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In our latest survey, Mercer sought to identify trends among institutional investors on the topic of outsourcing investment management responsibilities. Results and findings of the survey, which ran from August 1 through September 18, 2020, were based on the views and opinions of individuals responsible for the management and oversight of defined contribution plans, defined benefit plans, endowments, foundations and other institutional asset pools.
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What are institutional investors’ top concerns?


Survey respondents’ top concerns include reducing fiduciary risk, improving investment performance and reducing fees. 


Interestingly, the COVID-19 pandemic had no material impact on respondents’ top concerns. The leading concerns before and after the height of the pandemic remain 1) reducing fiduciary risk and 2) improving investment performance. Not surprisingly, improving governance rose the most among the top concerns, as any critical market event can give fiduciaries cause to reevaluate their governance structures.

 

In fact, improving the oversight and governance of institutional assets is a commonly cited benefit of investment outsourcing. A growing number of institutional investors have welcomed the involvement of an outsourcing provider as a way to share fiduciary responsibility. It also allows those individuals at the  organization who oversee the asset pool to focus on  activities where they can add the most value, especially if investment expertise is limited or lacking in particular areas (for example, alternatives, asset allocation or ESG).

Are more institutional investors considering outsourcing?

 

Of those who participated in the survey, 44% already implement a fully or partially outsourced investment solution.

 

Another 14% indicate that they plan to explore outsourcing within the next two years, contributing to the rise in demand for outsourced investment services.

 

Learn why 42% of respondents say they are not considering outsourcing the oversight of their investment managers in the next two years. Download the complete survey results here.


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Contact us if you would like to discuss ways your organization can enhance or outsource the investment program.

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