As managers boost the output of thought leadership, they say they're raiding the turf of investment consultants and expect their own better-funded enterprises will win out.
Through thought leadership, managers are cutting out consultants from their traditional gatekeeping role, replacing three-year performance records and consultant vetting with direct client relationships. Managers say the technique is particularly useful when introducing themselves to new geographic markets or rolling out new strategies in any market.
Also, helping clients think through investment issues steps on toes of consultants, traditionally the trusted advisers on investment issues.
“There's been a significant challenge that's been issued,” especially in the area of target-date funds for defined-contribution plans, said Michael Falk, partner at Focus Consulting Group Inc., Long Grove, Ill.
The rise of manager thought leadership “undoubtedly” will cut into what consultants do “and consultants will respond by boosting their thought leadership as well,” said Benjamin F. Phillips, partner at Casey, Quirk & Associates LLC, Darien, Conn.
But investment consultants don't see it as a threat.
“It's not a direct impact on us,” said Divyesh Hindocha, global director of consulting at Mercer in London. “For many years, managers have been providing high-quality (thought leadership pieces), as have consultants. The difference is that consultants can look across asset classes ... and connect the dots much more easily.”
He added that “it's fair to say we're below managers in the food chain by a margin ... however, we don't have the same agency issues a manager might have.” Also, consultants are “much more patient ... and are happy to have a longer-term payout” on thought leadership.
Competition in thought leadership is a good thing and reflects the new area in money management, where multiasset solutions managers and fiduciary management offerings from consultants vie for the same assets, said Roger Urwin, London-based global head of investment content at Towers Watson & Co.
“It's a dynamic industry: The lines of who does what are relatively fluid,” Mr. Urwin said.
Chetan Ghosh, chief investment officer at the £4.7 billion ($7.5 billion) Centrica Combined Common Investment Fund, which runs the pension assets of Centrica PLC, Windsor, England, said in his experience “the consultants' thought pieces (tend to be) a step behind” those of managers when a pension executive is already talking directly to the managers.
He'd like to see managers “write more about medium-term asset allocation opportunities that are attractive based on the current pricing. Consultants do attempt to do that, but because their background isn't in asset management or economics, it's more of a work in progress than a finished article.”