The recent Competition and Markets Authority (CMA) review into the investment consultant market concluded that across the industry as a whole, trustees struggle to evaluate the quality of their investment adviser.
The review found that fiduciary management revenues have quadrupled since 2011, with UK pension schemes spending over £250 million with providers in 2017 alone, and broadly half of pension schemes buy fiduciary management from their existing investment consultant. In addition, as our recent survey found, only around two thirds of new fiduciary appointments were assisted by independent advice.
The new ratings acknowledge that the fiduciary industry has evolved over the last few years and the fact that the range and breadth of what fiduciary managers offer can be very complex.
The ratings will add to KPMG’s existing investment manager research and will mean more informed choice for pension trustees when choosing how best to manage investments. It will also help trustees review whether their provider is still meeting their requirements, and improve comparisons with other options in the market.
KPMG have identified a number of criteria, ranging from operational processes to the expertise and experience of a fiduciary team, which can help to differentiate offerings in the market.
Greg Wright, Director, Head of Fiduciary Advisory at KPMG said: “We supported the CMA review from the outset which found particular concerns around integrated advisers in the fiduciary management market – those who offer both investment consultancy and fiduciary management services and benefit from an incumbency advantage.
“The risk is that clients are steered towards the incumbent’s products without assessing if a better fiduciary product, or indeed a non-fiduciary fund, is available elsewhere.
“Our rating of fiduciary managers will provide robust manager selection and supplement existing advice from setting objectives and targets, through to considering investment approaches, managers and ongoing reviews. This ensures that trustees can make a better choice when making their investment management decision.”
Nick Evans, Partner and Head of Investment Advisory at KPMG said: “We don’t want to pigeon-hole clients and will continue to give advice bespoke to their objectives and requirements. We believe the only way to do this is by offering an independent perspective across the full spectrum of investment advice, by considering both non-fiduciary and fiduciary approaches and products where appropriate.
“We want to meet the need for strong strategic advice guided by clients’ objectives with more informed and engaged trustees. Ultimately this will result in a higher quality of product and service benefitting pension schemes in the long run.”
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