UK - Consultants that provide fiduciary management are facing an inherent conflict of interest, according to SEI's head of institutional business in Europe.

Patrick Disney told IPE the problem stemmed from consultants offering fiduciary management in its various forms while still relying on the actuarial side of the business to generate a significant amount of company revenue.

"You can highlight a conflict of interest, but also a conflict of resources," he said. "How do you implement a client base that is partially delegated and partially not?

"The ones who are not delegated are perhaps being left further down the chain in the decision-making process than those that are delegated.

"There is also an interesting dynamic within those firms' relationships with pension funds because the bulk of the revenue up to now has come from the actuarial side."

Ed Loughlin, executive vice-president at SEI, added that the US had seen a number of new companies enter the market of late - "typically from the consulting side of the arena" - as well as pension funds' former chief investment officers launching their own 'delegated CIO' businesses.

Disney conceded SEI saw itself as competing "head-on" with these consultants, especially the so-called Big Four, but he dismissed the notion that only pension funds of a certain size should consider fiduciary management as an approach.

"All pension funds are trying to achieve a specific funding goal, which means that, irrespective of size, all need the same type of help," he said.

Asked about the risk posed by euro-zone bonds, Disney stressed that while SEI might hear about a client's discomfort with the region, its role as a fiduciary manager was to offer an opinion rather than simply "reacting to someone's fear of the euro-zone".

Loughlin added that all these conversations would of course revolve around diversification and the framing perspective agreed with pension funds from the outset, as well as any shifts in asset allocation as specific goals are achieved.

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