Median total fiduciary management fees have fallen 27 per cent over the past five years, according to IC Select’s annual survey of the fiduciary management market.

However, the research also showed that in 2024, the median investment fee rose from 0.19 per cent to 0.22 per cent, a 17 per cent increase and the first rise since 2018.

The company attributed this increase to a combination of higher manager and administration fees, alongside a strategic shift toward active management and greater diversification of assets, both of which typically command higher fees.

However, the report also highlighted that median investment fees have fallen by 32 per cent over the past five years.

Despite the slight rise in median investment fees in 2024, the interquartile range and overall spread between minimum and maximum fees have continued to narrow, indicating ongoing market consolidation even as strategies become more costly.

Meanwhile, the report showed that median base fees declined between 2023 and 2024, with fees being reduced by between 6.3 per cent and 16.7 per cent, particularly among larger pension schemes. 

In terms of what is driving this decline in fees, the company said it has been a combination of the launch of new services by lower-cost providers and more intense competition between fiduciary managers.

Despite an increase in median investment fees, IC Select said the total investment fees, as reported by the survey, have remained stable. It also pointed out that the market has continued to consolidate on the whole.

The report pointed out that while some costs are beginning to rise again, overall pricing remains “significantly” below its peak in recent years, a positive trend for pension schemes and their members. 

Additionally, the report showed that model investment fees do not depend on scheme size; instead, they increase as the investment return target increases.

Commenting on the results, IC Select managing director, Peter Dorward, said that despite falling asset values and fiduciary management revenues, mainly due to rising yields since 2022, total fees have not risen for those defined benefit (DB) schemes with fiduciary management, but have been consolidated at lower levels.

“While this could be seen as welcoming for schemes and sponsors, the flip side of that ‘value’ coin is whether firms can really maintain service levels and quality support for schemes,” he said.

He explained that it is hard for any business to sustain, and DB trustees should be alert to further consolidation or poor service as a consequence.

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