Delegated or Fiduciary Management
As a wider range of assets are put together into ever more complex structures, trustees are finding it more and more difficult to understand the range of options available to them.
In addition, as the complexity of their investment arrangements increases so does the time required to monitor them. Frequently trustees lack the expertise to take very important decisions and will need to defer to the recommendations of their consultants.
It is also recognized that when making substantial changes to portfolios the timing of decisions can be critical and can lead to substantially different funding levels if optimized.
This has lead to a number of trustees taking the decision to delegate these decisions to professionals in order to make the process more efficient. This decision is taken very seriously by the trustees and made for the best reasons.
Before finalizing this decision trustees should be aware that there are a number of organizations in the market place all offering slightly different services and Consultants are only likely to promote their own services. Trustees have duty to consider the alternatives that are available.
Finally, it is very important to understand that even though you may be delegating the day to day decisions, investment is still your responsibility as trustees. It is therefore important that you continue to monitor the performance and decision making of the Fiduciary Manager.
My View
The role of Investment consultants can broadly be split into to areas - investment strategy and manager selection. In general manager selection naturally follows on from the strategy that is set by the trustees.
With detailed analysis of recommendations and subsequent monitoring of the strategy Trustees will a better chance of being sold unnecessarily complex and expensive investment solutions.