"There are quite a few reviews of fiduciary managers going on, partly because pension funds are maturing. Some have providers or teams that don't match what their future looks like," Mr. Nilsson said in an interview.
"It's a pretty difficult outlook in terms of macroeconomics, geopolitical tensions, higher inflation and we have uncertainty on rates. Central banks are working hard to see if they can manage that. It means that you need to have good quality people that focus on delivering on the schemes' objectives and have the scheme outcome as their primary focus," he said.
In addition, the liability-driven investing crisis last year was a jarring wakeup call for some U.K. plans, and Mr. Nilsson thinks Brightwell is well-positioned to help these funds with its new focus on fiduciary management and advisory, while it continues to manage the assets of the £47 billion ($59.8 billion) BT Pension Scheme, London.
Pension funds using derivatives as part of LDI portfolios were required to post additional cash collateral against their positions to keep their hedges in place as gilt yields soared in response to a U.K. budget proposal, which in some cases forced plans to sell assets at significant losses.
"Some pension fund executives feel that the LDI crisis wasn't very well managed," Mr. Nilsson said.
In April, the £1 billion EE Pension Scheme, London, became the firm's first fiduciary manager client.
"What we are looking to do for EEPS is to make sure that all the managers that are supporting them are delivering on what it needs and also that they're paying the right fees for that," he said.
Mr. Nilsson said that it is important for pension funds to align investment strategy with execution, but some plans don't execute it well because they use "too many managers with completely different incentives or mandates not fully aligned to what they're trying to do."
There is a role for Brightwell to play in the U.K. market as a "holistic provider," he added.
BTPS funding status improved through in-house management and the plan is on course to be fully funded by 2030.
Brightwell plans to bring on more executives as the business grows. So far it has strengthened its research and solutions team that conducts manager selection and portfolio construction by about 10%. In addition to being managed by people who know the complexities of mature plans, Mr. Nilsson said that Brightwell could help U.K. pension funds benefit from scale and lower fees.
"We see so many benefits … cost benefits but also operational and strategic benefits in having an in-house team and we see that the market is very fragmented and costly and services often sold on a false understanding of costs. What really matters are the overall scheme costs," he said.
"There are tons of conflicts of interest in this and there are many mouths to feed, and you are feeding them perhaps more than you realize if you are not very careful," he said.
Mr. Nilsson thinks that U.K. pension funds are struggling to find the right professionals to help them continue managing the plans in-house, providing Brightwell with an opportunity to take over.
"A lot of pension funds are discovering they have senior people who are retiring, and because of the schemes' maturity, they are considering if they can invest internally and if they are able to retain and attract the high-caliber people they need," he said.