Well-known investment managers are combining and charities should take note.

The UK investment-management landscape is constantly evolving and a series of high-profile mergers has brought together well-known firms, creating fewer but larger groups. This is a trend that the industry expects to see continue.

For the charities and not-for-profits they serve, this can come with trade-offs. Larger groups may offer stronger infrastructure, wider investment reach, and the promise of lower costs. But scale can sometimes come at the expense of the focus, close relationships, and specialist understanding that charities often value most.

Why consolidation is happening

Consolidation is not unique to this sector, but the pace has accelerated in recent years. Rising regulatory expectations, tighter margins, and ongoing investment in technology have pushed many firms to seek strength in numbers. Private equity has played a role too, with investors increasingly willing to back wealth and investment management deals as firms look for capital to scale and modernise.

Meeting the standards expected by the Financial Conduct Authority (FCA) now requires substantial investment in systems, governance and reporting. At the same time, the rise of low-cost passive investing has continued to place downward pressure on fees, making it harder for mid-sized firms to compete. For many, joining forces has become the most practical way to spread costs, diversify income, and access new asset classes.

What this means for charities

A merger can shift the dynamics of service, governance, and investment delivery in subtle but important ways. Some mergers can eventually result in the streamlining of investment structures where investors are put into new managed funds, presenting the threat of a misalignment of values. Even when “business as usual” is promised, experience shows that integration takes time. It can also change the things charities often value highly such as the people they deal with, the clarity of reporting, and the consistency of approach.

There can also be a number of benefits when your investment management firm mergers with another. The expansion can bring broader research resources, deeper investment teams and improved operational resilience.

Though there may be challenges, the most practical response is to treat a merger or acquisition as a trigger for review. Some helpful actions might be:

• Revisiting your Investment Policy Statement (IPS)

• Sense-checking the ongoing suitability of your manager.

• Approach any change with informed curiosity and good governance

We have put together a selection of helpful questions you can ask your investment manager or adviser following the announcement of a change:

• Has the investment team responsible for our portfolio remained in place?

• Will the firm’s investment philosophy and process remain consistent, or is it being harmonised across the group?

• Are there any anticipated changes to fees, service levels or reporting structures?

• Does the merged entity retain a clear commitment to the charity and not-for-profit sector?

• Will the investment solution, custody, liquidity, platform access or operational processes change?

Addressing these points early can help avoid surprises and ensure arrangements continue to support the charity’s objectives.

Taking a governance-led approach

The most practical response is to treat a merger or acquisition as a trigger for review. Charities should revisit their Investment Policy Statement (IPS) and sense-check the ongoing suitability of their manager.

Engaging advisers to provide an independent perspective can be valuable, particularly in assessing whether the merged firm’s culture, service model and investment capabilities remain aligned with the charity’s needs. Documenting discussions and decisions also strengthens governance and makes the trustee position clear.

For many charities, a merger may ultimately confirm that their manager remains appropriate. For others, it may prompt a broader review of strategy, reporting or manager selection. The key is to be proactive rather than reactive.

How we can help

At Buzzacott, we work closely with charities and not-for-profits to strengthen investment governance. This includes reviewing investment policies, assessing manager performance, suitability and providing oversight.

If your investment manager has recently merged, or you want to understand how wider consolidation could affect your charity, our Investment Consultancy team can help you review the potential impact and ensure your arrangements remain fit for purpose*.

*Some investment consultancy services may not be available to existing Buzzacott audit clients. This insight has been prepared to keep readers abreast of current developments. Professional advice should be taken in light of your charity’s circumstances before any action is taken or refrained from.