March 13, 2012 (PLANSPONSOR.com) – A survey by Mercer found that 41% of organizations with assets below $500 million are considering investment outsourcing.
According to the survey, 31% of those surveyed with assets in the $501 million to $1 billion range are also considering outsourcing.
A major reason for delegating some or all fiduciary responsibility for investment decisions relates to the need for speed and sophisticated decision-making in a volatile, fast-moving market environment.
Tom Murphy, U.S. head of fiduciary management at Mercer, told PLANSPONSOR that a number of factors are leading committees to consider investment outsourcing. He said that typically committees only meet once per quarter, which means they cannot execute decisions in a timely fashion. He also mentioned that most committee members are not investment professionals, therefore it would be a lot more straightforward and efficient to give the investment responsibilities to an expert.
“We believe the trend to investment outsourcing will accelerate due to a combination of factors: volatile market conditions, the desire to take faster and more considered investment decisions, and the challenge of staffing to adequately monitor performance and risk in real time,” said Murphy.