Just under half (45.5%) of respondents to this month's Off The Record survey use investment consultancy services on a retainer basis. Some 32% use them on an occasional or project basis, 18% use them in other ways, such as a combination of retainer and project basis, and 4.5% never use them.

Asset allocation was the most common (59%) service for which respondents made use of investment consultants. This was closely followed by equities (54.5%), fixed income (50%), and real estate and ALM (both 45.5%). Others identified by respondents were hedge funds (36.5%), private equity (32%) and derivatives (27.5%).

Just under half of respondents (47.5%) felt that investment consultants were better placed than asset managers to offer asset allocation advice to pension funds. A Dutch fund agreed with this, adding "as long as they are independent and don't [make] a financial profit or gain from their advice".

Some 33.5% felt the opposite, with another Dutch fund commenting: "Increasingly both have conflicts of interest, [but] I think big global investment managers have more global asset allocation expertise." The remaining 19% had mixed views. "I think the combination of input from investment advisers and fund managers provides the necessary information. We would then rely on the investment advisers to help us make a decision," said an Irish fund.

Some 41% of respondents felt that consultants had added value to their fund's investment portfolio. A Dutch fund commented: "[They have] added value as sparring partner to determine our view on asset allocation and as a [place] where we can ask specialised questions." However, 45.5% had mixed views as to whether they had added value. "Consultants are generally not pro-active in offering advice and ideas for investment opportunities," said a UK fund. Just 13.5% did not believe consultants added value.

The majority (43%) described their current investment consultant as being a global firm, while (28.5%) described them as local - an equal percentage to those that considered their investment consultant to be an expert in a specific area. More than 60% of respondents stated that they used more than one consultancy firm.

Some 45% of respondents felt that investment consultants enjoyed too much influence in their country. "They are often members of commissions that set regulations and standards," stated a Swiss fund. However, 55% did not agree with that assertion. "It is the board of trustees that determine the amount of influence investment consultants have. We are comfortable with [it]," said a Dutch fund.

A third of respondents said their investment consultant had, at some point, provided unexpected advice that proved to be useful. A Spanish fund said: "They showed us that we could be [a] candidate to endorse UN PRI, and gave [us the] advice and material support to do so."

More than 70% stated that their investment consultant had never provided them with bad advice. However, a UK fund that had experienced bad advice said that the consultant had a "poor understanding of the product they were recommending, which was arguably not fit for purpose. [They] recommended their own product when they would not have recommended the same offering from a third party."

Some 40% of respondents had identified a conflict of interest with their investment consultants in the past. A Swiss fund stated: "[The] consultant gets paid by investment managers instead of investors, [and] is responsible for conflicting services (selection and supervision)."

Over half (58%) had, at some point, awarded an investment mandate to a manager not on their consultant's approved list. A Spanish fund commented: "Our investment managers have their own approved list [as] our consultants do not cover all the managers in the market." A UK fund added: "[We] disagree with the idea of a ‘buy' list of managers, as it can overlook newer or smaller managers that may have very good offerings."

Respondents made it clear that investment consultants could be more pro-active, and also improve their knowledge of what pension funds require from them. A Dutch fund stated: "[They should] show that they really are independent, and provide different viewpoints. For example, [by offering] three options to choose [from], and a solid answer [as to] why one is really better [than] another."