EUROPE – More than one-third of European asset managers see the involvement of a fiduciary manager as bad for their own work with institutional investor clients, according to a report by research firm Cerulli Associates.

In its survey of European Institutional Managers, which looked at the state of the European institutional asset management industry, the firm found 38% of fund managers polled said fiduciary management was a negative or very negative element in the process of institutions making investment decisions.

Meanwhile, 27% said fiduciary management – the third party between investors and fund managers acting as adviser and delegator – was positive for the end-client.

David Walker, London-based senior analyst with Cerulli Associates and author of the report, said:  "Institutional fund managers are being severely tested on numerous fronts, and pressure over the coming years from their clients, rivals and regulators will show which players have the nimbleness and mettle to survive, and which do not."

Cerulli Associates polled 26 institutional asset managers with a total of €2.2trn of assets from European institutional clients.

Walker said the researchers felt fund managers were most concerned about losing their relationship with the end-client – the pension fund – and that, while consultants might sit between them and the pension fund, fiduciary managers represented potentially another hurdle.

"They're having less and less contact with the pension funds," he said.

"They are really caught between the devil and the deep blue sea because, on the one hand, they want to keep the relationship with the end-client, but, if they form their own advisory arm, they risk treading of the toes of the fiduciary managers and the consultants."

The report also found that average minimum yield targets set by asset managers for institutional clients of 3-5% would largely fail to make what many clients needed to satisfy guarantees and even to survive.

Bearing in mind that many core income portfolios of pension funds have the lion's share of assets in government bonds such as Bunds, where yields are very low, yields of between 3% and 5% for a small proportion of the portfolio would not pull overall yields high enough, Walker said.

Other findings in the report were that some asset managers believe German insurers would need bailing out and that Dutch pension funds would cut pension payouts even further.

In the survey, a small handful of German asset managers reported that the situation for some of the country's small to medium-sized insurers was so bad they would have to approach the German government for assistance in the same way the banks did during 2008-09, Walker said.