The RFP That Stops Too Early: Expanding Vendor Review to Fiduciary Spend
Custodia Advisory | Private Equity
Most platforms run a disciplined RFP process when they select outside counsel. Multiple firms are invited to pitch, rate cards are compared, references are checked, and the winning firm is chosen against a documented set of criteria. It's a rigorous process, and it produces exactly what it's meant to: a competitively tested legal relationship with terms that reflect real market comparison.
Then the RFP process stops. Fiduciary services — director appointments, share trustee arrangements, registered office, AML/KYC administration — rarely go through anything comparable. They're appointed, not competitively sourced, and the difference in process tends to produce exactly the difference in outcome you'd expect.
Why fiduciary spend escapes the RFP entirely
The reasons are structural, not careless. Fiduciary appointments are often needed on a closing timeline that doesn't leave room for a multi-week tender process. They're frequently introduced by the same offshore counsel already running the legal RFP, which makes them feel like an extension of a decision that's already been made rather than a separate one requiring its own comparison. And because fiduciary fees are often smaller individually than legal fees, they don't trigger the same procurement scrutiny on a line-by-line basis — even though, aggregated across a platform's entities, they frequently add up to a comparable or larger total spend.
The result is a governance asymmetry: the function that gets the most competitive rigor applied to it is the one where the fee structure is usually already reasonably well-benchmarked by an active market of law firms bidding against each other. The function that receives the least scrutiny — fiduciary services — is the one where a single, unchallenged provider relationship is most likely to drift from market terms over time, precisely because nothing is regularly testing whether it should.
What monitoring fiduciary spend actually requires
Treating fiduciary spend with the same discipline as legal spend starts with visibility, which most platforms don't currently have in a consolidated form:
Aggregate the true cost across the platform. Annual director fees, AML remediation charges, KYC refresh cycles, registered office fees — these are typically reviewed and paid entity-by-entity, which makes the platform-wide total invisible unless someone deliberately consolidates it. A single fund vehicle's fiduciary fees look modest. Twenty vehicles' worth, added together, often tell a very different story.
Track fee movement over time, not just fee levels. A fiduciary provider's rates rarely jump dramatically in a single year — they drift, a few percentage points at a time, renewal after renewal. Without a baseline to compare against, that drift is invisible in any single year's invoice and only becomes obvious after it has compounded for several years running.
Separate genuine cost increases from scope creep. Some fee growth is legitimate — additional regulatory requirements, more complex structures, genuinely more work. Some is simply the absence of anyone asking whether the fee still reflects the work being done. Distinguishing between the two requires someone reviewing the relationship with enough distance to ask the question in the first place.
Extending the RFP process to fiduciary services
The fix is not to treat fiduciary appointments as fundamentally different from legal appointments — it's to extend the same competitive discipline to them, adapted for how fiduciary services actually work:
- Run a genuine comparison at initial appointment, rather than defaulting to whoever offshore counsel introduces. Even a lightweight process — three quotes, a basic reference check, a comparison of fee structures — produces meaningfully better terms than accepting the first, and only, name put forward.
- Set a periodic re-tender or re-benchmark cycle, rather than treating a fiduciary appointment as permanent once made. Legal panels are typically reviewed every few years; fiduciary relationships, which are just as susceptible to fee drift, usually aren't reviewed at all after the initial appointment.
- Include fiduciary providers in the same OCG framework used for outside counsel — rate review cadence, billing format, escalation procedure — rather than allowing them to operate under separate terms of business that were never actually compared against a market standard.
- Require disclosure of any commercial relationship between the introducing law firm and the fiduciary provider before the appointment is made, so that "recommended by counsel" and "independently selected" aren't treated as equivalent when they're demonstrably not.
The case for treating this as one review, not two
None of this requires building an entirely new procurement function. It requires recognising that fiduciary spend is a genuine category of vendor spend, not an administrative afterthought attached to the legal relationship — and extending the same review discipline a platform already applies to counsel selection to cover it. A platform that runs a rigorous RFP for its law firms and accepts whichever fiduciary provider is introduced alongside them has, in effect, built a governance framework with a structural blind spot sized exactly to the category of spend least likely to be caught any other way.
The RFP process that stops at the law firm's door was never a deliberate design choice. It's simply where the discipline happened to end. Extending it the rest of the way is a smaller step than it looks — and it's usually the step that surfaces the most previously invisible spend.
Custodia Advisory helps platforms extend competitive review discipline from outside counsel to fiduciary services. Enquire about a complimentary review of your current fiduciary spend and appointment process.