This research was launched at XPS’ Fiduciary Management webinar this week and highlights fiduciary managers views on the impact of the Competitions and Market Authority order on their clients. Over 20 Fiduciary managers across the industry reported only 248 schemes that needed re-tendering, in stark contrast to the CMA’s estimate of up to 500 schemes. XPS’ report has revealed that out of the CMA’s estimated 500 schemes up to 100 have moved back to an advisory relationship with the remainder (mainly partial mandates) being reclassified as not FM or not required to adhere to the CMA order. Of those currently going through a re-tender processes 37% had completed the re-tender, 40% were in progress and 23% were yet to start, as of 16th April 2021. Of those that had already been completed, 81% of schemes retained their existing managers and 19% changed their manager.
André Kerr, Head of Fiduciary Management Oversight at XPS Pensions Group, said: “XPS’ research suggests that many Trustees have left re-tendering very late, with the 9th June 2021 deadline fast approaching. This could lead to a lack of choice for Trustees. With 81% of mandates staying with the incumbent fiduciary manager, it could suggest a box ticking exercise. However XPS’ experience of over 30 re-tenders XPS has found that every retender process has added value. Benefits to trustees have included, new improved investment strategies and significant reductions in fees (ranging from 10%-50%)”
During the webinar this week XPS polled the audience of over 200 pension professionals. Key findings included:
• 5 times more pension professionals thought the CMA order had led to better outcomes than those that disagreed.
• 55% of pension professionals believed fiduciary management appointments should be re-tendered every 3-5 years, compared to 40% who disagreed and 5% who were undecided.
André Kerr said: “XPS believes these polls highlight the value pension schemes give to challenging the status quo and the value placed in regular reviews and ongoing effective Fiduciary management oversight. “
XPS has also published further research on how FMs approach end-game planning. The research, attached, finds that fiduciary managers are relatively untested when it comes to end-game planning for schemes, and that there is a wide variation in the approaches that different FMs take to de-risking as schemes mature. De-risking approaches are currently likely to be driven by the size of the scheme and the opportunity set of the FM in question, rather than trustees’ investment beliefs and preferences. The research highlights the consideration that trustees should give to end-game strategies when selecting or retendering their fiduciary management appointments.
Investment End game Planning
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