The traditional model for defined benefit pensions involves investment decisions being made by pension fund trustees with guidance from independent investment professionals from the consulting world. Such advice is then executed by asset managers. However, this model places all the decision making in the hands of non-technical pension trustees rather than investment specialists. Furthermore, as a panel of pension trustees meet relatively infrequently, tactical investment opportunities can rarely be exploited under this model.
The result of these flaws has been the growth of fiduciary management, where investment decisions are delegated to investment professionals. Fiduciary management is offered by asset managers who add an advisory capacity to their execution-only provision. It is also offered by consultancy firms who add an execution element to their advisory-only proposition. It is this blurring of boundaries between the consulting world and the asset management world where Plenum’s network is particularly strong.