Investment consultants are focusing on the lasting impacts that macroeconomic trends — the growing wealth gap, longer life expectancy and political uncertainty in an unprecedented bull market — will have on institutional investors and the asset management industry at large.
Stephen Cummings, Chicago-based CEO of Aon Hewitt Investment Consulting Inc. and global investment officer, head of North America investments at parent Aon PLC, said his top concern is the stock market approaching an 11-year bull run.
"Everyone is holding their breath wondering how much longer will this bull market run," Mr. Cummings said. "To be in the longest sustained bull market that we've ever known, while also being in an unsettled political environment — it's just an interesting juxtaposition."
Adding to that are concerns about global wealth inequality and the fact that governments and employers need to grapple with the possibility of many people outliving their wealth. Additionally, a "sandwich generation," which often refers to those simultaneously caring for elderly parents and their children, is emerging, Mr. Cummings added.
"Inequity and longevity will have big implications on how we think about investing," he said.
As of mid-2019, the bottom 50% of wealth holders collectively owned less than 1% of total global wealth, while the top 1% owned 45% of global wealth, an October report from Credit Suisse found.
"These are global macro trends that I believe investors ignore at their own peril," Mr. Cummings said.
As consultants serve in the capacity of advisers — and increasingly as discretionary managers under the growing outsourced CIO trend — these are "big-picture trends" firms should be looking at, he said.
Data from Pensions & Investments show that worldwide institutional investors are increasingly turning to consultants for both advisory and OCIO services.
For the year ended June 30, institutional assets under advisement grew 9.2% to $41.4 trillion, P&I's annual survey of investment consultants found. During the same period, U.S. institutional tax-exempt AUA also grew 9.2% to $22.67 trillion.