The UK’s asset management industry is split over the threat posed by consultants offering fiduciary management services, research by portfolio institutional has found.
Twenty of the 41 asset managers questioned in our exclusive consultant survey said they believed the continuing growth of implemented consulting, delegated investing, outsourced CIOs and other forms of fiduciary management were eating into their territory.
While just under half disagreed, two thirds of asset managers felt the influx of consultants moving into money management represented a conflict of interests.
One respondent said: “The consequence of the evolving consultant business model from traditional advisory to implemented consulting is that shortlists for products will become shorter, so only the highest-rated managers will see search opportunities.”
“It’s competition,” said one respondent. “The gloves are off and fund managers can compete directly for clients.”
Another respondent said it was an “undeniable conflict of interest”, adding: “Particularly when you see the number of clients who go down the implemented consulting route with their existing adviser without going out to tender.”
The views echo those expressed by Anton van Nunen, the consultant widely considered as the pioneer of fiduciary management. Writing exclusively for portfolio institutional, van Nunen said: “The fiduciary manager should take care not to surpass the threshold of being an adviser and not to influence the outcome of the exchanges of opinion. That is a real danger as the discussions of changes in the pension system will always reveal conflicts of interest, especially with respect to the overriding fundamental issue: the choice between certainty and the level of future pension payments.”
Other respondents were more sanguine however, viewing the move of consultants into fiduciary management as creating a conflict, but also an opportunity.
One said: “A conflict yes, but one to be managed rather than railed against. It challenges the status quo and if that results in better outcomes for pension schemes and their members then that can only be a good thing.”
Another added: “Yes absolutely, but only if the pension fund doesn’t appoint an advisory. If the fiduciary manager and consultant are different it’s not an issue.”
Breakdown of responses in full:
Do you see fiduciary management/ implemented consulting by investment consultants as a potential threat?
Yes 20
No 18
I don’t know 2
No answer 1
In your opinion, is it a conflict of interest when a consultant moves into the fiduciary management or implemented consulting space?
Yes 30
No 10
No answer 1
To read the portfolio institutional consultant survey in full, click here.
To read Anton van Nunen’s exclusive article, click here
Comments