Do OCIOs Provide Value for Money?

Poor fee transparency is overshadowing an improving market for fiduciary managers in the UK, according to a survey by two consultancy firms.

Buck Consultants and Spence Johnson reported that respondents’ confidence in obtaining value for money from their fiduciary managers or outsourced-CIOs (OCIO) was “reasonable but continues to lag satisfaction in other areas”.

Buck Consultants said this was primarily down to a lack of transparency about fee structures and few useful comparators regarding charges.

In addition, the survey found a mismatch between trustee and OCIO reporting expectations.

“Overall satisfaction with the quality of reporting is reasonably high but some issues have been identified, namely overly technical detail and a poor executive summary,” the consultants wrote. 

“Some differences between what fiduciary managers and trustees want to concentrate on were also cited with many commenting that defining what is good reporting for a particular scheme is an evolving process,” the report said.

However, overall satisfaction with OCIO services was “high and increasing”, Buck Consultants said, driven by improvements in decision making, investment expertise, and risk management over the past 12 months.

A total of 33 UK-based pensions responded to the survey, all of which had outsourced their entire portfolios. The pensions had assets under management of £17 billion ($25.8 billion), roughly 45% of the total OCIO assets in the UK.

Related: 2015 OCIO Survey & The Arranged Marriage