Segal Rogerscasey Buys Marco Consulting Group

Consulting firm Segal Rogerscasey has announced it has agreed to acquire the Marco Consulting Group (MCG), bringing the combined advisory assets to more than $500 billion.

“The acquisition of the Marco Consulting Group represents a significant enhancement to the already deep expertise of Segal Rogerscasey,” said Joseph LoCicero, president and CEO of the Segal Group. MCG is a consultant focused on US multiemployer benefit plans.

The acquisition will become effective January 1, 2017.

The merged entity Segal Marco Advisors will operate with a staff of more than 150 investment, consulting, and research professionals, the firm said, advising more than 400 clients.

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Segal Rogerscasey President and CEO John DeMairo will remain in the same role, while MCG Co-founders Jack Marco and Tom Mitchell, Sr. will stay on as advisors. The combined Segal Marco Advisors will be headquartered in New York, but will also hold a significant presence in Chicago.

“This combination will provide trustees with unprecedented resources and talent, and make us the undisputed leader for multiemployer investment consulting,” DeMairo said in a statement.

MCG’s co-founders also praised Segal Rogerscasey’s “industry-leading research capabilities, particularly in the areas of due diligence, alternative investments, and asset-liability modeling.”

The two firms are also outsourced-CIO (OCIO) providers. According to CIO’s 2016 OCIO Guide, Segal Rogerscasey managed $1 billion in discretionary assets for 12 US clients as of January, while MCG managed $9.3 billion for 52 US clients.

Institutional investors have voiced their discontent over hedge fund fee structures—and the hedge funds are listening.

Hedge fund managers are adjusting their business models to offer arrangements better in line with investor interests, according to a survey by the Alternative Investment Management Association (AIMA).

The survey included 120 managers with assets ranging from below $100 million to more than $20 billion. Respondents said they are taking several measures to create fee structures that better appealed to investors.

For example, nearly all (97%) said they used a high watermark, meaning performance fees are only paid on net new increases in the fund’s asset value. Others (33%) offered a hurdle rate, or a minimum performance level required before charging incentive fees.

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While two-thirds of managers reported that they did not employ hurdle rates, AIMA said its usage has increased “significantly” over the last few years.

The survey noted another emerging trend, “clawbacks,” a practice of allowing investors to take back incentive fees paid in profitable years if performance turns negative. Though the trend is “not by any means widespread,” AIMA said some investors and managers are exploring it.

Other more common practices included offering fee discounts in exchange for longer lock-up periods, rewarding early investors in the fund with cheaper founder share classes, and giving preferential terms to investors who make the largest allocations.

More than three-quarters (77%) said they offered or are considering implementing a tiered management fee structure, in which fees decrease as assets under management increase.

While more than 80% charged investors for service-provider costs and fund expenses such as audit fees and tax expenses, over 90% said they did not charge operating expenses such as employee compensation and regulatory reporting costs.

“Managers want to build sustainable businesses and investors want the right kind of performance at a fair price,” said Jack Inglis, AIMA CEO. “These are the interests that are being ever more closely aligned.”