John Lappin reports on the debate

The fact that several smaller firms have been absorbed into larger groups in the past year could lead to questions about their future role and whether the networks developed to give them international reach will prove an adequate protection in a highly competitive market.

The networks themselves are, of course, adamant that not only is there a place for them in Europe's markets but that there are compelling arguments for using them.

In addition, while companies such as William M Mercer, Towers Perrin and - perhaps most dramatically - Aon have expanded rapidly, some of the networks, most notably Euracs, have also grown.

Networks such as Woodrow Milliman, Euracs and the International Benefits Network (IBN) point out that their strength lies in the fact that the individual firms have to stand financially within their own markets.

Danny Wilding, an actuary with Barnett Waddingham in London, a Euracs member firm in the UK, says the network is as strong as ever and with more members than ever before. He stresses that members must be commercially viable participants in their own country", while suggesting that there may be some element of cross subsidy in single member firms. "Some single owner practices are clearly more commercially viable than others locally. As a whole they operate on a commercial basis but not necessarily on an individual basis."

Peter Morgan, an executive director with Woodrow Milliman, based with Bacon & Woodrow in London, strongly defends the network set-up, pointing out that the big accountancy firms are essentially networks with separate operations in different countries. As for actuarial networks he says: "You have very strong indigenous firms that have both local client bases and international client bases: that is a real strength."

He also believes that the independent firms attract some of the best people in the industry. "These consultants are entrepreneurial because they own their firms. The structure appeals to leading professionals more than some of the more hierarchical structures you see in other groups and helps recruitment, retention and motivation."

The major thrust of the larger groups' criticism of smaller firms, albeit one refuted by them, is that they cannot provide consistency of advice globally. They also suggest that that the needs of multinationals are increasingly best served by a single firm which can operate a global strategy to match that of the multi-national itself.

Russell Smith, marketing manager at Watson Wyatt in Reigate, says: "If you have control over the end product then it has got to be of benefit to clients. Companies themselves have national global policies for the way they deal with clients, so they should expect the same from their consultancy."

Nigel Bateman, head of Towers Perrin's international benefits group in London, surveying the needs of multinationals, largely agrees with this assessment. However he thinks that American companies are becoming slightly less centralised while European multi-nationals are becoming more so.

He also argues that, on grounds of cost and time, a single partnership network is better. "If it is cheaper in terms of the transactional work, it leaves more time to concentrate on the strategic decisions," he says.

His final point is that local firms in a network will prioritise the needs of their own firm; international members of single firms, however, "all pull in the same direction".

However the networks argue that in terms of quality they can monitor quality just as easily as a single owner company.

Morgan argues that networks, through stringent membership requirements and ongoing reviews of quality procedures, can offer the same level of service to multinationals as single owner firms.

Dieter Kleylein of Bureau Kleylein in Frankfurt, whose practice is part of the Asinta network, suggests that it may actually be the more sophisticated companies who use different actuaries in different countries as they see the value in using the best people.

Melvin Nightingale, a consultant with Callund Consulting in Maidenhead, which is part of what he describes as a looser network, IBN, takes this point further: "The problem with a single owner network is that you have no control over the advice that you get at the other end. You have to take the local man no matter how good he is, whereas this is not the case with our more informal arrangement.""