LONDON 8 September 2014 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has today announced the findings of its Fiduciary Management Survey 2014, which reveals that two-thirds of schemes measure the success of fiduciary providers against unique objectives while only 25% would prefer to use an industry benchmark.
The survey shows that 68% of respondents prefer to assess fiduciary providers against scheme specific targets, measuring the performance of their solution against their own unique investment objectives, rather than judging success against a broad industry-wide benchmark or versus other fiduciary solutions.
Sion Cole, partner and head of Client Solutions at Aon Hewitt said:
“The results of our latest survey show a clear preference from trustees for using tailored measurement rather than broad benchmarking when assessing fiduciary providers. This reveals a recognition that schemes – and their needs – vary greatly, making industry benchmark analysis misleading in these circumstances. These findings reinforce Aon Hewitt’s view that fiduciary performance league tables would not only be inappropriate and irrelevant, but would also be detrimental to helping trustees select the right provider for their scheme.
“Trustees are becoming increasingly innovative in their approach to achieving pensions stability and it is encouraging to see them using methods of measurement to reflect this.”
The survey, Aon Hewitt’s fifth and the largest on the UK fiduciary management market, gathered the opinions of 359 pension industry professionals, covering an estimated £269 billion of assets and representing around 25% of the defined benefit pension market in the UK. The survey covers 93 schemes currently using fiduciary management services, with an estimated £40 billion of assets, and representing around 70% of all fiduciary assets in the UK.
Demand and satisfaction run high
The survey also highlights a doubling in the level of uptake in fiduciary management over the last three years, with 37% of respondents having a fiduciary solution in place - up from 18% in 2011. The demand for fiduciary management is being driven by two key factors. First, trustees are faced with increasingly complex investment decisions, with schemes which are implementing liability driven investment (LDI) strategies rising by 25% over the last year alone. Second, trustees are spending less time dealing with these decisions, with 73% of trustees devoting no more than five hours each quarter to investment issues, up from 67% in 2013.
Sion Cole continued:
“This year’s survey reinforces many of the themes that we have seen developing over previous years. Trustees are faced with ever more complex investment decisions and have less time to deal with them, and that is driving demand for access to expertise and support from fiduciary management providers. However, perhaps the most striking trend is the outstanding 99% level of trustee satisfaction with the service of fiduciary managers – a resounding success for the industry.”
Key survey highlights:
• Customer satisfaction with fiduciary management services is high with 99% of respondents rating their overall experience as satisfactory, good or excellent.
• The main benefits of fiduciary management are cited as being the access to investment expertise and daily attention to risk/investments.
• The main concerns are seen as being costs and the difficulty in differentiating between providers.
• Schemes with assets of £500m or less are the most likely to opt for full fiduciary management.
• Schemes with more than £1bn in assets are more likely to opt for a partial fiduciary management mandate than a full one.
• 59% of trustees want to grant a fiduciary management mandate to a provider that they already work with for investment or actuarial advice.
• 63% of schemes are now using flight plans as a method of dynamic de-risking; a 20% increase over the past two years.
Notes to editors
Aon Hewitt’s Fiduciary Management Survey 2014 is available from firstname.lastname@example.org.
About Aon Hewitt
Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit www.aonhewitt.com.
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Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.