Fiduciary management
survey - impact of CMA-led retendering

Our viewpoint

We have recently passed 9 June, which was the deadline for many schemes to retender their fiduciary management mandate, as required by the CMA Order.

We surveyed 16 fiduciary managers to understand what the outcome of those retender exercises has been, and reflected on our experience of these exercises, to consider what has been achieved, and what can be learned.

  • Over 100 full fiduciary mandates for UK DB pension schemes have been retendered since the
    beginning of 2020. This has naturally led to a very busy period for fiduciary managers – some participating in over 60 retender exercises.
  • We estimate that around 15% of retender exercises have resulted in a change of provider as
    a result. This is not a surprise to us - in our view this relatively low number is due to general
    satisfaction with investment performance, combined with the high costs (financial and time) of switching provider.
  • In our experience of running CMA retender exercises, our clients have typically benefited from a reduction in fiduciary management fees of 15-20%. As such, retendering has been significantly beneficial to clients from a financial point of view, far outweighing the cost of the exercise (saving many multiples of the cost of the exercise in just the first year).
  • Clients have also benefited from an increased understanding of their arrangements. Many have considered their high-level strategy as part of the exercise, have re-examined what they need, and their fiduciary mandates will change as a result, even though they may not have changed provider. 

So has it all been worthwhile?

We would certainly say yes, with trustees benefiting from lower fees and improved arrangements, and with a better understanding of the options available. The number of switches certainly hasn’t changed the market landscape, and we expect that newer and smaller players are disappointed by this, particularly given the huge amount of work they have needed to put in. A key point that this reinforces, in our view, is around the stickiness of the money in fiduciary mandates.

From our experience of running these retender exercises, whilst solutions with materially lower annual costs were available, and were fundamentally attractive to trustees, the significant cost of changing provider meant that savings would only be generated after 4 or 5 years. This is a high barrier to change – trustees need to be convinced that an alternative provider will deliver better outcomes, which in many cases is a difficult conclusion to reach from an investment perspective.

This high cost of change is a product of investing 100% of your assets within a single manager infrastructure, which in many cases is the nature of fiduciary management – if you subsequently need to change manager you likely need to disinvest and reinvest all of your assets, which is naturally expensive.

This is why the initial choice of fiduciary manager, and the structure of the fiduciary arrangement, is so crucial – the manager needs to have the toolkit to evolve your strategy appropriately over time with your journey plan, and to adapt to your changing needs. This is a fundamental issue that trustees should take into account when first selecting a fiduciary manager, to reduce the risk of needing to incur substantial costs of change, or indeed being effectively tied into unattractive fee arrangements, further down the line.

The related consideration for trustees is how to get the best out of your current fiduciary arrangements, to avoid the cost of change. Is the strategy and journey plan appropriate? Is the level of delegation appropriate? How should it evolve in future, for example to best prepare for insuring the benefits? Is it providing the best value for money that it could, for example through its use of active managers?


To summarise, we believe that the CMA-led retenders have resulted in benefits to engaged clients,
through lower fees and a better understanding of their arrangements and the marketplace. It has
also reinforced our view that the material cost of changing fiduciary manager, or exiting fiduciary
management, is a significant barrier to change. As a result, our suggested action points are:

  • When first selecting a fiduciary manager, think carefully about their flexibility to adapt to your evolving needs, and how to reduce the risks of needing to make a change in future – it should be considered a long-term appointment.
  • If you have a fiduciary manager, get independent investment advice on how to get the best value from your investment arrangements. Improving your existing arrangements can be far more efficient than changing provider.
  • If you are still to retender your fiduciary appointment, obtain expert support for the exercise
    – this should lead to tangibly better outcomes for the pension scheme, as evidenced by the fee savings we have negotiated on behalf of clients, and changes to the mandates that we believe will lead to better outcomes.
Fiduciary oversight services

Fiduciary oversight services

Expert independent advice

Fiduciary management is a hot topic, and has been a focus of the recent CMA review. We ensure that clients fully understand the pros and cons, and help them put in place the right arrangements for their needs.