Investment consultants grow AUM by 60%

Pension schemes are awarding more money than ever before to investment consultants, up £42bn in a year.

Assets under fiduciary management grew by £42 billion over the last year, an increase of 60% to £114 billion, according to findings by KPMG.

The KPMG study said nearly three quarters of those assets were controlled by investment consultants, which include Towers Watson, Aon Hewitt and Mercer to name but a few. This comes following a study by Aon Hewitt in September 2015 which found 46% of pension schemes utilized fiduciary management in some capacity in 2015, an increase from just 18% in 2011.

Some have criticised pension schemes for awarding investment mandates to their existing consultants with little competitive bidding. Nonetheless, investors have been advised to appoint organisations to provide independent oversight of the quality of their fiduciary manager, and to benchmark performance against other providers.

The growth in consultants’ fiduciary management operations comes as the UK Financial Conduct Authority (FCA) launched its market review in November 2015, which will analyse potential conflicts of interest at consultants providing advice and asset management services. The review will also assess costs and competition in the asset management sector.