UK - The increasing number of players in the fiduciary management market, particularly from within the consultancy space, is blurring the lines between delegation and advisory services, according to Andrew Waring, chief executive of the Merchant Navy Officers Pension Fund (MNOPF).

In his presentation at the National Association of Pension Funds (NAPF) annual conference in Manchester, Waring said the appointment of a delegated CIO to manage the pension fund was a "natural last step of the outsourcing process begun in 1990".

The scheme appointed Watson Wyatt, also investment adviser for the MNOPF, to the role in 2008 and Waring claimed this led to a more effective relationship with the delegated CIO as there is clarity of responsibility and accountability with the scheme having an increased focus on asset/liability issues and asset allocation. (See earlier IPE article: Merchant Navy treads fiduciary path)

However, he warned there is a "blurred line between delegation and advisory" services, because while asset managers are moving into the fiduciary space - with Henderson Global Investors considering such a move - "most, but not all, the consultants are coming into the space".

"So where in the UK model do you get the independent challenge to fiduciary manager? Do you need to appoint another adviser to challenge them?" said Waring, adding it "feels odd that the investment adviser has become the fiduciary manager".

Waring also warned delegates of "very clear potential conflicts of interest" between the advisory and delegation sides, and said there needs to be a consideration of the long-term objectives and strategy.

For example, he said, in MNOPF's recent £500m buy-in with Lucida, Watson Wyatt, in the role as delegated CIO, was "an integral part of that process and as a result lost a large slug of fees. But there was an alignment of objectives". (See earlier IPE article: MNOPF completes £500m buy-in with Lucida)

He added: "There needs to be clear accountability. However every pension fund will approach fiduciary management for their own needs so they will each get a slightly different proposition."

In the same session, Mitesh Sheth, deputy head of fixed income at Henderson Global Investors, noted the firm is considering a move into the fiduciary management space.

He said while Henderson does not offer "a complete fiduciary solution" it has been providing some services that could be seen as part of fiduciary management for "some time", including to its own pension funds.

"More recently, we have had a few clients come to us asking if we'd consider offering a more complete solution," said Sheth. He said Henderson has been researching the landscape and the "pros and cons" of fiduciary management which he thinks of as a "project manager" role.

He noted fiduciary management is "not a product or one-size-fits-all model", although while trustees cannot delegate their fiduciary responsibility they can outsource things such as liability risk management - a move which Sheth claimed "can get a bit complex and a little over-engineered".

Sheth argued that fiduciary management can allow trustees to focus on "decisions that matter to most" but admitted there are issues. However, he added: "Do we think we can offer something? To the extent we believe that we can do a proper job and do the job our clients need, then I think we can offer something."

He also pointed out that it can take time for trustees to feel comfortable with such a big step, adding "we have to build trust if we enter that space. We'll do it if we feel we can gain that trust and do a good job".

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