The rise in investor demand for multiasset-class solutions and outsourced CIOs is contributing to a spike in executives from investment consulting firms joining money managers. Pensions & Investments data show 32 consultants joined money managers in the first three quarters of 2014, nearly twice the number during all of 2013. And already, there are more moves to senior positions like CIO or head of multiasset this year than last.
There's nothing new about money managers recruiting
consultants, but often they are hired to be consultant relations managers or
sales people. Former RVK Inc. senior investment consultant Michael L. Ford
joining Amundi Smith Breeden in September as U.S. head of consultant
relations, for example, is a common move within the industry.
Money management firms haven't been able to keep up with the
demand from clients for multiasset strategies and often don't have that talent
in-house, he said. As a result, many are looking to build their teams from the
outside, and often are turning to consulting firms for that talent.
Evolving needs
Historically, consultants have faced a big challenge when
switching to money management and its radically different working culture.
While consulting firms traditionally have been seen as a more academic,
research-related environment, asset management firms are known for being a more
fast-paced, competitive arena.
However, with a number of investment consultants creating
third-party asset management businesses, this cultural difference is starting
to erode.
There's another reason more consultants are joining money
managers: Asset management firms can offer significantly higher salaries.
Sources qualified, however, that consulting firms offering
OCIO tend to be a little better in offering competitive compensation than ones
that don't, although they're still not as strong as pure asset managers. Although
there's historically been a back and forth in trading talent between money
managers and consulting firms because of the dramatic imbalance in
compensation.
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