The growth of fiduciary management and outsourced chief investment officer contracts is translating into an increase in third-party search, selection and monitoring firms, seizing their chance to get in on the action.
Money management, fiduciary management and consultant sources said they have seen an increase in the number of firms offering to help pension funds in the U.K. and the U.S. to search for, select and monitor their fiduciary managers, outsourced CIOs and implemented or delegated consulting providers.
Among the big names that have taken their experience in investment consulting and branched out into the relatively new area are KPMG, Ernst & Young Global Ltd. and Buck Consultants. But sources said new firms are popping up on their radar, with second-tier consultants, independent trustees and even law firms now coming to the market.
Steven White, London-based managing director for Europe at Buck said the business is growing, spurred in part by demand from pension fund clients. “Those (pension funds) with fiduciary management in place for some time are questioning whether or not they should have greater oversight and monitoring of that fiduciary manager,” he said.
Anthony Webb, London-based executive consultant in KPMG's investment advisory unit, said, “there has been a definite increase in the last year. Interestingly, we are seeing more people get involved from the non-traditional sources,” such as law firms and independent trustees.
The U.K. fiduciary management market grew 22% to £72 billion ($108.4 billion) in the year ended June 30, said KPMG's annual latest survey of the market; the increase is 17% when two new providers in the survey are excluded.
More than 300 U.K. pension funds are now using fully delegated fiduciary management, up 44% compared with the 2013 survey, or 16% excluding the new entrants.
“Being a fiduciary management search firm is big business,” said Shamindra Perera, managing director and head of Russell Investments' pension solutions group in London. “It is not just about the search, but conducting ongoing reviews.” Russell's fiduciary management assets under management could not be learned by press time.
The real explosion in opportunity — and new entrants to the market — is in the ongoing monitoring and evaluation of fiduciary managers, said sources.