News & Views

IC Select Fiduciary Management Performance Standard

The challenge

The problems originate from each provider using a different methodology to calculate performance and risk, combined with a lack of transparency, standardisation and consistency in the way that fiduciary manager performance is presented to potential clients. This has led to accusations that managers are ‘cherry picking’ their performance record, when responding to invitations to tender.

Many of the above problems can be solved by moving to a standard basis for classifying funds, calculating performance and displaying performance.  Consequently, IC Select have engaged with the UK’s leading fiduciary managers, prominent industry professionals and the CFA Institute to agree a standardised methodology for data calculation and presentation of fiduciary management performance information for selection purposes.  All the major fiduciary managers have now agreed to comply with the standard[1].

The introduction and adherence to the IC Select Fiduciary Management Performance Standard will put trustees in control of the information they receive, avoiding the potential for cherry picking funds by fiduciary managers, and provide trustees with confidence that the performance data provided has been calculated on a consistent basis and is being presented in a standardised manner to improve their understanding.


The benefits

The FM Standard provides trustees with many advantages:

✦ Any trustee board carrying out a fiduciary management selection exercise can request the performance information on the IC Select Fiduciary Management Performance Standard direct from the fiduciary managers

✦ Each fiduciary manager will have a list of core performance composites on different risk and return characteristics for the trustees to select from

✦ As performance composites are calculated on average performance for a group of clients it prevents the fiduciary managers from reporting on only their best performing funds

✦ When requesting performance information on the IC Select Fiduciary Management Performance Standard trustees can have confidence that performance has been calculated and audited on an industry standard basis

✦ Trustees can be confident that the information they are getting will be presented in a standardised format


So, in summary the IC Select FM Performance Standard will put the trustees in control of the due diligence of the fiduciary managers they are assessing and removes any charge of ‘cherry picking’ of performance records by the managers. This is good for trustees, good for the managers and good for the industry.  


[1]  Aon Hewitt, BlackRock, Cardano, Charles Stanley, Goldman Sachs Asset Management, JLT Investment Solutions, Kempen Capital Management, Legal & General Investment Management, Mercer, P-Solve, Russell Investments, Schroders, SEI and Willis Towers Watson.


This is the first in a series of short notes to be published over the next few weeks that explain how the IC Select Fiduciary Management Standard works and how trustees can benefit from the information.  This note focuses on the background to the Standard.  Subsequent notes will cover:

  • Aligning the Standard with Trustees’ needs
  • How performance is calculated
  • Making sense of the composites and what to focus on
  • Understanding the standardised performance information
  • The impact of different methodologies for calculating liability benchmarks
  • Full and hedge adjusted liability benchmarks

The FCA and CMA have highlighted that trustees are not receiving the necessary information to allow them to assess performance and judge value for money when selecting fiduciary managers. This is one of the areas that is currently being looked at in detail as part of the CMA’s Investment Consultants Market Investigation which will report its finding in July 2018. 

These issues with fiduciary management performance are not new and have been widely discussed in recent years.