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Are pension investment consultants useless?

Pension funds pay tens of millions of dollars to investment consultants every year, but an Oxford University study questions whether theyre worth it.

By Marlene Y. Satter | Updated on October 28, 2013

Pension plan sponsors, particularly of larger plans, nearly always rely on the recommendations of outside consultants in choosing plan investments. They spend a considerable amount of money doing so, with CalPERS and CalSTRS alone accounting for $42 million in investment consultant fees last year. And they’re not alone; a 2011 survey found that 94 percent of pension funds call upon outsiders to suggest investments.

A study by Oxford, however, says that it’s wasted effort and wasted money — that the recommendations of investment consultants underperform, resulting in lower yields on plan investments.

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