Investment consulting: global trends
Investment consulting is one of those sectors where, when everything else is going down the pan, things start to look quite rosy.
How rosy? Well, with stock markets plummeting in the UK, the US and Asia, all those pension funds which could previously rely on making enough money from their investments to cover all their future commitments to people going into retirement, are suddenly having to think again.
In the UK, for example, figures from consultant Lane Clark & Peacock showed the country's largest pension schemes plunging into a 41bn (€51.9bn) deficit in July 2008, down from a 12bn surplus in July 2007. A report by Lehman Brothers suggests solvency ratios at German and Dutch pension funds fell 9.7% and 8.3% respectively in the first half of 2008.
According to a Mercer report, pension plans funded by S&P 1500 companies in the US lost around $280bn in assets between the start of the credit crunch and early July 2008. And in Japan, the average defined benefit fund run by a Japanese company 'achieved' a return of -10% in 2007.
For more info on the dire state of global pensions, visit Pension Fund Meltdown.
Investment consultants are already benefiting from pension funds' predicament. For example, results for the fourth quarter of fiscal 2008 from Watson Wyatt, one of the bigger players in the market, show that revenues from its investment consulting business rose 26%.
Watson Wyatt attributed this to "strong demand for all of our services, particularly advice on investment strategy and investment manager selection" - in other words, pension funds used investment consultants' services more frequently to help them decide how to invest and who to invest with.
Click here for an explanation of the investment consulting sector.
