GERMANY - Certain "psychological barriers" have complicated the adoption of fiduciary management in Germany, according to Murat Ünal, founder of international strategy consultant Funds@Work, told IPE.

The debate over fiduciary management in Germany has raged in recent weeks, with some consultants railing against the practice, asset managers defending it and other consultants offering their takes as well.

For Frank Umlauf, managing director of German consultancy tajdo, 'fiduciary management' is merely a new a way of packaging content that has been around for years under the name of 'investment consulting'.

Responding to previous coverage of these issues on, he said: "The asset management industry uses every little opportunity to undo the breaking up of the value chain, which allowed providers other than asset managers to participate."

Yet for Funds@Work's Ünal, the picture is more complex.

"There is a psychological component, as people are wary to give away the locus of control and be told someone might potentially do a better job," he said. 

Additionally, outsourcing means an investor is passing up the chance to build capacities in-house that might later be of benefit, he said.

However, Ünal added that "every fiduciary mandate is different", depending on the investor group and the perceived strategic importance of managing assets in-house.

In general, smaller investors are more likely to use such services, he said, but he conceded that making generalisations was "difficult".

He said the fact that outsourcing tended to occur when there was a liquidity squeeze - rather than as part of a strategic decision - was a problem.

He also said he could see more investors actually hiring two competing investment consultants for their manager selection process, even if that meant they had to pay a bit more up front.

"The practice of hiring competing investment consultants for complementary services - from manager selection in the alternative space to risk management related services - is increasingly more common," he said.

On the investor side, Ünal said he saw much greater professionalism.

"It is a good indicator that, for example, selected large Versorgungswerke are hiring specialists for their in-house team with experience in, say, Asian markets for their real estate exposure," he said.

He added that talks between consultants and investors were now happening on a "different level" and that this had forced consultants to go into niches, as large investors are increasingly covering a broader investment universe using specialised skill sets externally, rather than a full package of services.

"As part of the market evolution, you need a differentiation feature that investors can hold on to," Ünal said. "It would, of course, also be desirable if controlling could also be more detached from the actual consulting practice, bringing more objectivity into the process."