By Alex McCallum - Reactions Magazine, March 2016
"It’s no secret that investment consultants have established an important presence in the field of insurance asset management, driven by the after-effects of the financial crisis and the extra pressure put on insurance companies to keep a closer eye on their investment portfolios."
An Independent Voice
Consultants haven’t been shy about differentiating themselves from managers. Here, for example, is Alton Cogert, president and CEO of Strategic Asset Alliance: “Investment consultants add something that pensions and endowments have known is very important for some time: An independent voice different from those ideas and opinions promulgated by investment managers or others attempting to sell their ‘side of the story.’ Couple this with broad experience in approaching current problems and issues faced by a variety of insurers, and the result is perspective that can be unmatched.”
Higher Risk, Lower Return
The ability of consultants to set themselves apart is hard to disguise. Insurers’ consultant-advised assets are already substantial, certainly in the US and Canada, which accounts for $300bn of the $500bn total in the Holmes Compendium. This converts to 26% of new investment mandates placed through consultants from 2008 to mid-2015. In the UK and Europe it is 13%; for the offshore hubs and Asia-Pacific, 10% or less.
The financial crisis certainly helped to expose the need for all insurers to consider consultants alongside managers as external contributors for keeping their investments in good shape.
The bottom line, it seems, is that the competitive spirit is alive and well in the world of insurance asset management, which ought to be to the benefit of the insurance industry.
“It just takes an experienced perspective and good, independent advice, coupled with common sense that isn’t always so common,” Cogert summarizes.
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