UK – The investment consultants’ trade association has rejected Paul Myners’ attack on the industry’s “short-termist regime”.

The Society of Pension Consultants said the focus on the short term was not of their doing, pointing to an environment created by the Minimum Funding Requirement and the FRS17 accounting standard.

Myners wrote in a newspaper article that: “The consultants’ emphasis on the short term is a problem – and one not simply affecting a proper assessment of their competence.”

He added: “Many fund managers appear to have concluded that under the short-termist regime promoted by consultants, there was no case for seeking to achieve superior returns by taking a markedly contrarian investment stance.”

The trade body’s public relations head Roger Mattingly said: “There’s no doubt that the MFR and accounting standards have led to a greater analysis of the short term.” He said the current environment doesn’t encourage radical decision-making by trustees.

Myners said the situation has led managers to develop a “herd mentality”. He wrote in the Financial Times that “there are few who doubt the extraordinary power of the consultants”.

“It is a fact that being in or out of favour with the consultant is the key to success or failure in winning mandates from pension funds.”

Myners, the author of a government-backed report on institutional investment, also said that the switch to specialist mandates that was sparked by consultants has meant that asset allocation has been overlooked, with “dire consequences”.

Mattingly rejected this. He said pension funds would have lost more under the balanced mandate system during the market downturn because equity exposure had fallen with specialist mandates.

Myners also said the evidence of consultants’ success in selecting fund managers was “not clear”. “Insofar as there is any proof of skill, the incremental return tends to be modest,” he says.

Mattingly, who is a director of HSBC Actuaries and Consultants Ltd., said that consultants choose managers in good faith. “It’s like saying fund managers should never pick bad stocks.”

Myners’ comments should add spice to a forthcoming conference organised by AIMSE International. The “Consulting the Consultants” event takes place in London on September 24.