As UK pension funds start to embrace specialist investments such as venture capital, consultants say they are seeing an increased demand for their services. And investment advice in general is gaining importance as a service for most UK pensions consultancies.
It was a belief that more and more pension fund trustees are now looking for strategic investment advice which led consulting actuaries Lane Clark & Peacock to strengthen their investment side by recruiting Paul Haines as investment partner from PricewaterhouseCoopers at the end of last year.
"Most consultancies ought to be seeing investment consulting as an integrated part of their overall pensions consultancy capability," says Haines. Even the smaller consultancies in the UK, says Bob Collie, senior consultant at Frank Russell, now do have an investment side.
Because career paths open to investment experts in the UK are so attractive, pension funds find it hard to retain experienced in-house specialists. This too, spells more business for the consultancies. "As the experienced people in the industry have become harder to find, we have had greater penetration," says Anthony Ashton partner at Bacon & Woodrow.
Some services previously offered exclusively by consultants are now being provided by asset managers as an add-on, but consultants say this poses no real threat. Innovation is the nature of consultancy and this will always keep them one step ahead, they say.
"If consultants were just doing the same thing in five years’ time as they are doing now, they would be in trouble," says Collie. "But as a consultant, you need to develop ideas if you’re going to be successful," he adds. Frank Russell says one of its services enjoying increasing demand from clients is multi-manager funds.
Is some cases, the consultants are themselves treading on asset managers’ shoes. But other consultants are sceptical about venturing too far into the investment sales arena. "We’re keen to remain independent – to advise and not to sell products," says Ashton, adding that he believes clients value independent advice highly. Rachel Fixsen