The power of the investment consultant is on the wane in Australia and New Zealand. While such firms are busy, they work increasingly in niche areas, acting more as appendages of the investment teams of large superannuation funds, rather than as a voice of authority. David Rowley reports.
“We do not have an asset consultant on retainer but, from time to time, we may seek advice. Whoever they are, [a consultant] needs to be complementary to what the funds do themselves and do something that we cannot do.”
Kevin O’Sullivan, UniSuper
Two of the biggest superannuation funds in Australia and New Zealand ended their use of investment consultants over the past five years.
The Australian university sector fund UniSuper and the national monolith NZ Super Fund based in Auckland, have recruited enough high calibre investment staff in hands-on roles to make all asset allocation decisions and monitor all external managers.
NZ Super stopped using investment consultants in 2013 after it built up expertise in-house around asset allocation and tactical overlays as a response to the global financial crisis.
David Iverson, acting chief investment officer at NZ Super, says: “We felt that the lack of an internal treasury team with wider in-house capability held back our initial response to the crisis. There was also a desire to have more control over the risks our capital is exposed to.”
The fund works closely with a diminishing number of fund managers with which it negotiates flexible mandates. Internal staff at NZ Super can dial these mandates up or down according to their risk appetite. In such relationships, the internal staff have much better oversight than any external consultant.
