Half of asset managers view fiduciary management offered by investment consultants as a threat to their business, the portfolio institutional consultant survey found.
Twenty of the 41 asset managers we questioned said they believed the continuing growth of implemented consulting, delegated investing, outsourced CIOs and other forms of fiduciary management ate into their territory.
One respondent said: “The consequence of the evolving consultant business model from traditional advisory to implemented consulting is that shortlists for products will become shorter, so only the highest-rated managers will see search opportunities.”
Furthermore, respondents also felt there was a conflict of interest when a consultant moved into the fiduciary management or implemented consulting space, with 30 answering “yes” and 10 in disagreement.
“It’s competition,” said one respondent. “The gloves are off and fund managers can compete directly for clients.”
Another respondent said it was an “undeniable conflict of interest”, adding: “Particularly when you see the number of clients who go down the implemented consulting route with their existing adviser without going out to tender.”
However, other respondents were more sanguine, viewing the move of consultants into fiduciary management as creating a conflict, but also an opportunity.
One said: “A conflict yes, but one to be managed rather than railed against. It challenges the status quo and if that results in better outcomes for pension schemes and their members then that can only be a good thing.”
Another added: “Yes absolutely, but only if the pension fund doesn’t appoint an advisory. If the fiduciary manager and consultant are different it’s not an issue.”
Do you see fiduciary management/ implemented consulting by investment consultants as a potential threat?
Yes 20
No 18
I don’t know 2
No answer 1
In your opinion, is it a conflict of interest when a consultant moves into the fiduciary management or implemented consulting space?
Yes 30
No 10
No answer 1
The full consultant survey can be read here.
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