As a result of the internationalisation of portfolios following the introduction of the euro, pension funds in the Netherlands seem to be more keen on the use of consultants, but they approach it is different depending on their size.
Medium and small-sized pension funds are using consultants more than they did in the past, although the Dutch market still continues to be a difficult one with much of the work done internally.
"The most striking thing that is happening, is that whereas before you saw that the smaller pension plans mimicing the behaviour of the big ones, now you see that the services that they use are different in scale but also different in content," says Erik van Dijk, CEO at Palladyne Asset Management in Amsterdam.
"The top of the market is using consultants for services like international equities and other kind of products, while the small funds are more interested in what you could call one-stop shop solutions," says van Dijk. What this second layer clients are looking for is someone able to help them out with everything from putting down a good strategy to actuarial work and manager selection.
Amsterdam-based Investment Management Factory (IMF) was created in order to satisfy this demand and offer a wide range of products from investment consulting to a whole DB or DC plan. "The use of consultants also depend on the fund managers," says Lou ten Cate, IMF’s managing director. "Some of them are very interested in the strategic field and others are more focused on project work."
"Medium and smaller funds are using consultants more," ten Cate says. "But for the big funds it’s just a question if they want to use them or not because they have their own staff on board."
Van Dijk comments: "Local players like ten Cate are focused on the second layer market. In this sense their role is growing but they will loose ground in the first layer of the market." Within this first layer, there are two trends happening: "First of all you have those pension plans that have decided to do much more internally than before, and those who are going externally which will become mainstream users of consultants," he says. These big funds going more external are already looking at the big international consultancy firms, as products get more complex and international.
"In general, I would say that there is a steady but modest increase in the use of consultants, says Dan Allen, vice president and principal at international consultants Wilshire Associates. "Products like manager selection, asset liability and asset allocation, and advised on the fixed income side is what our clients are looking for."
Frans Ballendux, director at William Mercer Investment Consulting in the Netherlands, says: "In this country, we’ve seen quite a long wave of increasing focus on asset liability work supporting the investment decision-making process.
He adds: "As clients become more globalised they tend to appreciate the fact that international organisations in consulting have a global expertise which can bring the international investment scene more directly to them." Paula Garrido