OUR VIEW
The fact Mercer came out on top of our study for the third time, having previously topped the 2011 and 2014 surveys, highlights the company’s consistency across the board.
One might expect a firm which operates in 40 countries and with more than 20,000 employees to have high standards and a strong reach, but it still needs to back this up across its due diligence, flexibility and research in order to stand out in a highly-competitive industry. Similarly, the same could be argued for Willis Towers Watson, another global player with some 14,000 employees.
Size is no guarantee of success however, as illustrated by Redington, which has a headcount of around 80. The firm ranked third overall, up from seventh in the previous survey. By contrast, Aon Hewitt, which has some 20,000 clients and 30,000 global employees, came 17th overall compared with sixth in 2014, let down by poor performance in the ‘willingness to take on board ideas or products’ and ‘quality of research’ categories.
Elsewhere, it was worth noting Cambridge Associates climbed to fifth overall this year after coming 12th in 2014, bolstered by a trio of solid fifth places in ‘willingness to take on board ideas or products’, ‘quality of research’, and ‘relationship management’.
It was also interesting to see different consultants appear higher up the ranking for the DC category. Mercer and Willis Towers Watson occupied the top two respectively, but Hymans Robertson came in third, Aon Hewitt pulled off its best ranking across all categories by coming fourth while LCP and Barnett Waddingham charted fifth and sixth respectively.
Russell Investments, EY, Cardano and bfinance jointly occupied the bottom position, but, as mentioned previously, this is because these firms do not operate in the DC market.
Conducting any survey usually throws up controversy and portfolio institutional is aware asking asset managers to rate consultants on a scale of one to four based on certain criteria is no exception and can never provide a full picture.
We decided to target the asset management community as we believed it was best-placed to give an overall assessment of the industry given its firsthand experience of working with different consultants. Ideally, we would have spoken to every trustee in the UK to gauge the end-user or client experience (which, in truth, is likely to be more valuable to consultants than the asset managers’ opinion), but most pension schemes only use one investment adviser and do so for long periods at a time, so this would not have given us the same breadth of opinion.
We also concede that the survey does not touch on certain nuances, for example situations where an asset manager’s fund or products are not ‘buy-rated’ by a certain consultant. In such cases, would that manager be inclined to rate that consultant highly? Probably not. Similarly, a consultant’s ‘slow’ pace when rating funds might be seen as a negative by one asset manager, when in reality it might mean a consultant’s research process is more in-depth and considered – it is all subjective.
