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Consultants look to the future

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  • Consultants look to the future

GLOBAL - Pension fund consultants must achieve a greater understanding of their clients' needs and constraints and should consider more closely what investments will benefit them, according to consultants questioned in an IPE study.

A survey of 15 European consultancy firms has uncovered evidence suggesting consultants believe they need to expand their skillset and clients' financing needs to survive in the future.

Patrick McCoy, head of investment advisory for KPMG, said clients need a consultant with a "wider skill base, who is more commercial and who picks up some of the opportunities in the market."

But to offer better services to their clients, consultants must keep up with new ideas, consider specialising in more areas like pricing methods and look at where investments fit into the wider picture of their clients' objectives, suggested Ken Willis, head of corporate investment consulting for Lane, Clark & Peacock.

"Over the past few years, the increasing use of derivative techniques, eg interest rate and inflation swaps, could have provided significant benefits to clients. However, without the wider context, too often consultants were looking down the telescope the wrong way, encouraging clients to focus on the minutiae and not helping them understand and mitigate the wider risks, " said Willis.

The global market turmoil has also put risk management of assets and libailities at the top of the agenda for consultants, as Dirk Söhnholz, partner of Feri Institutional Advisors, said: "Topics on which clients have focused are risk analysis, portfolio risk management, risk overlay services and diversification issues. Especially for pension consulting, the task at the moment is to integrate already existing topics within an overall risk management system."

Delivering information to clients as quickly and efficiently as possible is likely to be a key focus point for consultants, as they try to satisfy their clients' demands in the volatile marketplace.

Lee Jagger, partner of the pensions practice at KPMG, said: "It's important to be able to take yourself out of pension world and see things from the client's perspective. Actuaries like to have full information and sufficient time to carry out detailed analysis.

"Unfortunately, lots of business decisions are not made this way. For example, if we are working on a deal where there is a pensions element, the client, other advisers and our own colleagues need quick, practical advice because the deal doesn't wait," Jagger continued.

Diversifying assets in relation to the changing markets is also expected to be another focul point in the future.

Andrew Kirton, global head of investment consulting at Mercer, said: "We have grown real estate capabilities, active currency, alpha more generally, infrastructure capabilities. And we have more to do. The emphasis will be more towards the alternatives side, or the alternatives end of the mainstream markets."

If you have any comments you would like to add to this or any other story, contact Poppy Sketchley on + 44 (0)20 7261 4629 or email poppy.sketchley@ipe.com

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