GERMANY – A row is looming in Germany as investment consultants complain that asset managers are trying to break into their market – a charge that managers deny.
Consulting industry sources have asserted that managers are seeking to win over pension fund clients by, for example, offering asset-liability studies at cut-rate prices or even for free.
This is done under the expectation that the pension fund will invest in funds provided by the managers, the sources, who requested anonymity, have told IPE.
They added the strategy was attractive to smaller Versorgungswerke, funds that serve specific professional trades, as it was cheaper than hiring investment consultants.
Names mentioned included Sal. Oppenheim, Metzler and Goldman Sachs. The three, along with other firms, have started offering advice – on areas such as ALM and portfolio construction - in the last few years.
However, all three firms dismissed the talk. They stressed that their pension advice should be seen simply as an added-value product and not a competitive threat to consultants.
“About 80% of the pension fund clients we’ve talked to prefer to go with an independent consultant, so I don’t see how we are a threat,” observed James Dilworth, head of investment management at Goldman Sachs in Frankfurt.
Dilworth also said it was simply not true that Goldman Sachs insisted that clients who are advised on pensions invest in its funds. “There have been cases where we have advised larger pension funds and while it may have been our preference that they invest with us, they ultimately decided not to,” he told IPE.
Private bank Sal. Oppenheim also denied that there was any link between pension advising and investing in its funds. It has not got a pension advice mandate.
A spokesman for Metzler, another private bank, said that it was even possible for it to give independent advice on pensions. He added, however, that none of Metzler's clients so far had opted for this.