Some 50% of pension funds have a directed brokerage program in place, with large funds most likely to have such programs, according to a survey by Fidelity Capital Markets. The survey also revealed the recaptured commissions are most frequently used to pay pension consultant fees. The commissions also are used to pay for performance measurement, investment management, research and custody.
The survey also found two-thirds of plan sponsors with directed brokerage program have added a new broker within the past two years, and one-third may add a broker within the next six months. Overall, 59% maintain a goal for the amount of commissions directed, with the most common target being between 25% and 34%.