PLSA IC 18: Clarity needed on investment consultant fees, quality and performance - CMA

Written by Talya Misiri

Greater clarity is needed around the fees, quality and performance of investment consultants and fiduciary managers for trustees, the Competition and Markets Authority has highlighted.

Speaking at the Pensions and Lifetime Savings Association's Investment Conference, Thursday 8 March, CMA project director Alison Gold, outlined the need for transparency around fiduciary management fees, quality and performance of investment consultants to enable trustees to make informed decisions.

According to the CMA's recent trustee survey, only a third of trustees said they could compare investment fees and tenders among investment consultants and just a quarter said they could compare fiduciary management fees.

A lower number of trustees noted that they can track and asses the performance of fiduciary managers. A further 21 per cent said they could understand the quality of investment consultants when looking at tenders.

At present, Gold stated, "pension schemes’ ability to compare this information" among consultants is limited.

As a result Gold explained that "the competitive process isn't providing the customers with the necessary information they need to judge the value for money... and so customers aren't able to choose and compare between consultants in the market."

Whilst the CMA suggested consultants in the investment space work on becoming more transparent for trustees, TPT Retirement Solutions trustee board chair Sarah Smart stated that the "onus" is on trustees.

"It's trustees where the onus is to make things happen," she claimed. In order to better select investment consultants and fiduciary managers, trustees must set objectives for their investment decisions, and consider how they select investment consultants more carefully.
It is important to "realise the decisions we're making and understand whether we've made good decisions," Smart added.

The CMA's trustee survey is to be published later this year. In the next couple of weeks the CMA will be publishing further working papers on work investment consultants and asset management providers and the potential conflicts investment consultants have in offering fiduciary management.

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