(April 17, 2012) — It has been over two months since Segal Advisors acquired Rogerscasey, creating an entity with more than 350 clients with worldwide advisory assets approaching $400 billion.
One growing opportunity to emerge from the deal, according to the new heads of Segal Rogerscasey — Chief Investment Officer Tim Barron (formerly of Rogerscasey) and President and CEO John DeMairo (formerly of Segal Advisors): increasing opportunity to provide services to investment advisers who service the wealthy, who are now increasingly demanding institutional quality investment solutions. Assets under management among household millionaires in the United States currently amount to roughly $20 trillion, Barron said.
While Rogerscasey had been providing advice to that particular market segment for the past five to six years, Segal had been unexposed to the market before the merger. The acquisition thus provided Segal with a more diversified client base while Rogerscasey acquired expanded research capabilities, Barron and DeMairo asserted.
The heads of Segal Rogerscasey also expanded on two growing trends in the industry: 1) consolidation, and 2) consultants moving into investment management.
The convergence of Segal and Rogerscasey, the firm’s heads said, is the latest in a string of consulting firms consolidating. In May 2011, for example, Mercer Investment Consulting announced that it signed an agreement with Milliman to acquire portions of its investment consulting subsidiary, Evaluation Associates. “It’s hard for boutiques to provide global resources and specialist consulting. Consultant firms need to have scale to serve those needs,” Jeff Schutes, Mercer’s US investment consulting leader, told aiCIO at the time of the deal.
“We’ll see more consolidation,” Barron echoed, noting that in order to stay competitive, and to help clients manage in the increasingly complex investment world, smaller firms will need to team up with other firms to achieve economies of scale. He added that the history of employee ownership by Segal has allowed the firm to maintain its independence throughout the consolidation.
When asked about the firm’s presence in the investment outsourcing space, Barron was quick to note that he perceived the term as misleading. “Do consultants buy and sell stocks?” he questioned. According to Barron, investment outsourcing means delegating responsibility, empowering a plan sponsor to act in their best interests. He preferred the term “implemented consulting.”
Barron is skeptical of the few holdouts in the consulting world to investment outsourcing –or, using his term, implemented consulting. “Asset management could be considered outsourcing as sponsors are giving them authority to buy and sell securities,” Barron said, imitating a horse with blinders. Segal Rogerscasey aims to expand their offerings within the implemented consulting space, Barron and DeMairo confirmed.
The comments from Barron and DeMairo follow Rocaton Investment Advisors’ decision last month to offer implemented consulting.