Fiduciary fees hold steady amid rising investment costs

Overall fiduciary fees in the UK have stabilised and consolidated, despite the increase in investment costs, according to a fiduciary management fee survey conducted by IC Select.

The research showed that median investment fees increased by 17% in 2024, marking the first rise since 2018. Median base fees, meanwhile, declined, particularly among larger pension funds.

IC Select has been publishing analysis of fee trends across the UK fiduciary management market over the past years. This year’s report builds on the fee data collected annually since 2015 and combines findings from the most recent survey with historical data dating back to 2018.

Ten fiduciary managers took part in the survey: Aon, BlackRock, Goldman Sachs Asset Management (GSAM), Legal & General Investment Management (LGIM), Mercer, Russell Investments, Schroders Solutions, SEI, Van Lanschot Kempen and WTW.

The report found that despite the increase in investment fees, the overall market fees have stabilised and consolidated.

It found that median total fees have fallen 27% over the past five years, and median investment fees are now 32% lower than they were in 2018.

IC Select said that the findings suggest that, while some costs are beginning to rise again, overall pricing remains significantly below its peak in recent years, demonstrating a positive trend for pension funds and their members.

Peter Dorward, managing director at IC Select, said: “Despite falling asset values and fiduciary management revenues, mainly due to rising yields since 2022, total fees have not risen for those [defined benefit] DB schemes with fiduciary management, rather consolidated at lower levels.”

Dorward said that while this could be seen as welcoming for pension funds and sponsors, the flip side of that ‘value’ coin is whether firms can maintain service levels and quality support for schemes.

“It is hard for any business to sustain, and DB trustees should be alert to further consolidation or poor service as a consequence,” he noted.

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