Pension funds still wary of fiduciary management - survey
GLOBAL - Very few pension fund professionals plan to outsource the running of their fund to a fiduciary manager, suggest the findings of a survey by Bfinance, the manager search consultancy.
A poll of 88 managers of pension schemes worldwide suggested while market conditions have prompted pension funds to focus more on their long-term pension strategy, the overwhelming majority (91%) have no intention of changing their governance model. Not a single respondent said they plan to switch to a fiduciary provider, while only 9% say they "may" do so.
The survey, completed in August and September, covered executives who oversee pensions in 10 countries, ranging from €127m (Foresters) to €18.4bn (AP3) in assets. Just over one-third (34%) of participants were corporate pension schemes, while 30% were public pension funds, and 10% were endowments.
Pension funds may instead turn to a more specialised consultant, as an alternative to outsourcing to a single third-party fiduciary provider, the survey's findings indicated.
When asked which of the following services pension funds do outsource to a consultant, the largest group (24%) said they would seek support with strategic advice, while another 18% said they needed assistance with asset manager selection, 12% for monitoring and reporting, 11% for benchmark selection, 7% for risk budgeting, 7% for portfolio construction and 5% for custody services.
This poll's findings coincided with a separate poll by SEI Institutional Group, which claimed pension executives are, on average, spending very little time on evaluating new investment managers (10%) and researching new asset classes (6%).
The Bfinance survey also asked for written comments from participants: in their responses, a number of executives pointed to the importance of maintaining control, checks and balances and, ultimately, taking responsibility over their investment decisions.
Bfinance claimed the survey clearly showed pension professionals remain sceptical about placing all their investment decisions in one fiduciary basket.
"We limit the investment services a provider is able to give, in order to ensure that we have multiple sources of information and oversight," said one participant. The chief executive of a Canadian endowment also said: "Not sure if fiduciary providers are cost effective or able to provide custom governance that is required."
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