Nicole Connolly, for example, was hired form Telstra Super to advise on alternative strategies, and Raewyn Williams was hired from Queensland Investment Corporation to concentrate on after-tax investing. These are all people who, in their previous jobs as investors, have “touched the money” and provide specialist advice, says Greg Liddell, director of consulting. These specialist services can be used by funds of all sizes but are suited to larger investors. There are not many of these big, $20 billion-plus, investors. This spurs Warren Chant, director of superannuation research and ratings business Chant West, to say the growth of investment teams within superannuation funds is over-hyped. “Not many funds have strong internal resources,” he says. “You could name them on one hand easily.” But they indicate a future that consultants are preparing for. In 2009, Mercer Investment Consulting restructured its global business to adapt to investors seeking expertise beyond that provided by generalists. It created research teams, or ‘boutiques’, that focus on different aspects of investing, such as dynamic asset allocation, alternatives or sustainability risks.
Graeme Mather, head of the business in Australia and New Zealand, which has $152 billion in funds under advice and management, says Mercer is prepared to garner clients who seek specialist input. “The role of the generalist consultant is gone,” Mather says. “The relationship manager is like a conductor. They can play a few instruments but is not an expert with all of them.” JANA Investment Advisers, whose funds under management and advice total more than $167 million, engages most types of institutional investor in Australia and New Zealand. Its clients include smaller institutional investors, charities and large superannuation funds. Ian Patrick, CEO of JANA, says “the nature of client relationships is more diverse than ever”. The days of smaller superannuation funds overseen by trustee boards or investment committees that meet quarterly are over, he says. “They are fewer in number than even five years ago.”
It is more common for clients to call upon research specialists within JANA for insights on specific aspects of investment. “But this doesn’t detract from the fact that, in my view, the primary relationship person with each client has a very weighty responsibility to address the significant issues and provide leadership for specialists,” Patrick says. “You can’t allocate tasks and assume they come together in a seamless fashion for the client. You still need that central relationship person to synthesise all of those views.” This illustrates how the “mechanisms” of asset consulting are changing as large funds hire investment staff. The aim of the business – to help clients meet their investment objectives – will always remain. But consultants will adapt to how funds do business. “Do I know what form this will take? No,” Patrick says. Throughout its 40-year history, Cambridge Associates, a USheadquartered investment consultant, has kept the endowment funds of Yale, Harvard, Princeton and Stanford universities, which are some of the world’s most successful institutional investors, as clients. “They are very different now compared to what they were,” says Eugene Snyman, managing director of the consultant’s Australian office.
