Sweden: the most buoyant of Nordic markets
Of the four Nordic markets, Sweden is the most willing to employ consultants. According to the latest Greenwich Associates Investment Management report, 53% of institutions employed consultants in some way during 1999. This rose to 58% last year, taking it way above the continental European average of 32%.
Wassum, one of the most significant investment consultants in the market, has split into three – management consulting, headed by managing director of the group Jan Bernhard Waage, a fund rating company and Wassum Investment Consulting, headed by Mats Langensjö, formerly of Mercers.
Langensjö says the focus will change thanks to specific circumstances in both Norway and Sweden. “In Sweden and Norway, for example, we see a lot of pension fund money go through insured schemes and this requires very specific knowledge,” he says. Strategic pensions and investment advice and portfolio monitoring is important to the group’s revenue and, in addition, it is branching out into searches for fund markets and unit-linked companies.
In Sweden there is no real legal requirement to use a third-party consultant and there’s a feeling that there is work to be done in convincing companies to use them. Many local consultants believe they have to sell themselves hard, to demonstrate they are worth their fees. Institutions and asset managers are under no obligation to use consultants meaning the latter have no legal raison d’être, hence the need to show they can, in the phrase, ‘add value’.
Mercers, despite closing its investment consulting business, has beefed up its operation in Stockholm to 40 employees now working largely on the benefit side. With regard to investment consulting the group now operates from London, with two people concentrating on the Nordic region. Ola Larson, head of Mercers in the Nordic region, says it might consider trying to set up a local consultant, but not for a year or so.
Mercers is not alone in that many of the other larger consultants run their operations out of London. This, however, is not stopping them from winning mandates and, when the larger ones come up for grabs, they are often in the running. Many of the municipalities have used them for manager selection and PPM’s default fund the 7th AP used Mercers for manager selection, Watson Wyatt for asset allocation and, in setting up the system, consulted KPMG and Wassum.
Speak to any asset manager in Sweden about consultants and they invariably mention Sverker Lindström, founder and head of Lindström & Partners. He now works on and off our about 25 clients, all large Swedish institutions. He says: “We have about Skr2,000bn (e225bn) under management in Sweden and I think a lot of this money is managed in such a way that the asset managers are selling their products to the institutional clients without putting them in any order ... they are put together on rather an ad hoc basis.”
His company is aiming at putting together coherent packages and, ever keen on his analogies, Lindström compares the Swedish market to motor car construction – “in this market we don’t have the assembly part we just have the spare parts,” and this is where Lindström comes into it, on the strategic side. “We’re trying to put things together to have the portfolio working well, not just the parts working well,” he says, finishing with another analogy for portfolio construction. “It’s like a bouquet of flowers, it more a sense of how you put them together than what kind of flowers you use, that’s the name of the game.”