By Sebastian Cheek and Chris Panteli
We asked the industry to rank the UK’s top investment consultants. Here’s what they said…
The UK occupational pensions market is renowned for its reliance on investment consultants for advice on how to invest pension scheme members’ money. Often referred to as ‘gatekeepers’, consultants regulate the flow of assets from asset owner to manager and therefore find themselves in a powerful position that has generally remained unchallenged.
However, the role of investment consultants is increasingly coming under scrutiny. Late last year, the Financial Conduct Authority (FCA) announced it was conducting a review to see whether institutional and retail investors are getting value for money from the asset management industry. As part of this, it is seeking to understand how investment consultants affect competition for institutional assets.
This industry-wide probe is necessary because consultants have expanded their services beyond third-party advice into fiduciary management in all its guises, and rapidly swept up the lion’s share of assets in the space. This migration from traditional consultant to money manager continues to be a source of controversy as investors question – or fail to question – whether a good third-party adviser makes a good money manager (see below for more).
The landscape is shifting, but the pressure is still on for consultants to occupy the traditional advisory role of independent middle men between asset owners and asset managers. Therefore, we decided to rate them based on four areas concerning interaction with asset managers: willingness to take on board new ideas and products; quality of research; relationship management; and innovation and development in defined contribution (DC) pensions. Success in all four areas is essential for the development of the advisory model, from being open and flexible around investment ideas to having a robust and thorough research process, maintaining meaningful relationships, and being on top of the ever- changing DC market. It is our aim that this research gives asset owners an insight into the firms currently excelling in the consulting sphere.
