The market for pensions consultants in the Netherlands is well developed, reflecting the highly evolved system of funded pensions in the country. The consultancy scene is dominated by the big international names such as Watson Wyatt Brans, Towers Perrin and William Mercer Ten Pas. But smaller firms still have a place.
However, you have to have a thorough knowledge of the pensions and investment industry to stand a chance as a small operation, says Lou ten Cate of Investment Management Factory. “All things are possible if you know the market quite well,” he says.
Edwin Schokker, partner at consultancy Watson Wyatt Brans says international practices in the Netherlands have advantages over their more local counterparts. “We talk with and learn from our international colleagues, and we see what’s happening elsewhere – that’s very important,” he says.
“We can work more effectively than a smaller consultancy and we have a larger scope of work,” he says.
Business is growing for consultants, says Schokker, with all major consultancy groups in the Netherlands currently expanding. The larger consultancies report that they are asked to work on a wide range of practice areas, and their expansion is only limited by the problem of hiring appropriate staff.
Buck Heissmann has just 12 staff in the Netherlands, and it too seeks to expand. But finding new consultants to join the team is not easy, particularly as staff who work closely with clients need to be native speakers.
Arthur Huits of Buck Heissmann says much of the consultancy’s work with pension funds is in valuations, with little call for asset liability modelling.
Schokker says Watson Wyatt Brans is called upon not only for investment services, but also legal and actuarial services are in demand. Particularly since the shattering events of September 11 last year, clients have sought advice, with the insurance chamber requiring advice on whether risk control provisions should change.
However, from an investment point of view the changed international environment has not created a new need for advice, says Huits. Pension funds in the Netherlands have been relatively unfazed by world events last autumn, because their investment risks are already seen as adequately controlled by national legislation.
“Pension funds have to look at liabilities in the long-term,” says Huits, “Especially in the Netherlands where we have fairly strict control by the Dutch insurance and pension chamber. So requirements for risk control are already very high.”
Specialisms vary from consultancy to consultancy. For instance, Watson Wyatt Brans has a multinational group that concentrates on the needs of Holland’s vast international corporations, and their many expatriate employees.
But while business may be robust for larger firms, the future for the consultancy industry in the Netherlands as a whole is far from clear. Ten Cate says he does not see the area of pensions consultancy as a growing business in the future. Clients are increasingly seeking general information rather than requiring more substantial services from their advisers.
“My feeling is that in a couple of years, smaller organisations and mid-sized pension funds will join each other and become bigger groups,” he says. These larger entities would be more likely to carry out the jobs in house than engage the services of consultants. Rachel Fixsen
Ten Cate, previously with Wilshire, plans changes to his business to take account of this altering environment. He wants to turn his recently-launched Investment Management Factory group into a ‘superconsultancy’. He hopes the group will help pension funds on both sides of the balance sheet, in terms of asset management and on the benefits consulting side.
“Others are doing the same thing,” he says. “There is more money to be made in asset management than in consultancy.”