Taking stock: what next for the early adopters of fiduciary management?

24 Jun 2014

An inch is as good as a mile

When measuring anything, you need to know what it is you are trying to measure and some schemes may find their original benchmarks difficult to pin down for such an exercise.

Measure twice, cut once is a useful analogy to apply to most areas of life, but if you don’t know where to start measuring, because the original objectives were not clear, it will become an impossible task.

Much of it will be qualitative and should expect it to include a degree of qualitative analysis.

“They should not be outraged or shocked by how badly they may have performed,” says Lace. “As they become more aware and their sophistication increases, so the shiny superficial services sold to them will appear as just that.”

Anyone assessing a provider needs to ask hard questions and the kinds of questions a consultant seeking to appoint or monitor a fiduciary manager must ask goes much deeper than performance. “The sorts of things the client will have considered rather dull to date,” says Lace, “such as back office, platforms, monitoring systems and compliance, which become vitally important.

“Also the mindset of the provider, as there is a world of difference between advising on fund management and actually managing money,” he adds.

Indeed, the biggest challenge for some of these consultants is putting in place the resource and infrastructure to do the monitoring and evaluation properly, says McCauley.

But the third party consultants are making a difference, says Mark Davis, a portfolio manager at Towers Watson. “The process helps professionalise the selection and monitoring process and it offers the ability to have an extra layer of governance to provide broad market contexts which is useful to ensure the strategy focuses on the right places,” he says. “It’s about improving governance and making sure focus is on the most important areas, not introducing less important areas.”

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