Consultants depart due to competition

A third top investment consultant has resigned in a matter of weeks as the industry faces acute competition and rising costs.

Nicola Ralston has quit as head of global investment consulting at Hewitt Associates to pursue other opportunities. Her departure follows that of Hartmut Leser, managing director of Feri, Germany's best-known investment consultancy. Kevin Carter gave up his job as head of Watson Wyatt's European investment consulting practice in May.

Analysts say their departures reflect stress in the consulting industry because of competition from investment banks, the growing maturity of pension schemes and the cost of expanding research departments. Consultants have stopped offering lucrative advice to asset managers to avoid conflict of interest accusations.

Ralston declined to comment. As a former head of investments at asset manager Schroders she may have been frustrated by Hewitt's limited resources. She is leaving after less than two years in the job. Lori Lucas, Hewitt's US director of retirement research, also departed recently to head the defined contribution arm at Callan Associates, a US consultant.

Hewitt, a US-listed company, said last month its chief executive Dale Gifford, 56, was retiring. Bryan Doyle, president of outsourcing "left to pursue other opportunities" at the same time.

Hewitt downgraded its earnings forecast, saying it expected its revenue to be flat only in the third quarter. Analysts said the consultancy had been failing to make money out of the benefits outsourcing deals for which it is known in the US.

Hewitt has introduced a defined contribution product, Fund Delivery Service, to boost revenue.

Watson Wyatt has evolved a service which hires and fires managers on behalf of clients. Mercer Investment Consulting is developing a multi-manager service, which bolts rival products on to a single platform. Watson and Feri are developing an advisory service to high net worth investors.