If you can't beat 'em, join 'em.
That's the view of multiasset money managers and investment consultants that are learning to work more collaboratively instead of in competition with each other.
"As asset managers develop greater capabilities around strategic and tactical allocation, liability hedging, tax and derivative overlay, consultants and asset managers are partnering more together today on solving a client's investment objectives," said Margo Cook, president, Nuveen Advisory Services, Chicago, which manages $50 billion in multiasset strategies. "While many asset manager and consultant relationships are still run in a traditional sense, this shift toward partnership is becoming more common, especially for large asset managers that can bring multiple capabilities to the table."
Jeb Doggett, managing director at Casey Quirk, a practice of Deloitte Consulting LLP, Darien, Conn., agreed. "As the market has evolved, managers have adopted a more consultative approach to marketing with plans, and multiasset has driven that change to meet the challenges of plans and bring the resources of the total firm to that relationship," said Mr. Doggett. "But plan sponsors don't have room for a consultative relationship with every manager. I think consultants still are very important advisers to institutional clients. There's an evolution going on."
The evolution, which has been gaining speed as the use of strategic partnerships has grown over the years, is in how consultants and managers interact. While the traditional model — in which consultants assess and recommend money managers to their asset owner clients on specific asset classes — remains, consultants and managers have learned to expand their relationship because of asset owners' demands for broader multiasset strategies. (Institutional assets under management tracked in eVestment LLC's global balanced/tactical asset allocation universe hit $813 billion as of Dec. 31, a 20% increase from two years earlier.)
Those strategies that require managers to consult with end clients on their overall asset allocation could be viewed as treading on consultants' turf — particularly those that offer outsourced chief investment officer services, where consultants compete directly with managers for asset owner business. But sources said both managers and consultants have adjusted their relationships with each other.
"There is more collaboration," said Mark Brubaker, managing director and head of OCIO solutions at Wilshire Consulting, Pittsburgh. "There are cases when we're competing head-to-head with these managers, that's one end of the spectrum. The other end is we're recommending them as money managers for our clients, and there's a whole lot of gray area in between. The fact that we do have these relationships (with other managers) shows we've been managing these aspects pretty well."