Despite the small number of consultants in the Norwegian market, the market is beginning to mirror the development of its Swedish neighbours.
While third party advice is used mostly by pension funds on employee benefit issues, risk management and asset allocation are growing areas.
Consequently, Caspar Holter, partner at Oslo-based adviser Pensjons & Finans believes there will shortly be additions to the market. "I think there will be a couple of foreign consultants establishing their business in Norway this year."
For the time being though asset managers still carry out much of the pension fund advisory work on asset allocation. However, Holter says asset liability modelling is surfacing in Norway. "I only know of one client who has actually done this properly, but it is something that the large pensions trusts have heard about and are looking to do, but they haven’t started yet."
Regulatory constraints on investment - an equity investment ceiling of 35% and 20% permitted allocation to foreign shares - continue to hamper full market potential, says Holter.
Nevertheless, he adds: "We should see steady growth in consultancy business in the coming years and I think if we see other consultants coming into the market then they will be part of moving the market forward and creating more need for consultants." Ola P Lyngstad, managing director at Alfred Berg Investment Managers in Oslo says that Norwegian pension funds are currently split between those using asset managers for the whole investment and advisory package and others selecting different fund managers for different functions. However, he is seeing a number of small Norwegian firms trying to become client advisers.
Lyngstad concurs though that the arrival of foreign consultancy firms should shake up the market. "I think they will come into the market quite soon and we are certainly looking forward to the increase in competition levels as a result.
"Investment demand in Norway is all going towards the foreign markets; to European and US equities, and the growth factor in the market is also high," he says.
With GIPS standards also becoming an important factor in Norway, the expanding investment market and the current Norwegian economic boom could mean that the consultancy invasion comes sooner rather than later. Hugh Wheelan