Plan sponsors want consultants to play a bigger role in helping wring their targeted investment goals from a stingy market, and they are paying more for the services of those willing to step up to the plate, consulting executives say.
The bleak consensus view of major U.S. financial markets has left sponsors seeking "a far more activist consultant" who will be heavily involved in both decision-making and the implementation of proposals, said Stephen P. Holmes, the president of St. Louis-based consulting firm Summit Strategies Group.
Clients increasingly want their consultants to tell them what to do, rather than just offering options, said Jeffrey Van Orden, managing director of Norwalk, Conn.-based Evaluation Associates LLC.
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That trend, while not entirely new, picked up a lot of momentum in 2004, said Mr. Holmes. Summit, a self-professed activist consultant, has had its best year ever, more than doubling its revenue from new clients from the year before, even though 2003 had itself been a record year for the firm, he said.
And the fees that clients are willing to pay now for those consulting services are 50% or more higher than those Summit charged for comparable business three years ago, Mr. Holmes said. Executives at other consulting firms — including Mercer Investment Consulting Inc., New York; Watson Wyatt Investment Consulting, Chicago; Strategic Investment Solutions Inc., San Francisco; New England Pension Consultants, Cambridge, Mass.; Segal Advisors Inc., New York; and Angeles Investment Advisors LLC, Santa Monica, Calif. — said they have also seen signs that plan sponsors are placing a higher premium on value-added consulting services.