INVESTMENT CONSULTING
Investment consultancies have seen their business models change rapidly
over the last fi ve years. In an increasingly competitive landscape, many have
had to re-think their value propositions and what they offer clients.
As a result, there are increasing opportunities within this business,
reports Maha Khan Phillips.
BY: MAHA KHAN PHILLIPS • PROFILE BY: STUART NEWMAN
A decade ago, the investment consulting setting up pension fund advisory groups for their clients.
T
industry in the UK would have had an excuse Consultants found themselves unable to compete, and the
to be complacent. As the gatekeepers to consulting business model came under pressure. Fees ranged
lucrative pensions mandates, consultants were from anywhere between one basis point to 20 basis points, but
both feared and respected. Without a on average sat at 3 basis points for most services, meaning
relationship with a pension fund’s investment consultant, consultants got paid much less than investment managers and
asset managers may as well have packed up their things and custodians. Many consultants, such as Mercer and Aon,
gone home. Two key investment consultancies, Watson launched multi-manager spin off s as a way to stay competitive.
Wyatt and Mercer, dominated the European market and Others created some sort of ‘implemented consulting’ or
continue to do so, with less than a dozen medium size fi rms fi duciary management service, in eff ect off ering product and
vying for position below them, and a handful of specialist strategic advice alongside manager and fund research.
boutiques further down the chain.
Much has changed for investment consultants in the last LONG-TERM APPROACH
few years. Consultants were criticised for being slow to Pension funds have looked for long term investment solutions
understand new asset classes, such as alternatives, and were that included liability matching and hedging infl ation, and
accused of having lack of depth in manager research. Th ey consultants have been forced to raise their game as a result. Th e
faced rising competition from other players in the market, consequence has been that the traditional roles available at
most notably investment banks, which began to advise pension investment consultancies, those within asset allocation, fund
funds directly on the use of derivatives in their portfolios. selection, or relationship management, have broadened.
Ironically, even asset managers began to get in on the game, “We’ve been hiring a huge amount of people lately. We are a
third bigger than we were a year ago, and we are out in the
marketplace hiring. Th e types of people we are looking for is
“We’ve been hiring a huge
far broader than it would have been in the past,” explains Paul
Deane-Williams, head of public relations at the investment
amount of people lately. We are
business of consultancy Watson Wyatt. He says the fi rm is
looking for people with greater project management skills than
they have done traditionally in the past. “We have greater need
a third bigger than we were a for people who do asset liability management and structured
products. We also have a greater need for consultants who do
year ago, and we are out in the
project management and can look across the board and talks to
implemented consulting clients.”
On the manager research side, Watson Wyatt has been
marketplace hiring”
recruiting more specialist talent, as the nature of each asset
class becomes more specifi c and localised. “Formerly we would
Paul Deane-Williams, Watson Wyatt have hired somebody and brought them through the whole
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