The Pendulum Swings Back in Asset Management

Fiduciary Management is a way of organizing the management of sizable investment portfolios. This chapter presents the need for the Fiduciary Manager approach. In order to understand the need for the Fiduciary Manager approach, it is important to understand the evolution of investment management in the advanced industrial countries. As the twenty-first century began to unfold, there was substantial discontent among plan sponsors and other institutions regarding the prevailing investment management structure. Too many people had a role while no one had overall responsibility. Having outsourced much of the work of running a pension plan, the plan sponsor was likely to be a small organization with limited expertise. It was deeply dependent on both its consultants and managers, just as it was dependent on its actuaries and other experts for specialized counsel. Fiduciary Management came into being in response to these problems. Fiduciary Management seeks to reunite expertise and responsibility. It seeks to ensure that those who oversee managers and consultants have both the expertise to do this job and also to have enough ties to the plan sponsor to do this job effectively.