Despite Hype, Pension Management Outsourcing Not Popular

(September 17, 2009) – Despite the hype, a new survey suggests that fund outsourcing is far from the minds of most fund managers.

According to an August/September survey by manager search consultancy bfinance that polled 88 managers in 10 countries, 91% of fund managers have no intention of altering their governance structure. Even more surprisingly, given the hype surrounding fiduciary management, not one respondent claimed that they plan to switch to a fiduciary provider. Nine percent said that they “might” do so. These numbers show a more-than-healthy skepticism toward placing the risk of pension funding with a third party.

Instead, the survey finds, pension funds are more likely to turn to consultants. Of the respondents, 24% said that they plan on asking consultants for strategic advice; 18% stated that they would need help with manager selection. Other uses for consultants were monitoring and reporting (12%), benchmark selection (11%), risk budgeting (7%), portfolio construction (7%), and custody services (5%).

The survey respondents represent corporate pension schemes (34%),  public pension schemes (30%), and endowments (10%); they ranged in size from $200 million to nearly $30 billion in assets.