The fees charged by fiduciary managers need to be more transparent, Aon Hewitt has argued.

In a report, 'Understanding the fees charged within fiduciary management', Aon Hewitt highlighted the complex situation that trustees face, because of the available solutions and the varying fee levels that differ "significantly" between the providers.

Aon Hewitt said that schemes need more transparency from providers, especially in light of the growth in fiduciary management in the UK pensions industry, and has published the report to help trustees understand the topic.

Sion Cole, Aon Hewitt partner and head of client solutions, said: "It's vital for the provider to be transparent about what fees will be charged and for trustees to have a full understanding – before appointing a fiduciary manager – not only of the overall fee being charged but also of its different components."

There are four main components of fiduciary management, Aon Hewitt said. These are fiduciary management fees; underlying management fees; investment consultancy fees and other fees, such as administration costs.

The report also covers the question of whether fiduciary fees are actually more expensive than schemes' existing approaches.

"The answer to this is both yes and no as it very much depends on the scheme's current starting point and where they are looking to get to," Cole said.

"In some cases fiduciary management can be more expensive but the extra costs should be weighed against the additional benefits of the approach.

"In other instances, moving to a fiduciary management approach can actually be cheaper - without even considering the added value it offers."

First published 22.01.2014

monique_simpson@wilmington.co.uk