GERMANY - Watson Wyatt's investment consulting arm in Frankfurt says it has advised institutional clients on €1.3bn worth of allocations to asset managers since opening its doors about a year ago.
"We definitely have made an impact on the institutional market since launching. It's an ambitious goal, but we aim to rise the manager selection volume to €3bn by June of 2007," senior consultant Jürgen Heiny told IPE at Watson Wyatt's Frankfurt office today.
His colleague Zeljko Tipuric said around 70% of the volume came from German pensions funds.
"We permit institutional clients to ‘cherry pick', meaning that they can choose what one-time services they want, though three-quarters of our current clients are using us on a retained basis," he added.
Cherry picking is common practice among German institutional investors. This is partly because consultants do not dominate the institutional market and partly because of an ingrained "do-it yourself" approach to investing among German institutions.
Tipuric also noted that while investment consulting was a growth market in Germany, the fact was that of all the institutional money allocated to asset managers, very little was done with the help of consultants.
"I know there are figures out there suggesting that consultants allocate up to two-thirds of institutional money, but this only applies to money from foundations, pension funds and ecumenical organisations," he said.
"If you include German banks and insurers, which have in-house asset allocation competence, then I'd say consultants are under 10% of the total market".
But not all German consultants offer cherry picking. One that insists on full-service consulting and that on a retained basis is RMC. Based in Cologne, RMC specialises in smaller pension funds and ecumenical organisations.
FERI, the German consultant that claims to be the market leader, also says that of the asset manager allocations it advises on, three-quarters come from pension funds.
Tipuric also said that like FERI and foreign consultants like Mercer, Watson Wyatt offered the complete range of services, including asset-liability studies, advice on strategic asset allocation and asset manager searches.