NEW YORK — Roughly 80% of plan sponsors are reporting that fees paid to investment consultants are low, according to a recent survey on the consulting industry.
The survey, by the Investment Management Institute, New York, and its online subsidiary, Electronic Consultants Website Services, found that plan sponsors believe consulting fees have been chronically low for several years; as sponsors seek more research and guidance in areas like alternative investments and governance, consultants deserve greater compensation for their expertise.
"Consulting firms have a tremendous opportunity right now to provide their clients with additional educational and informational services," said Robert Bailey, managing director of ECW. "What we are seeing is that consulting firms don't need to change their investment strategies; they need to review their ‘MO' and how they approach the entire relationship with their clients."
The bad news for a number of investment consulting firms is that the Securities and Exchange Commission's pay-to-play probe is still a lingering question mark. Despite the investigations, plan sponsors believe investment consulting firms aren't charging enough for their services — with most plan sponsors saying they are willing to cut their consultants larger checks.