessions, one on one training, and in-depth reviews.

  • There are an increasing number of fiduciary managers and solutions, we will help you select the one that meets your specific needs.
  • Our selection process is underpinned by our proprietary SCORE research process which recognises the market is relatively young and still differentiated.
  • We engage at a level that is suited to you, whether it is providing a short list of recommendations all the way through to arranging beauty parades and site visits.

  • We feel strongly that your fiduciary arrangement should be independently reviewed on a regular basis to ensure transparency around performance and fees.
  • We check if your manager is performing in line with their mandate and provide insight into the whole market to help you benchmark your arrangements.
  • Importantly, we also consider if your fiduciary arrangement continues to fit with your overall pensions strategy.

  • Unclear mandates and high fees can destroy the value of your assets.
  • We work collaboratively with your manager(s) to negotiate the best deal for you.
  • This includes establishing a clear transition timeline and overseeing this if necessary.

  • We have the expertise and network to advise you on investment issue you encounter.
  • We work closely with our pensions, sponsor covenant, legal and insurance teams to provide a comprehensive service.

Fiduciary management explained

What is fiduciary management?

Fiduciary management involves the delegation of some, or all, of the day-to-day investment decision-making and implementation. Importantly, the Trustees always retain responsibility for deciding high level investment strategy, i.e. risk and return targets.

Fiduciary arrangements can be highly customized: this chart provides some examples with the grey areas relating to where the Trustees retain investment decision making.

 

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History of fiduciary management

The first UK mandate was implemented in the early 2000s - since then the number of fiduciary mandates and providers has grown significantly. The total UK fiduciary assets now exceed £100bn.

 

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Why do trustees choose fiduciary management?

  • Focus on high level strategic decisions
  • Manage decision paralysis
  • Implement ideas more quickly
  • Access wider range of asset classes
  • Achieve better manager fees through economies of scale

 

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What are the challenges associated with fiduciary management?

  • Potential conflicts of interest
  • Difficult to assess value
  • Fee transparency
  • Traditional performance comparison difficult
  • Exit costs can be high

 

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Is fiduciary management right for your pension scheme?

Consider the following questions:

  • Are you spending your time in an optimal and effective way?
  • Are you receiving value for money from your current arrangements?
  • Do you have the right level of investment expertise?

If you answer no to any of these questions (or are unsure) then you should consider if there is a different investment and governance model that could work better for you.

 

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Compliance statements are coming

Trustees need to confirm the extent to which the relevant parts of the CMA Final Order that were in force have been complied with.

This needs to be done via the submission of a Compliance Statement along with a signed certificate.

See our summary of the Final Order

Deadline 7 January

Deadline: 7 January 2021

What actions do we recommend Trustees take?

Before 9th December 2020

  1. Identify which Parts of the Final Order apply. For schemes using fiduciary management this is likely to be Parts 3 and 7. For schemes without fiduciary management this is likely to be Part 7.
  2. Identify signatory. For Trustees this will be (a) a director of any sole corporate trustee; or (b) the Chair of the Board of Trustees; or (c) only if there is no Chair or the Chair is not available, any other member of the Board of Trustees.
  3. Prepare a draft Compliance Statement.

Between 9th December 2020 and 7th January 2021

  1. Finalise and sign the Compliance Statement.
  2. Email the Compliance Statement to RemediesMonitoringTeam@cma.gov.uk

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Contact us

Keira-Marie Ramnath

Keira-Marie Ramnath

Head of Fiduciary Management Oversight and Selection, PwC United Kingdom

Tel: (+44) 7710 036915

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