Institutional asset owners must use great care and due diligence when it comes to more than just investments. That same duty of care extends to navigating the increasingly complex world of investment consultants.
It is important to vet well, and thoroughly, those companies hired to help select investment managers.
As the landscape of companies offering consulting services for traditional investments as well as alternatives gets more complex, buyers need to make sure they understand the potential for conflicts and prepare themselves and their teams with training and education.
Such conflicts come in myriad forms, as consolidation grows and fee pressures increase. As fiduciaries, asset owners need to ensure that the advice they are paying for and receiving from their consultants is putting investors' needs first.
Keith Ambachtsheer, in an article in the Nov. 30 issue of Pensions & Investments, said there continues to be "asymmetric information between buyers and sellers of investment consulting services, with the sellers knowing more about what they are selling than the buyers know what they are buying."