The market for pension consultants in Finland is not a big one, says Oli Pusa, managing director of Pusa Consulting Oy. In general, Finnish institutions have done the work of consultants themselves, helped by the services of international asset managers. But increasingly, the need for good independent advisers is being recognised.
Where consultancies are used in the pensions industry, Pusa says those firms with international reach tend to get more business than those whose scope is limited to domestic investment. As equities play a more significant role in pensions investment in the country, Finnish funds are finding that the domestic market is simply too limited. But their knowledge of international markets is not sufficient to invest confidently abroad without objective advice.
“Cooperation with foreign consultancies is growing because Finnish pension funds are diversifying their investments abroad,” says Pusa. “Most Finnish funds would have trouble managing this themselves.”
Smaller Finnish consultancies could in theory increase staff diversity to meet these needs. But in practice they are unlikely to recruit internationally, because the domestic market for their services is not big enough to justify the expense such an expansion would require. “There are plenty of others who already have the resources,” says Pusa.
But global expertise is not enough. Any international consultancy hoping for success in the Finnish market would need to have a thorough understanding of the local society and of the mechanics of the domestic pensions system, asset managers say.
International firms operating in Finland would at least have to have Finnish and Swedish-speaking staff to conduct business efficiently and inspire confidence, one asset manager says, but notes that some overseas firms with offices in Finland only speak their own language.
The two main consultancies operating in Finland are Pensionservice and Porasto. These firms provide actuarial services and help set up new pension schemes, but do not offer investment consulting services.
Consultancies tend to be small local firms, and many of them are brokers rather than consultants. Many firms that fulfil the role of a consultant actually lack any independence, because they are affiliated to insurance companies. Pusa Consulting, says Pusa, is usually engaged to work closely with a pension fund, attending meetings of the board, planning investment and -- once up and running -- monitoring the investment performance achieved by the chosen fund managers.
Timo Matikkala, tax partner at KPMG in Finland, agrees that the market in Finland for pensions consultants is neither very well developed nor competitive. The mandatory pensions system is quite regulated and while there are individual pension planning opportunities, these are limited, he says.
Voluntary pension arrangements are very much a tax-driven exercise, he says.
Companies providing pensions for their employees do have an incentive to seek good investment advice, however. They make pension contributions of between 17% and 20% of salary, and if those funds are invested well, the company may be able to reduce that contribution, says Matikkala.
But consultants are not used to advising on pensions across the board. For the most part, the pensions consultancy market in Finland is one that contains very specialised areas of business. For instance, companies with large numbers of expatriates tend to use consultants to help them set up tailored pension arrangements for these employees.

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