- The first comprehensive review of the UK fiduciary management finds that the market currently stands in excess of £40bn, which equates to c. 4 percent of total UK pension scheme assets under management (“AUM”), with over 200 pension scheme mandates; according to KPMG
- Implemented consultants dominate the market by AuM and number of clients - with the majority of appointments being made without consulting alternative providers or considering the wider market
- Performance measurement, benchmarks and fee structures vary widely and with each provider adopting their own approach, there is little consistency within the market
- After a period of initial growth in this market, there is now uncertainty around the future prospects for FM with provider expectations of future market growth varying significantly
Over the past 5 years, the UK Fiduciary Management market has grown to now comprise over £40bn of assets, covering over 200 pension scheme mandates, and equating to around 4 percent of the total UK pension scheme assets under management, according to KPMG’s 2011 UK Fiduciary Management Market Survey, the first comprehensive review of this market, published today.
The survey reveals that, to date, implemented consultants hold a significant majority market share compared to specialist providers and asset managers operating within the UK market. It also reveals that a significant number of fiduciary management appointments have been made without going to market or considering more than one potential provider. However, as the awareness of FM and the various providers and solutions available within the UK market increases, it is likely that trustees and companies looking to appoint a fiduciary manager will take a more competitive tender approach, pitting providers directly against one another which will increase transparency and balance within this market.
Patrick McCoy, pensions partner and head of investment advisory at KPMG in the UK, said:
“Our survey offers the first definite picture of where the UK FM market is currently. It is clear that the nascent fiduciary management market in the UK has experienced a period of rapid growth and is now emerging into a more mature growth phase. The expectation for future growth and acceptance of fiduciary management among UK pension schemes varies widely according to this survey of the market participants.
“Not untypical for a new and developing asset management market, standardisation of benchmarks and comparability is still to emerge. Our survey finds a wide variation in how performance, as well as the success or failure of fiduciary management, is measured. This makes the establishment of market benchmarks and comparators difficult. Therefore, while the industry uses performance fees to a large degree there is no consistent definition and application of performance fees. These findings are in line with our experience at KPMG where we see a lot of demand for independent advice in setting up performance measurement and compensation structures for FM.
As FM develops, in terms of both public knowledge and the universe of providers available in the UK market, we believe there will be increased pressure on providers to offer transparency and adhere to market standards as these develop. Going forward, we also expect that the majority of FM appointments will be made via a competitive tender process – as is the case with nearly all other investment management appointments.“
- Ends -
Notes for editors:
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 responsibilities to a fiduciary manager (the “provider”) with the aim of better utilising trustees' limited time and to allow decisions to be taken and implemented more quickly with clear accountability.
The concept of FM has already taken off in the Netherlands and in the US; albeit under slightly different structures than the current UK offerings that investment consultants, pensions providers and asset managers are currently marketing.
The proportion of UK pension fund assets under FM is still relatively small but is growing, with a number of very large schemes having moved to this approach.
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel: 0207 694 4246 Mobile: 07920 274856: margot.cowhig@kpmg.co.uk
KPMG Press Office: 0207 694 8773
About KPMG
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with nearly 11,000 partners and staff. The UK firm recorded a turnover of £1.6 billion in the year ended September 2010. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have more than 138,000 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.
