The UK fiduciary management market saw a 24% fall in asset value in 2022 while client growth stalled, according to the latest survey of the fiduciary management sector published by IC Select – an independent firm focused on the selection and oversight of investment consultants and fiduciary managers.
Over the past five years, the market for fiduciary management has grown by 50% in client numbers and 16% in assets under management. But according to IC, 2022 saw the first significant fall in asset values for more than a decade.
It said that the fall was driven by the rise in bond yields, which reduced the value of liability-driven investment (LDI) funds held by fiduciary managers.
Client growth also stalled in 2022, with a net increase of just three funds. IC said this came as scheme buyouts and transfers to the Pension Protection Fund (PPF) offset new funds moving to fiduciary management from advisory arrangements.
The survey also found that relatively few (9%) of the schemes that use fiduciary managers receive strategic advice from a third party.
In addition, the re-tender process established by the Competition and Markets Authority (CMA) is now largely complete and a full 80% of schemes retained their incumbent fiduciary manager.
The research also showed that 66% of schemes used a third-party evaluator to assist them in selecting a fiduciary manager – a reduction of 9% from the previous year, – and only a minority of schemes (34%) commissioned independent oversight, despite encouragement from The Pensions Regulator.
Director and head of research Anne-Marie Gillon said: “Clearly, fiduciary management has faced headwinds in the form of Covid, the CMA retender process and the LDI crisis.”
She added that the slowdown in client growth is a reflection of fiduciary management’s maturity, as schemes moving to buyout are balancing out new clients.
“But if we look beyond the recent turmoil, we can see that the attractions of fiduciary management are still intact – essentially, cost and time savings for trustees. So we expect the industry to return to growth in the years ahead,” she noted.
IC Select said that 13 firms took part in the survey: Aon, BlackRock, Brightwell, Cardano, Charles Stanley, Goldman Sachs Asset Management, Legal & General Investment Management, Mercer, Russell Investments, Schroders Solutions, SEI, Van Lanschot Kempen and WTW.
Read the digital edition of IPE’s latest magazine
No comments yet