More Than Half of Schemes to Re-Evaluate Their Consultant Relationship Following FCA Market Study

According to a survey released today by SEI (NASDAQ:SEIC), more than half of pension schemes are planning to re-evaluate their relationship with their investment consultant in the wake of the Financial Conduct Authority’s Asset Management Market Study, according to a poll of trustees, representing over £42 billion of assets.=
SEI’s poll was completed in late June and early July 2017 by 35 U.K. pensions professionals, including Trustees, Chair of Trustees, Financial Directors, and Head of Pensions overseeing defined benefit pension schemes ranging in asset size from £20 million to £6 billion. The poll did not include any clients of SEI. The survey follows a pledge by the FCA to consult on its provisional view to reject consultants’ undertakings in lieu to avoid referral to the Competition and Markets Authority, and reveals that 54 percent of trustees are planning to re-evaluate their relationship with their investment consultant.
More than 87 percent of respondents said they will review their consultant in 2018 or 2019. The survey also found that 60 percent of respondents would consider a different model for their pension scheme outside the traditional consulting model.
Commenting on the survey findings, Patrick Disney, Managing Director of SEI’s Institutional Group, EMEA and Asia said:
“The FCA’s final report again highlighted the inherent conflicts of interest in the investment consulting business model, and revealed the regulator’s preference to continue with its original proposal to refer the sector to the CMA.
While that view is currently open to public consultation, our survey clearly indicates that the majority of trustees we polled have become concerned enough about the issues raised in the report to re-evaluate their relationship with their consultant and consider an alternative to the traditional investment consulting model.
SEI has long recognised the conflicts of interest that arise from offering both an advisory and fiduciary management business model in one firm. We sold our global investment consultancy business, in 1995 to focus on fiduciary management. Our primary goal is delivering better outcomes to pension schemes, and it is clear that trustees have begun to recognise that the traditional investment consulting model may be far too compromised to deliver the same commitment.”