It is also canvassing ways it can work more closely with, or “co-innovate”, with selected clients rather than develop ideas on its own. “We would like to work with a subset of clients and dedicate resources to it.” Frontier also aims to develop research ideas with funds. In a re-structure of the business in June, Trafford-Walker became director of consulting after relinquishing management duties to Damian Moloney, the former long-term CEO of Industry Funds Management, who became the consultant’s first chief executive. It also created an investment committee, led by Trafford-Walker and staffed by senior consultants, to develop ideas and take them to clients more quickly. This month, the committee will hold its first “ideas forum”, in which staff members are encouraged to pitch ideas they believe to have a lot of merit, Moloney says. The committee will select the best and present them to funds. “Clients want to share ideas more often and hear a lot about what we’re doing earlier in the process rather than at the tail-end,” he says. “Ideas diminish in value very rapidly. Clients want to continue to get returns by moving first.” There seems to be a common trait between Cambridge Associates and the university endowment funds it has advised for decades. The “collegial” regard among staff furthers the consultant’s investment thinking, Snyman says. Paul Liu, who relocated from California to join Cambridge’s Sydney office in May, says “the academic aspect” distinguishes the consultant from competitors. Company-wide conference calls, held each month, help relay investment ideas and spur debate.
Approximately 200 consultants, 150 analysts and 210 researchers participate in the hourlong discussions. Staff members are encouraged to research outside their areas of expertise, which helps enrich the intellectual property of the business. They are also rewarded for sharing ideas. People who “keep their cards close to their chests” do not fit in, Snyman says. global vs local Warren Chant knows Australian asset consultants very well. For a decade, his company has been hired by super funds to compare and select investment consultants. It runs about five such tenders each year and assesses most consultants annually. “We know them very well. We research asset consultants in the way they research funds managers,” Chant says. The company scrutinises their ability to monitor and interpret capital markets, craft investment strategies and assess funds managers. Like other researchers, Chant asks for how much longer Australian consultants can compete against their global rivals who have overseas offices and argue they have better access to managers worldwide. “JANA and Frontier will say they have been going overseas to do research for many years,” he says, “and because they have dual roles in consulting and research they can talk about managers they have met and researched.” The investment performance of the domestic consultants’ clients parallels that of funds advised by global consultants, he says. “We say to clients that both models work and that both have shortcomings. But we don’t buy the argument that there is enough proof that international firms are better.” JANA consultants’ dual roles as researchers and advisers is important, Patrick says, because clients put a lot of trust in JANA’s capital markets analysis and assess recommendations based upon this work. “You don’t do research for the sake of research,” he says.
