New fiduciary data standards planned for early 2017

IC Select’s Roger Brown

Allowing an investment consultant or asset managers to take over the investment decision-making process has become popular among pension fund trustees. However, concerns have arisen about the quality of data provided by managers when pitching for fiduciary business.

IC Select, an independent adviser that works with trustees on fiduciary manager selection, had started to collect preliminary data from these managers with a view to developing a standard, based on proposals detailed in FN on February 14.

Its campaign comes with the UK’s Financial Conduct Authority also looking into investment consultants and fiduciary managers as part of its review of the wider asset management sector.

IC Select has recruited an 11-member steering group to help with the work – including David Clare, partner at Barnett Waddingham, James Trask, senior partner at LCP, and Graham Wardle, BESTrustees managing director – it said in July.

Roger Brown, founder of IC Select, told FN his firm had now started to analyse fiduciary data with a view to introducing the standard in the first quarter of 2017.

Fiduciary mandates are growing in number at a faster rate than last year, due to their strong performance during a period of falling interest rates, which has pushed the value of their swaps sharply higher. In December, Cardano, a leading provider, calculated that its clients had seen a 24.2 percentage point improvement in funding positions since March 2009, after stripping out sponsor contributions.

Fiduciary managers have welcomed the development of a performance standard which harks back to the development of the CFA Institute’s Global Investment Performance Standards, widely used by managers across the world to verify their returns.

Patrick Disney, institutional managing director at US-based manager SEI, says: “We welcome the development of a standard by an independent body like IC Select.”

Disney added he believed it would improve the quality of decision making. Over the year to June, SEI increased its European fiduciary assets by £1.6 billion to £6.3 billion, through new business and the capture of mandates from third parties.

Consultants say accurate comparisons of data will lead to increased use of performance comparisons, based on changes in funding ratios, and gilts-based liability measures. To date, performance comparisons have varied widely, frequently flattering the performance of managers who provide them, as reported in FN on February 17.

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