With the financial crisis unfolding further in recent weeks and stock markets continuing fall, some established asset management houses have been forced to concede defeat and parent companies have been eaten up by bigger, stronger or faster rivals.

The starkest development was seen at Fortis. The Belgo-Dutch bancassurance group was still a hunter around this time last year, but became the hunted in a matter of weeks. The global financial meltdown left the group unable to raise enough money to finance its share of the purchase of the ABN Amro banking group, and eventually saw it dismantled, nationalised, and partly sold on to French bank BNP Paribas.

When BNP Paribas announced in October that it had bought Fortis from the Belgian government, having earlier eyed Fortis but been unable to reach any agreement, it suggested the acquisition of Fortis' investments business would be a "quantum leap" for its asset management, since Fortis' €209bn in assets under management (AUM) would drive BNP Paribas' AUM up to €550bn, making it the fifth-largest asset manager in Europe.

But other deals have also surfaced amid the turmoil, pushing previously unlikely synergies. The precarious banking situation may see a merger between Insight Investment and Scottish Widows Investment Partnership (SWIP) into a £200bn (€250bn) asset management house, as Halifax Bank of Scotland (HBOS) entered into a shotgun marriage with rival bank Lloyds TSB. Perhaps one more likely outcome will be the sale of one of the entities.

Such mergers, whether they have been forced by the market or not, should make financial institutions more efficient thanks to economies of scale, despite the anxiety theycause.

John Feeley, former head of retirement solutions at Mercer Ireland and now partner at new consultancy Attain, said there are benefits to be had. "There is certainly room for coming together, and that will drive efficiency and lower fees."

Philip Neyt, chairman of the Belgian Association of Pension Funds (BVPI), also thinks bigger is better: "Fortis Investments always wanted to be a global player, but it was far too small to justify global investment centres worldwide."

Neyt, formerly head of the Belgacom Pension Fund, is convinced asset managers should either be niche players such as boutiques, who can stay small in certain markets, or have the scale to be a global player.

Maarten Thomassen of Hewitt in the Netherlands, believes one of the side effects is there could be negative developments in relation to counterparty arrangements.

"Many pension funds in the Netherlands have derivatives contracts, such as swaps. The number of counterparties will decrease, which is an unwelcome development from the competition perspective," suggests Thomassen.

There are also other warnings for pension funds, according to Neyt.

Firstly, it is vital the right synergies are created within the company, where the newly-combined entities are required to work together as one platform. If two incompatible cultures are combined, pension funds should question whether their assets will continue to be managed in the manner and under a philosophy they are content with.

"I saw this with the relatively small Gartmore, which was bought at the time by the large group National Westminster. All useful know-how was gone after the merger," explains Neyt, who thinks the merger of "unsuited" entities causes a brain drain and a loss of originality in strategy.

Secondly, pension funds should be wondering: "How are the assets going to be managed during the integration, between the announcement of the merger and the realisation of the merger?" suggests Neyt.

He suggests pension funds need to evaluate how quickly such synergies are created, and how quickly the new asset management business is being integrated, as there could be lesser focus on the management of assets, presenting a possible risk for pension funds.

Perhaps the bigger issue to watch out for is what happens to fund managers after the merger, to key personnel in portfolio construction and risk management, as well as to back office integration and reporting.

"There is a certain correlation between the departure of fund managers and the results of the overall asset manager, which pension funds should heed," claims Neyt.