UK - The key to the development of fiduciary management in the UK is trustee education, according to Philip Read, chairman of the British Coal Staff Superannuation Scheme.
Speaking at the National Association of Pension Fund’s (NAPF) annual conference in Liverpool, Read stressed the importance of creating a situation where scheme trustees fully understood each and every investment decision.
“I see trustee education as fundamental to diversification,” he said. “I don’t think any fiduciary manager should be putting a trustee’s investments into an area where the trustee is not really up to speed with why, what the risks are, what the advantages are.”
Speaking of the development of fiduciary management, he speculated that the model implemented in the UK would differ from the Dutch one, where it was invented.
“The model for England is going to be different from the model that operates in Holland and indeed in America,” he said.
Read said the UK approach would most likely take the form of trustees having teams of skilled people helping them address their risk problems.
He also said this would most likely occur through outsourcing, as it offered direct access to fiduciary managers and the best ideas in the market.
Read, who is also a senior adviser at Goldman Sachs Asset Management’s global portfolio solutions unit, said it would be beneficial to handle fiduciary management in-house, but that outsourcing would still be a viable option were this not possible.
He added that the outsourced fiduciary manager would lay the groundwork - dealing with aspects ranging from due diligence to investment management decisions.
He also stressed that trustees could be reassured through detailed reporting, as well as ongoing education.
“My challenge to all of you here in the room is to think seriously about outsourcing,” he said.
“Think seriously about fiduciary management as possibly the way forward for you and for many others in the UK.”
Recent fiduciary management deals in the UK include the Merchant Navy Officers’ Pension Fund re-appointing Towers Watson as its delegated CIO, while the Cookson Group announced the appointment of Black Rock as managers of their defined benefit scheme on Monday.
A survey published last month by P-Solve show that fiduciary management fared beter during the financial crisis than more traditional investment approaches.
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