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Last week a headhunter called me. ‘Pieter, do you know any investment directors at pension funds who might want to transition into investment consultancy?' With things in Holland not exactly optimal there are a couple of hundred people who might be interested. But what I say is: ‘I am not exactly sure, but it does sound interesting.' Exactly the response the headhunter wanted; before I can say ‘een ogenblik' I am discussing dates for a meeting.

And then I meet John, a senior executive from Big Co. Asset Management. ‘You see Pieter, we are moving into consultancy, and we want someone like you to lead the effort.' ‘Why are you moving into consultancy?' ‘Pieter, consultants have become multi-managers, implemented consultancies, fiduciary managers, and even outsourced CIOs, whatever that means. They have become all sorts of things but not better consultants.'

‘Ah,' I say. John is clearly depressed. ‘Yes, ah, and they are taking away business normally done by asset managers.' I smile. He continues. ‘And if you also look at the number of pension funds becoming fiduciary managers, and investment bankers talking to CFOs about structured products to solve pension liability issues what are we supposed to do?' ‘Well, you could become a fiduciary manager.' ‘We thought of that, but we are not convinced we have enough expertise across asset classes as well as all the other countless things people pretend they can do.' ‘And so you want to become a consultancy?'

‘Yes, there is no real money in advisory work, which has explained the move to asset management by the consultants, but there is now a gap. There is a gap that allows people who actually can manage money to advise people who need money managed.' ‘But consultants do now manage money.' ‘Pieter, you miss the point, consultants don't execute the trades, they outsource. That is their kind of asset management.' ‘But other fiduciary managers, such as pension funds and asset management firms, they do manage money and can advise.'

John looked at me and shook his head. ‘Pieter, they only give advice in order to sell their brand of fiduciary management.' ‘And your advice will be independent?' ‘It will be. We will work with firms and let them talk to our portfolio managers, and effectively have a partnership with an asset management firm without having to outsource their assets to us. We are selling access to our intellectual capital and competitor knowledge, and thus can help retain the normal system.' I shake my head slowly.

‘We will call the consultancy Tau.' ‘Tau?' ‘Yes, it seems to be the only Greek letter left. Rather like domain names, the good ones get snapped up.' ‘Touw in Dutch means rope, do you know that?' ‘That will work.' I shake my head. ‘John, thank you for thinking of me but it is a no.' ‘Too tangled a web that I am weaving?' ‘Yes, and best to avoid the rope.'

Pieter Mullen is investment director at Wasserdicht Pension Funds

 

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