With over 200 mandates, the fiduciary management market in the UK currently stands in excess of £40bn, which is four per cent of the total pension scheme assets under management, according to KPMG’s 2011 UK Fiduciary Management Market Survey published today.

Implemented consultants hold a majority share in the fiduciary management market compared to specialist providers and asset managers operating within the UK market.

A significant number of fiduciary management appointments have been made without shopping around or considering more than one potential provider. However, KPMG believes that as more players enter the market and more solutions are being offered, it is likely that trustees and companies looking to appoint a fiduciary manager will take a more competitive tender approach.

Patrick McCoy, pensions partner and head of investment advisory at KPMG in the UK, said: “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.”

Share Story: