GERMANY - Claiming inadequate transparency among investment consultants, German fund industry association BVI has prepared a questionnaire seeking detailed information about their business, IPE has learned.
"One motivation for the action was that BVI members said to themselves: ‘We have to undress before the consultants in order to win a mandate. It's only fair that the consultants do the same for us'," said one asset manager familiar with the BVI's action.
The existence of the questionnaire was confirmed by Rudolf Siebel, a BVI managing director. According to him, an initial version was conceived of by a BVI committee made up of institutional asset managers.
In it, 16 consultants were asked to provide details about their business model, pricing and rank in the institutional market, including mandates and total number of assets they advise on.
But Siebel said that due to opposition among consultants to the original questionnaire, the BVI and the consultants were currently agreeing a second version. "In the revised version we hope to gain as much information as we can. We estimate that the vast majority of consultants will provide more information than we can obtain by, for example, visiting their websites," he told IPE.
In Germany, between a quarter and a third of mandates from institutional investors are awarded via consultants. Considering their standing in the market, asset managers seek to meet their demands for information, with performance, track record and investment process as a few minor examples.
Major investment consultants in Germany include FERI, Alpha Portfolio Advisors, RMC and Mercer. International houses like Watson Wyatt and Rauser Towers Perrin as well as Faros, a consultant formed by ex-FERI advisers, are also steadily gaining market share.
But investment consultants queried by IPE said they were not keen on the questionnaire. Alpha Portfolio Advisors even said it would not bother filling it out. "We don't really see the point of this, as we are already as transparent as we need to be. We also cannot take valuable time away from our clients," said Christian Schlenger, one of Alpha's managing partners.
Faros said it would return the questionnaire, but only answer "a very small percentage of the questions".
"We also feel that we are transparent, and we can't afford to be giving out proprietary information," the Frankfurt-based consultant said. Meanwhile, FERI said it would only fill out BVI's revised questionnaire.
Observed a well-placed expert on the German institutional market: "It is curious that the BVI is sending this out when for the past three years, a great deal has been written in the press about German investment consultants, including the things the association wants to know".
According to the expert, the real problem for asset managers lies less with inadequate transparency and more with the different information requirements from consultants that they have to meet.
"The BVI would be well advised to focus instead on getting consultants to adopt unified minimum requirements for information from asset managers," the expert added.