So specialist advisory firms in private markets and hedge funds have been acquired, while large teams for specialist investment operations and custody advice and ESG advice have expanded internally.
Such reinvention is seeing consultants solely hired for niche strategy roles, a trend favoured by some large investors who want the best consultant for each asset class, where possible.
One of the best case studies of an investment consultant reinventing itself is Frontier Advisers, a firm which is co-owned, by a group of the large industry superannuation funds. In the UK, Frontier is best known for its partnership with LCP to share fund manager research, a partnership that includes Segal Rogers Casey in the USA.
Damian Moloney, chief executive of Frontier Advisers, sees the days of giving the same advice to different clients as over and customised advice as the future. For larger clients this means more work is likely to be labelled ‘research’ than ‘advice’.
“Each contract we sign is different to the last and each one is different between clients,” he says.
It is telling of this high maintenance approach (and quite often a higher fee approach) that as part of the firm’s recruitment plans it will soon have three staff for every one client (60 staff and 20 clients).
“That does constrain how many clients you can work for,” says Moloney. “So we are careful how we expand our client base.”
To make its model more efficient, Frontier Advisers is increasingly offering data services such as manager research and scenario analysis online; so frequently clients do not need to speak to consultants.
All this reinvention is giving Moloney hope. He says of funds such as UniSuper and NZ Super: “They will want specialist expertise in some areas and you have to make sure you are the brand they come to. Eventually they will want to come back, even if it is to supplement their own data.”
SELECTIVE MARKET
Funds are not getting it all their own way in Australia. Russell Mason, head of superannuation at Deloitte, who organises investment consultant tenders, reports that for the last three tenders he has run, at least one of the big four consultants (Mercer, Willis Towers Watson, Frontier and Jana) has chosen not to compete. This is significant as there are only around 70 superannuation funds of scale in Australia.
