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.

Any opinion expressed is that of Russell Investments, is not a statement of fact, is subject to change and does not constitute investment advice.

The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.

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