SEI Finds UK Charity Sector Could Overpay for Investment Management

February 1, 2018

Significant Cost Savings Available Through Alternative Model

LONDON, Feb. 1, 2018 – SEI’s (NASDAQ:SEIC) Institutional Business in the U.K. announced today that a review of public data on fees in the charity sector has revealed that charitable foundations in the U.K. could be overpaying significantly for investment management fees when compared to other institutional investors. The analysis demonstrates that the charity sector could save between £250 million and £288 million overall by switching to a different investment management model, such as the OCIO approach commonly employed by global pension schemes and U.S. endowments.

When considering fees, SEI’s analysis applied a multi-faceted approach, which included evaluation of financial statements, analysis of the largest charity trusts’ fees, and the review of fees associated with the fund-of-funds structures commonly offered by wealth managers. The average fee paid in these cases is likely to be higher than fees for an equivalent strategic asset allocation in an OCIO model that combines advice and implementation. In addition to cost savings, charities could also benefit from the multi-sector experience boasted by the OCIO strategy. A move to this investment approach could also provide charities with the opportunity to benefit from timely asset allocation, manager selection and replacement decisions, professional advice and economies of scale.

Commenting on the research, Pradeep Kachhala, Director of Charities, SEI Institutional U.K., said:

“Demands on U.K. charities and their trustees are at an all-time high, and these demands are likely to grow as public spending continues to fall and the regulatory burden increases. It is concerning that the charity sector could be significantly overpaying for investment management services, and our analysis demonstrates that a renewed focus is needed. This notion supports one of the key tenets of the Charity Commission’s CC14, which recommends that trustees consider the costs of a manager or adviser. Trustee boards should consider alternative models that could ease their governance burden, as well as provide economies of scale that potentially reduce costs.”

About SEI’s Institutional Group

SEI’s Institutional Group is one of the first and largest global providers of outsourced investment management services. The company delivers integrated retirement, healthcare and nonprofit solutions to more than 480 clients in 13 countries. Our solutions are designed to help clients meet financial objectives, reduce business risk and fulfill their due diligence requirements through implemented strategies for the management of defined benefit plans, defined contribution plans, endowments, foundations and board-designated funds. 

SEI’s OCIO for Charities Proposition

SEI advises on more than £20 billion for over 140 charitable endowments in the U.S. and globally. Its “Investment Management for Charities” proposition utilizes SEI’s significant scale and award-winning manager-of-managers approach to benefit from customized and cost-effective investment strategies based on, and integrated with, a charity’s specific return and liquidity requirements.

About SEI

Now in its 50th year of business, SEI (NASDAQ:SEIC) is a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of December 31, 2017, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $861 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including $337 billion in assets under management and $518 billion in client assets under administration.