Today, the Competition & Markets Authority (CMA) announced its provisional decision on reforms for the supply and acquisition of investment consultancy and fiduciary management services.
David Clare, Head of Fiduciary Management Oversight, details what this means for trustees:
"We are fully supportive of the CMA’s drive for greater competition and management of conflicts in the fiduciary management industry, as we strongly believe that better governance brings better outcomes for pension fund trustees. Likewise we welcome the CMA’s recommendation of setting scheme specific objectives for their investment consultant as a means of improving measurement of their performance.
"The decision of whether a pension scheme should consider fiduciary management is therefore solely a question of investment governance. Whilst Fiduciary management can be beneficial to a trustee board, an independent engaged advisory approach can lead to a better outcome free of the concerns over conflicts of interest.
"We have always believed that the role of independent oversight is essential when hiring a fiduciary manager, setting its mandate and monitoring its performance and our experience to date has shown the added value that has been achieved We therefore welcome the CMA’s support of increased independent oversight."
Independent oversight benefits trustees by:
- ensuring they understand the different investment governance framework approaches, as well as the different types of fiduciary models, and help work out what is right for them
- highlighting the full range of different fiduciary management models and short listing providers which will best meet the needs of the pensions scheme
- restoring impartiality back to the setting of the fiduciary manager’s mandate by ensuring that appropriate performance benchmarks and investment guidelines are in place
- helping trustees judge whether their fiduciary manager is adding value as well as providing a platform for positive challenge and asking the right questions
Commenting on Barnett Waddingham’s FMO services, David Clare, adds:
“At Barnett Waddingham, we do not offer fiduciary management and are committed to remaining an independent investment consultancy. Our fiduciary management oversight (FMO) services are closely aligned with the sentiment of these reforms, and were launched in 2015 to help pension scheme trustees address these very issues.
“We have an experienced and stable FMO team which specialise in advising on all aspects of fiduciary management, from suitability assessments to the selection and monitoring of fiduciary manager performance. As our FMO team also work as independent advisors we have practical experience of the challenges faced by fiduciary management and our practical insight has proved to be beneficial to both our oversight clients and their fiduciary managers.”