Globalization has dominated money management for the past few years. Now, consultants to money managers are going global as well.
Nowhere is that more evident than in New York-based William M. Mercer Cos. LLC's recent purchase of Louisville, Ky.-based Eager & Associates.
The acquisition is resulting in the merger of the existing nine-person London-based Mercer Advisory Services, with 29 staffers at Eager's shop. The U.S. business will operate as Eager Manager Advisory Services in North America. Elsewhere, the Mercer name will prevail.
Julia Hobart, head of Mercer's London-based group, oversees the combined operation. Although currently on maternity leave, she is in daily contact with her colleagues.
The two firms are largely complementary. The 21/2-year-old London-based operation has worked for 60 clients around the world but has lacked a base in the United States, where many money managers are based.
"The U.S. market provides a model for the rest of the world," noted Simon Hill, a European partner in Mercer and a senior consultant in the London practice. Plus, there is a greater variety of managers in the United States than elsewhere, he noted.
The deal enables Eager & Associates to service their U.S.-based clients on a global scale. David L. Eager, founder and managing director, said the firm has increasingly received requests for help in pursuing overseas markets from its U.S. clients, but the firm lacked the capability. "Going forward, it was going to be necessary for us to service our clients" to have a global research function, he said. Even smaller managers are requesting information on a global basis, he added.
What's more, the two firms come at the business from different directions. While the Mercer unit started as a consulting arm, the Eager group initially developed databases and studies, and later expanded into more traditional management consulting.
Now, Eager conducts benchmarking studies measuring industry profitability, marketing and sales functions, fees and other issues. The firm also provides a client satisfaction service. Both services will be launched in the United Kingdom next year, and then perhaps in continental Europe and Asia, Mr. Eager said.
In addition, the unit plans to leverage other Mercer resources -- particularly the firm's expertise on retirement benefits and compensation issues.
For Mr. Eager, who is being named a member of Mercer's worldwide partners group, the deal means he has come full circle. He founded the firm bearing his name in 1984 after leaving as head of the investment consulting practice at what was then William M. Mercer-Meidinger Inc.
To avoid potential conflicts of interest, Mercer Manager Advisory officials insist they maintain high walls that strictly separate the firm's investment consulting practice. In fact, the other side doesn't even know who the management consulting clients are.
"At Mercer, we are extremely careful to bend over backwards" to keep the two separate, said Denis Bastin, a European partner and senior consultant. "We never talk about competitor information" with Mercer investment consulting colleagues.
Mercer Manager Advisory consultants believe they have an advantage over traditional management consultants because they know and understand the investment management business.
Traditional consultants generally have financial services groups, but rarely are focussed on investment management. In fact, some big financial services companies turn to Mercer after a traditional management consultant has done his job, Mr. Bastin said.
Mercer's U.K.-based team has extensive experience working with money managers. Mr. Bastin, for example, set up Credit Lyonnais International Asset Management North America Inc., New York; and before that held senior positions with Banque Paribas in both Paris and New York. Mr. Hill previously was director of marketing strategy at NatWest Investment Management, London.
Eager officials tend to have greater experience in the consulting world, although some of its principals have worked in money management.