While global custodians remain the largest vendors of performance measurement services to institutional investors, “advances in technology” mean that investment management consultants are increasingly able to provide the same services to their clients, according to a new report from financial market researcher Finadium.
“To meet client demand, consulting firms either developed performance capabilities internally or sought a performance vendor solution,” wrote co-authors Josh Galper, Finandium’s managing principal, and James McCann, senior consultant, in “The State of Performance Measurement for Institutions and Asset Managers.”
Messrs. Galper and McCann focused on the investment performance capabilities of the 40 largest of the 150-firm universe of U.S. consulting firms because they advise on about $14 trillion or more than 75% of the assets of 8,700 U.S. institutional investors. Their analysis found that 55% of the top 40 consultants use internally developed and maintained performance measurement processes while 45% use services from outside providers.
Based on assets under advisement, InvestorForce is the most popular of performance measurement outsourcers, providing services to five of the 10 largest investment consultants based on assets under advisory, according to the Finadium report.