Fiduciary management has been embraced by the Netherlands with around 90% of assets under management placed in a fiduciary contract. This is in stark contrast to the second biggest market - the UK - where take up is barely 10%. Andrew Short compares both markets and asks what lessons can the UK learn?
Fiduciary management is a way of life in the Dutch occupational pension scheme market and there has been talk of a similar shift in the UK market. However, on closer inspection the statistics show such a shift is still some way away.
F&C investment director European LDI & fiduciary Jeroen Wilbrink said: “People have claimed that fiduciary management is the best export from the Netherlands to the UK after tulips. However, I disagree. The take up of fiduciary management has been phenomenal in the Netherlands with about 90% of assets under management under a fiduciary contract. The UK, which is the second market for fiduciary, has just under 10%.”
The differing nature of the Dutch and UK market has a large part to play in this low take-up. It’s also fair to say there remains a great deal of confusion in the UK about what a fiduciary manager does and how much responsibility they can take for investment strategy.
SEI’s European head of institutional solutions Ashish Kapur said the fiduciary manager is there to support the trustee, rather than take over their role.
“Generally speaking, as fiduciary managers, we provide trustees with better information on the bigger picture, rather than worrying them over the minutiae – whether or not they have Tesco or Sainsbury’s in their portfolio shouldn’t matter to them,” he said.
However, it is important to realise these concerns are not limited to the UK market. Despite increased levels of knowledge and comfort with the concept, fiduciary management is undergoing scrutiny in the Netherlands. Concerns about the level of delegation to fiduciary management led the Dutch Central Bank which regulates occupational pension schemes to issue a letter highlighting the situation.
“There has been a letter by the DNB head of the supervisory board Olaf Slijpen to every single pension scheme,” said Wilbrink. “Slijpen’s letter raises a number of points. He questions if schemes understand what’s going on with asset managers; if they understand the reporting; and also understand what they’ve invested in. It’s a way for the DNB to try – although I think trustees in the Netherlands are more familiar with investment decision-making – to actually professionalise trustees even further. It forces them to know even more about the products their managers have invested in.”
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