The majority (85 per cent) of U.S. institutional asset owners rely on consultants to oversee manager selection, performance monitoring, asset allocation and even outsourced chief investment officer services, according to a new report by Crisil Coalition Greenwich.
The report found the consulting industry has been reshaped following significant consolidation, adoption of the OCIO model, increased ownership from private equity and an integration effect between consultants, wealth management and registered investment advisor firms.
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Asset owners continue to use specialist and boutique consultants for “narrow assignments,” noted the report. However, the top 15 U.S. market consultants are advising on about 90 per cent of U.S. institutional tax-exempt assets.
The report also highlighted that the rise of private markets interest is changing the composition of manager searches and the core consulting functions. It’s also changing what asset owners look for in a consultant, it noted, and pushing these service providers to increase capabilities in private equity, credit, infrastructure and real estate.
“Institutions are relying heavily on their consultants for support and advice not only for help in narrowing down potential managers and awarding mandates, but also for assistance in valuing and monitoring opaque private assets and integrating them into their allocation frameworks,” said Mark Buckley, global co-head of investment management at Crisil, in a statement.
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