The Soaring Cost of Consultants
Asset owners’ consulting bills have jumped by 43% in five years, according to data from the UK’s pension fund trade body.
The Pensions and Lifetime Savings Association (PLSA) surveyed 63 UK corporate pensions and found that the cost of external consultants had risen from £21 ($32) per defined benefit fund member to £30 between 2011 and 2015.
The cost of asset management fell by 4.4% during the same period, the PLSA found, from £206 per member in 2011 to £197 this year. This figure reached as high as £228 per member in 2014.
Overall, UK defined benefit pension fund costs grew 38% to £543 per member between 2011 and 2015, driven by consultant fees as well climbing administration and record keeping costs.
Private-sector plan sponsors likewise spent more over the period, as “typical” employer contributions grew from 17% to 23%.
UK regulator the Financial Conduct Authority is preparing to investigate the country’s consultancy sector as part of a wide-ranging asset management review next year. Under particular scrutiny will be fiduciary offerings and outsourced-CIO services offered by asset managers and consultants.