Nearly 60 percent of institutional investors used consultants to manage their funds in 2012, according to a Cerulli Associates survey released Monday.
Consultants, the survey said, are more likely to be employed by smaller funds. Of those with less than $10 billion in assets, 75 percent said they use intermediaries. Funds with more assets are about as likely to use consultants as not. And, Cerulli noted, many investment committees are focusing on policy while delegating daily investment responsibilities to gatekeepers.
"Given the significance of investment consultants, just over half of the asset managers we polled plan on placing an even greater emphasis on fostering consultant relationships," Michele Giuditta, associate director at Cerulli, said in a press release.
Recommended For You
Managing those relationships is critical, Cerulli said in the fourth quarter edition of "The Cerulli Edge – Institutional Investor," but gatekeepers charged with working with them cited problems in ensuring the process is smooth.
Asset managers said their biggest frustration (cited by 77 percent) with consultants was turnover of contracts, which makes it harder to build relationships. Other problems mentioned included: closed door/elusive firms (73 percent); unwillingness to look beyond own brand or usual investment suspects (63 percent); and not being selected despite constantly filling out RFPs and being called a finalist (50 percent).
Those frustrations come, Cerulli said, as asset managers have increased their scrutiny on consultants that includes looking at back-office operations. One asset manager told Cerulli that auditors of public funds want to know how they conduct their operational due diligence.
The trend toward a risk-based approach to building investment portfolios continued with 85 percent of consultants saying it's part of the method they use when deciding on asset allocation.
The high percentage of consultants using the approach is apparently lost on the asset managers who hire them. Less than half of asset managers (46 percent) said that one-quarter or less of the consultants they meet use a risk-based methodology. Another 32 percent said that between 25 percent and 50 percent did so.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
