Investment Consultants See Rising Demand; Managers Adopt New Engagement Models

August 16, 2022 — Boston

To win shelf space, managers need to employ proactive communication and client support to maintain relationships

As asset owners address increased complexity of portfolio management, incorporate environmental, social, and governance (ESG) principles into their portfolios, and mitigate ongoing market volatility, they are seeking services offered through investment consultants. According to Cerulli’s latest report, U.S. Investment Consultants 2022, one-third (35%) of asset owners are likely to start using or increase their use of investment consultants.

More than half of asset owners (53%) expect to use investment consultants over the next two years at roughly the same rate they are using them today. About 13% expect to use them more often, with a significant minority (22%) expecting to begin using an investment consultant for the first time. “Investment consultants provide services that go far beyond identifying investment options and conducting due diligence,” says Laura Levesque, associate director. “Even smaller clients that typically did not use consulting services are likely to see value in their expertise as the markets and the investment landscape grow more complex,” she adds. Re-evaluating asset allocation (77%), portfolio risks (67%), portfolio holdings (69%), and capital markets expectations (68%) are topics that are expected to be discussed with investment consultants in 2022.

At the same time, consultant relationship professionals at asset managers are striving to win mindshare and marketshare among investment consultants. Yet, strategies that have worked the best in the past, such as meeting with manager research team members in their office, are harder to rely on in the hybrid work environment. “The pandemic has had a significant impact on how many consultant relations teams are able to interact with investment consultant contacts,” says Levesque. “Now, most organizations are operating in a hybrid working environment.” 100% of consultant relations professionals report that in-person periodic updates for existing clients are required less and can be substituted with some type of virtual meeting. Another 88% say the same for investment consultants.

Consultant relations professionals at asset managers aim to improve the quality of interactions and strengthen operations and support to maintain client relationships. 100% of consultant relations professionals relay that proactive alerts about events that impact the strategy or company are important in maintaining strong relationships. 81% of consultant relations professionals report that strong operations and client support are integral in maintaining strong relationships with consultants. “Having robust client support and operations is often what can set a strategy apart,” says Levesque. “Consultant relations teams should spend significant time highlighting these strengths and features, particularly for strategies in crowded areas of the market.”

Ultimately, the biggest challenge that remains for a consultant relationship team is how to best get the attention of investment consultants, particularly in a hybrid work environment. “Consultant relations teams are working hard to adapt to continue building those important relationships,” concludes Levesque.

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