The UK Fiduciary Management market is here to stay after another year of steady development and progression, according to a report by professional services firm, KPMG. Total assets under Fiduciary Management now exceed £100bn for the first time, making it clear that FM is no fad but an important part of the future financial services landscape.
The KPMG UK Fiduciary Management Market Survey is a comprehensive annual study of the UK full Fiduciary Management (“FM”) market. FM is used to describe the delegation of investment decisions, previously taken by trustees, to an appointed fiduciary manager, or provider. The provider manages the delegated assets on behalf of the trustees. Trustees benefit from having a dedicated provider focused on delivering their scheme’s investment needs.
The 2015 KPMG report revealed that the UK FM market has grown significantly in the past year, with assets under management increasing by 65% year on year to £114bn.
The full delegation market reached £54bn in assets under management (AUM), a growth of 42% on 2014 figures. This growth continues to be driven by small schemes, with two-thirds of new mandates in the ‘under £100m’ AUM category.
The boost in the partial delegation market was even more significant, with a 79% increase in growth in assets under management in the past year. The data suggests this was driven by very large schemes engaging a provider to run a part of their portfolios.
Anthony Webb, head of fiduciary management research, investment advisory at KPMG said, “The FM market has grown more than even the most optimistic fiduciary manager expected when we surveyed them back in 2011. To put the £114bn figure into perspective, UK fiduciary managers collectively now have enough money to buy every single bond issued by the Irish Government.
“We believe the number of new appointments that were advised by an independent third party is relatively low, at 23 per cent. Fiduciary Management can be a great service for trustees and seeking advice on the right services and the right terms is an important part of delivering better outcomes for pension schemes.
“The number of schemes using an independent provider to monitor their FM mandate saw a small increase, rising from 11 per cent in 2014 to 13 per cent in 2015. Again, we would argue that it is advisable to seek a second “oversight” opinion, in order to reduce the potential for conflicts of interest.”
The full KPMG report is available to download from https://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Pages/2015-fiduciary-management-market-survey.aspx
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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.