Origin of the fiduciary management label

A 'fiduciary' is someone who prudently manages money for other people, and has a duty to act at all times for the sole benefit and interest of the person and/or body that they are representing.

There are three main types of fiduciaries (see below). A trustee board (itself a ‘governing’ fiduciary) relies on multiple fiduciaries, such as investment committees, asset managers and custodians to help it set and implement a robust investment plan. A ‘fiduciary manager’ effectively manages those other fiduciaries on the behalf of the trustees.

The three main fiduciary roles

Governing fiduciaries – members of corporate boards and boards of trustees – are ultimately responsible for ensuring that pension assets are prudently invested. They usually employ managing fiduciaries – often in the form of an Investment Committee or internal CIO – to provide advice and oversee policy implementation, who in turn, employ a number of operating fiduciaries with specialised knowledge and skills to implement and manage investment policy on an ongoing basis.
A summary of the different roles is given in the table below.

Name Role Pension fund example*
Governing Fiduciary Plan: set policy Trustees
Managing Fiduciary Manage: oversee policy implementation Investment Committee or CIO
Operating Fiduciary Implement: manage day-to-day activities Internal or external money managers

 *Some groups can perform multiple roles.


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