ADVISERS
Aon Hewitt’s Lyons also poses the question: where will asset pooling leave consultants? Where there were previously a larger number of relatively time-constrained investment decision-makers there was a bigger role for third-party advice.
But, he adds: “Where you now have a smaller number of much better resourced and informed investors, perhaps the role of consultants will need to adapt too.”
That said, Lyons believes a lot will remain the same as it is only the selecting and monitoring of managers moving from the pension committees to the investment pools and there is a lot of work to get to the end point in that process. In the same way asset managers will take on more niche mandates, so will consultants.
“It is another 18 months for the pools to be established, then the transitioning of the assets could take several years,” he says. “I suspect the pools will be seeking advice in niche areas. You could see where there might be roles for consultants to advise on less liquid, higher risk, more esoteric and perhaps global investment types and less need to advise on more mainstream liquid equity and bond manager decisions.”
Indeed, 18 months feels like a long time but if the current pace of change is anything to go by, that time will soon be upon the industry and there is an awful lot of work still to do before the government’s dream for pooling becomes a fully-fledged and functioning reality.
As Lyons says: “Getting from where they are today with a larger number of managers in use to where they want to be down the line with a smaller number of managers who probably have a larger number of mandates, is no easy task at all.”
