(September 18, 2013) — More senior level investment consultants in the UK are joining asset managers than ever before, with Legal & General Investment Management (LGIM) the top destination for new jobs.
aiCIO analysis of new starters at asset management firms and leavers from investment consultancies—which looked at more than 160 job changes—found 67 high-ranking consultants have left their jobs for ones in asset management since 2010.
This figure is higher than the number of senior consultants who left their jobs for ones in other consultancies, insurers, or other areas of financial services, which totalled 59 for the same period.
LGIM was the destination for 20.7% of the consultant leavers, placing it comfortably at the top of the asset manager table. Schroders picked up a little more than 10% of consultant leavers, with UBS picking up another 8.6%.
The top poaching ground appears to be Towers Watson, with 27% of consultants who moved into asset manager roles coming from that firm. Mercer was close behind with 17% of the moves originating from it, and Aon Hewitt ranked third with 9% of leavers.
The trend has been growing since before the onset of the financial crisis, but has heightened in recent years, according to headhunters.
“The reason for asset managers hiring consultants is down to the way the market is re-shaping,” said Paul Battye, chief executive of Moorlands Human Capital.
“The consultants are the guardians of pension funds and have traditionally gone to them with investment ideas and then helped them pick the best managers. Given the consulting firms are now trying to build their own asset management businesses, it leaves the traditional asset managers needing to go direct to market as well as maintaining consultant relations.”
TC Jefferson, senior consultant at the Plenum Group, added: “Our asset management clients have hired former consultants for their ability to ‘speak the clients’ language’, understand their liabilities and provide the quasi-advisory service required of a solutions provider.”
Poachers Become Poached?
It’s not all one-way traffic however—some asset managers are also making the move into consultancy. Using the same data, aiCIO found 33 asset managers had upped sticks for roles in investment consultancies since 2010.
These moves have been driven by the changing nature of investment consultancies. No longer seen as simple advisory houses, many are now becoming third-party asset managers too.
“Consultants who are looking to build their asset management businesses need operational fund management skills,” said Moorland Human Capital’s Battye.
“It’s the old adage that consultants consult but executives have to execute; this is an area of expertise consultants traditionally lack.”
Plenum Group’s Jefferson added: “Lately there has been an exchange of talent between the fiduciary management teams of asset managers and consultancy firms, as one can occupy the same role in either type of organisation. As a result of this evolving landscape, the movement of talent is very much a two-way street.”
The Rise of DC
One of the most striking developments of the last two years has been the rise of the defined contribution (DC) professional. Since 2011, eight consultants and two asset managers have started working for the other side, thanks largely to their expertise in DC.
On the asset manager to consultancy side, Emma Douglas left Blackrock to join Mercer as UK Leader for Mercer’s workplace savings wrap in 2011, and Rita Butler-Jones left Threadneedle as head of DC to take on a principal role at Mercer in 2012.
The consultants who moved into asset management for their DC specialisms include Tim Horne, Nick Smith, Gary Smith, David Holding and Guarav Lal—all formerly of Towers Watson— who all moved to different asset managers in 2011.
And Nigel Aston, formerly the business development director at DC analysts PensionsDCisions, joined State Street Global Advisors as head of UK DC in 2012.
Ian Addison-Smith, associate partner at Hanover Search Asset Management, said he expected the trend of DC specialists at investment consultancies being poached by asset managers to continue in future.
“They have proved to be a strong breeding ground for talent with Mercer, Towers Watson and Aon Hewitt specifically all experiencing junior and senior departures in recent years,” he said.
“When it comes to DC, asset managers have been able to offer a role with equal breadth, better remuneration, and a chance to move away from a billable hours culture.”
The data used to create this article was collated from aiCIO’s existing records and job appointment notices from Plenum Group and Hanover Search Asset Management.
The 2013 Knowledge Brokers—aiCIO’s list of the top 25 investment consultants worldwide—can be found here.
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