- KPMG’s 2013 survey of the UK fiduciary management (“FM”) market finds that the full delegation market continues to grow strongly, with assets under management (“AUM”) currently standing around £29bn – approximately 2.6% of the UK market*.
- 91% of full delegation mandates have AUM of less than £250m, compared to 88% in 2012, highlighting an increasing interest in FM from smaller schemes within the UK market.
- While implemented consultants continue to hold the majority of both the mandates (75%) and market AUM (69%) their market share has reduced from previous years
- For schemes engaged in FM, the use of independent advice to monitor and challenge a fiduciary manager has increased significantly, with 53% of mandates now operating with independent advice, compared to only 30% in 2012.
- A review of the overseas presence of UK FM providers found that the global experience is significantly different to that in the UK market in that asset managers and specialist providers having materially more overseas AUM than implemented consultants.
KPMG’s 2013 Fiduciary Management UK Market Survey published today highlights that the UK Fiduciary Management full delegation market continues to grow at over 20 percent per annum, and increasingly appeals to smaller schemes.
The survey provides a comprehensive study of the UK full delegation FM market, which currently comprises £28.7bn of UK pension scheme assets across 211 UK pension scheme mandates and equates to approximately 2.6% of the UK total. Alongside this there remains a large ‘partial delegation’ FM market which covers an additional £30bn of AUM across 135 mandates.
Calum Brunton Smith, Head of Fiduciary Manager Research at KPMG Investment Advisory comments: “The market continues to grow at a remarkable pace. Despite growth slowing in terms of AUM, we continue to see a consistent growth in numbers of mandates – highlighting the increased interest from smaller schemes, with 91% of the market now made-up by mandates less than £250m in size. Mandates in excess of £1bn remain rare.
“We continue to see implemented consultants hold the lion’s share of the market, but specialist providers and asset managers have been gaining over the last year. Overall FM accounts for 2.8% of estimated total UK defined benefit pension scheme assets. AUM growth has been exceeding 20% p.a., although is slightly lower than the previous year’s rate. This is consistent with our expectation that FM will continue to grow over the medium term, albeit at a more normal growth rate.”
The number of trustees engaged in FM that appoint an advisor or in-house expertise to independently monitor their fiduciary provider has increased to 53% from 30% in 2012 - reflecting greater awareness among trustees of the benefits of independent oversight.
The experience of UK FM providers overseas paints a very different picture to that of the UK, with investment managers holding the majority of mandates (65%). In terms of assets, investment managers hold 47% of the overseas AUM managed by UK FM providers, with specialist providers holding another 32%.
Alex Koriath, Head of Research at KPMG Investment Advisory, said:“With a market that is becoming more mature whilst still growing rapidly, we see a greater focus on governance and best practice. More mandates are awarded through competitive tender exercises, greater use of independent monitoring and more demands for transparency are all encouraging signs.
We are seeing almost all fiduciary managers now being open and transparent about AUM and client numbers. Evaluation of performance is the next big challenge and we are inviting pension schemes to participate in our independent online survey to help shed light on the question as to whether FM adds value.”
We are intrigued by the market dynamics and see FM entering a more mature growth phase that should attract new providers to the market.”
Notes for editors:
*Based on data released in the 2013 Purple Book
Fiduciary Management (“FM” also known in the UK as "Implemented Consulting“, “Delegated Consulting” or "Solvency Management") is a relatively new approach to managing assets of UK defined benefit pension schemes.
FM is a broad concept with no single definition but usually involves the delegation of some investment decision making previously owned by the Trustees to a fiduciary manager (the “provider”) with the aim to allow decisions to be taken and implemented more quickly with clear accountability. Fiduciary managers aim to add value through strategic asset allocation, tactical allocation changes and the selection of active fund managers.
In our KPMG survey we distinguish between the ‘full delegation’ approach, whereby a FM manager provides full services across the full assets of a scheme, and the ‘partial delegation’ approach where only a subset of the Scheme assets are delegated and the Trustees retain the remaining responsibilities.
The proportion of UK pension fund assets under FM is still relatively small but continues to grow, with a number of small to medium sized schemes having moved to this approach.
KPMG does not offer any fiduciary management services but is one of the leading independent advisors on FM.
To access the survey, click here
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel: 0207 694 4246 Mobile: 07920 274856: email@example.com
KPMG Press Office: 0207 694 8773
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.