New research by Willis Towers Watson’s institutional asset management marketplace, The Asset Management Exchange (AMX), shows that more than 80% of pension trustees have low confidence in the clarity of costs incurred by asset managers relating to investment, trading and operations. Lack of transparency is a particular issue with operational and trading costs, with 86% having little or no confidence in these costs.
Less than half (46%) of trustees think that their asset manager delivers value for the money paid in administrative costs
Two thirds are worried about money being directed to unnecessary costs
88% of trustees name fees as a top factor when selecting an asset manager
Despite technological advancements, nearly (43%) of the respondents now have to spend more time monitoring their asset managers
Oliver Jaegemann, Global Head of AMX, said: "Our survey confirms that trustees feel their role has become more complex and difficult. The current institutional asset management model is inefficient and trustees are recognising this. Moreover, risk and governance concerns are high. Greater transparency is undoubtedly needed."
"Standardisation offers a solution; enabling a more confident monitoring and ensuring the value leakage is minimised."
The research raises questions about how the institutional asset management model is currently organised. Only one in five trustees think that having numerous asset managers with their own governance functions is a safe model for the pension industry; while only a third (33%) say that giving control to numerous managers is sustainable.
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