The rise in investor demand for multiasset-class solutions and outsourced CIOs is contributing to a spike in executives from investment consulting firms joining money managers.
Among the moves: Erik Knutzen, NEPC Inc.'s former chief investment officer, joined Neuberger Berman Group LLC in May, and Wilshire Associates Inc.'s senior consultant Michael Schlachter went to Prudential Investment Management in July. These and other personnel changes are the result of more money managers turning to senior consultants to oversee new divisions created to meet institutional demand.
“Senior-level people leaving consulting firms to run a business at a money manager is a new thing we're seeing,” said Keith S. Macomber, a partner and member of the financial services practice of executive recruiter CTPartners LLC, New York. “It's because of this new drive for OCIO and multiasset-class platforms.”
Pensions & Investments data show 32 consultants joined money managers in the first three quarters of 2014, nearly twice the number during all of 2013. And already, there are more moves to senior positions like CIO or head of multiasset this year than last.
In addition to Messrs. Knutzen and Schlachter, other recent examples include Kelly Cliff, formerly CIO of public markets at Callan Associates Inc., joining Victory Capital Management as president of investment franchises in September; and John W. Geissinger, formerly a partner at Hewitt EnnisKnupp, joining Christian Brothers Investment Services Inc. as CIO in April.
There's nothing new about money managers recruiting consultants, but often they are hired to be consultant relations managers or sales people. Former RVK Inc. senior investment consultant Michael L. Ford joining Amundi Smith Breeden in September as U.S. head of consultant relations, for example, is a common move within the industry.
“You've always had people move from consulting shops to investment management firms,” said Yariv Itah, a managing partner at money manager consulting firm Casey, Quirk & Associates LLC, Darien, Conn. “But there are new elements.”
One is “the growing demand for asset allocation products,” Mr. Itah said.
Money management firms haven't been able to keep up with the demand from clients for multiasset strategies and often don't have that talent in-house, he said. As a result, many are looking to build their teams from the outside, and often are turning to consulting firms for that talent.
“When you're growing a (multiasset class) team, where do you find the talent? You either look to a competitor, a plan sponsor, or go to a consultant,” explained Marylin L. Prince, a founding partner of executive recruiter Prince Houston Group, New York. “Our clients are looking for people who have been involved in asset allocation decisions, who have experience across a broad spectrum of investment options.”