Roundtable Update: Fiduciary Management - Focus on Funding

Last month SEI, the first and largest global Fiduciary Manager, hosted a roundtable; "Time to focus on funding – using Fiduciary Management to help control funding levels." The event provided a unique opportunity to understand and discuss Fiduciary Management with first-hand experiences and opinions from the Chairman of Trustees at Habitat Pension Fund, Malcolm Curzon, who appointed a Fiduciary Manager in 2009;  and Steve Delo, CEO of Independent Trustee Firm, Pan Governance.

Outlined below are some of the key themes.

Steve Delo, Independent Trustee and CEO Pan Governance

On the current state of UK Trustee Boards:

• Flexibility and nimbleness is often lacking on UK Trustee boards
• Consequently, trustees will likely miss chances to de-risk or add risk at appropriate times
• The typical trustee model inspires short bursts of activity and long periods of non-activity
• Few are aligning asset strategy with funding strategy

On the Fiduciary Management approach:

• Fiduciary Management is about more than delegation it is about trustees empowering a partner to provide new services and additional value
• The key benefit is real time decision making

On selecting and monitoring a Fiduciary Manager:

• Be clear who you partner with; Fiduciary Management comes in many flavours
• Think about what you want to achieve and choose a partner who can meet those objectives
• Ask questions:
  • How tailored is the solution to your needs?
  • How intellectually robust is the organisation?
  • How comprehensive is the research process?
  • Is there a conflict of interest?
• Monitor the Fiduciary Manager according to objectives (funding status), not short term performance

Malcolm Curzon, Chairman of Trustees Habitat UK Pension Fund

On what drove Habitat to appoint a Fiduciary Manager:

• Our trustee body found it difficult to select managers – time consuming, costly and complex
• Investment consultant wasn’t considered value for money
• Only average performance.

On the advantages Habitat has experienced:

• It feels like a partnership between our trustee body and SEI
• Our objectives are aligned but we haven’t abdicated our responsibilities
• The way SEI looks at the assets, liabilities and company cash flows has assisted in discussions with our employer
• We are much more diversified
• We’ve saved money – 30% less than we were paying before

SEI is planning a series of educational Roundtables for Trustees and Finance Directors in 2010. Please contact us if you would like to find out more about these events or would like any further information on Fiduciary Management.

Important Information:

This document and its contents are directed only at persons who have been classified by SEI Investments (Europe) Limited as a Professional Client, or an Eligible Counterparty, for the purposes of the FSA New Conduct of Business Sourcebook.

The experiences discussed are those of the specific organisation, others’ results and/or experiences may vary.

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This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts.

The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested. If the investment is withdrawn in the early years, it may not return the full amount invested. In addition to the normal risks associated with equity investing, international investments may involve risk of capital loss from unfavourable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly focused investments and smaller companies typically exhibit higher volatility. Products of companies in which technology funds invest may be subject to severe competition and rapid obsolescence.

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