Maggie Williams explores the key findings from our professional trustee survey and panel debate on trusteeship
We spoke to 72 independent trustees to find out what they think are the biggest challenges facing trusteeship in 2018? Here’s what we learnt:
● Respondents believe that member-nominated trustees’ biggest challenges are the complexities of their role, increasing regulation and pressure for higher standards from the Pensions Regulator.
● When asked what single thing schemes could do better, independent trustees said that making decisions more quickly (38%) and improving investment knowledge (18%) are the two most significant factors.
● Making decisions more quickly has been the highest-rated factor in this survey for the last four years.
● In our panel debate, participants said that different board structures, strong chairing and better use of technology could all help to improve board decision-making.
● Trustees are positive about the quality of market knowledge and reporting they receive from their consultants. They also praised trustee training standards. However, they feel there is room for improvement when it comes to transparency, delivering value for money, innovation and sustainable investment advice.
● Respondents ranked performance track record, stability of the investment team and fees as the three most important factors when selecting a defined benefit (DB) fund manager. Fees are all-important when selecting a defined contribution (DC) fund manager. Performance track record, stability of the investment team and client service are also significant in DC.
● Trustees want fuller explanations of how investment managers are adding value and the way in which house views affect investment decision-making. They also said that the quality of investment managers’ reporting could be improved, to demonstrate how the manager is adding value, explain their house views and cut jargon.
● The Pensions Regulator’s performance received mixed reviews from respondents. Fifty per cent said that the regulator uses its powers effectively, and the other 50% disagreed with that statement.
● Seventy-eight per cent of survey respondents believe that independent trustees should hold a qualification. However, our panel debate participants had varied views on what form this should take. Holding any relevant professional qualification could be a starting point, but ensuring that trustees are able to chair effectively and show strong leadership are more important and more difficult to test formally.
To download the full Independent Trustee Research Report 2018 click here.
This research was carried out in association with Newton Investment Management.