Pension funds in Austria are not benefiting so much from the growth in the consultancy industry there. Paul Roettig of Hewitt Associates in Vienna believes that consultants are missing out because only 11% of Austria’s working population is covered by pension funds and these are controlled by large financial institutions. “The problem is, most Austrian pension funds are affiliated to banks and insurance companies.”
Still, he recognises the potential in the market as more and more companies move from unfunded to funded schemes. “Much of the consultancy business is going into this and the market is huge,” he says. Kurt Bednar of Constantia, which is William Mercer’s correspondent in Vienna, says that there has been little increase because using consultants can be costly. “Pension funds still like to do business in-house since this is a cheaper option.”
Klaus Kühnen of Arithmetica in Vienna points out that changes in the population are now beginning to worry people. “More people then ever are looking for advice for financial security during retirement”. Whilst pension funds themselves are not looking to consultants for advice, many companies are restructuring and seeking help in developing and running pension schemes. Waltraud Viehboeck of Aon Jauch & Hübener agrees and says that this has led to new and more complicated products entering the market. “Comparisons are now much harder to make and the need for consultants is more pressing”.
Growth in the number of new consultants has been small. Bednar points to a greater international presence but feels that the market for both consultants and new pension funds has levelled out, “the market has been stable for the past couple of years, and that includes the number of new funds,” he says.
Viehboeck comments that there is a handful of new companies of two or three employees and a few one-man operations but these have relatively small client bases. Kuhnen also identifies growth in smaller firms, including actuarial bureaus, but believes that the trend is towards an industry where larger companies are becoming dominant. “The market is moving from a large number of small consultants to a small number of large consultants”.
Although there has been little growth in recent times, Roettig believes that the market is now huge and that small to mid-size companies will need a lot of help as regulatory changes mean that Austrian companies will begin to look for external investment and management advice for their pension funds. “There will be a lot to do”. He further states that lawyers and brokers are beginning to infiltrate the consultancy industry, which he considers to be a “funny thing”.
Asset consultation remains unexploited by consultants in Austria, but this is seen by some as an area of potential growth. Bednar believes that this will be the main focus of his work in 2001, as people begin to seek returns from their investments. “Employees have woken up and they are now interested in knowing what has happened to their contributions”. Investments will also become topical as many companies implement defined contribution schemes in place of defined benefit plans. But Viehboeck points to the hindrance that Austrian law has on the asset consultation business. “Investment possibilities are strictly regulated and so most companies continue to do this in-house.”
Consultants in Austria are still mainly used to advise on the administration and bureaucracy which surround pension funds. Advice is also sought on manager selection, where they assist in making clear decisions and recommendations.


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