Plus ça change
These are the same reasons that schemes began to look to fiduciary management four or five years ago – to improve governance structures and provide trustees better focus on strategic decisions and accountability on decisions made on that strategy.
Though the song remains the same, schemes may find themselves in competition with other voices. Corporate sponsors are demonstrating considerably more interest in the desire to investigate fiduciary management. This is being compounded by the increased maturity of schemes, particularly where funding levels have improved over the last few years and the route to settlement may not seem so far off as before.
As the scheme matures, the requirements change, says Davis. “Longevity, buy-in, buyout all come to the fore and new skills are required as the scheme matures. Appointing a fiduciary manager can ensure all the skills needed are in place to achieve self-sufficiency and then perhaps whatever that ultimate objective is.”
Corporates do not have the same hang-ups as trustees have in the past, says Davis, as they are used to managing the business on a day-to-day rather than calendar quarterly basis and derive comfort by investment professionals being in place to capitalise on opportunities that present themselves.”
Missed opportunities is something sponsors are not keen on and the majority of mandates Davis has seen over the past 18 months have been for full fiduciary management, with power to invest and advising the board on strategy. Where the mandates have been partial, this is to take advantage of specific asset classes such as hedge funds, where a more bespoke approach has been favoured above a funds of funds approach.
Another area that independent consultants have added value is in reducing charges, says McCauley. Though fees have been under pressure for the past year or more as competition increases, pricing was inconsistent, and he was able to secure his clients a keener price.