The investment consulting industry’s “giant sucking sound”
| Nov 14th, 2007 | Filed under: Institutional Investing | By: Alpha Male |
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In 1992, American entrepreneur and erstwhile politician Ross Perot referred to jobs migrating from the US to Mexico as a “giant sucking sound”. And as this Wikipedia page dedicated to the very term “giant sucking sound” says, the phrase has since come to refer to any situation involving loss of jobs, or fear of a loss of jobs.
So it seems the investment consulting industry now may have its own giant sucking problem. As this article from Thomson illustrates, many institutional investors, and even consultants themselves, are concerned about consulting personnel being sucked up by the talent-vacuum that is the investment management industry.
Last November we lamented the state of the investment consulting business when we wrote:
“…someone set off a stink bomb in the investment consulting business and it seems that the major players are falling over themselves to get out of the room.”
Now Thomson reports that some major European investment consultants told a recent conference audience that pension consulting was actually “in crisis”. Apparently the head of one European consulting firm told the audience,
“There’s something not quite right in the UK consulting industry today. It is in crisis and this is evidenced by the number of leading consultants who are leaving, indicating that something is wrong.”
Why? For one thing, reports Thomson, client requirements are evolving so quickly that consultants are simply having trouble keeping up with the changes. Reflecting the resulting need for specialization, one major pension manager told the audience that he expects investors to maintain multiple consulting relationships going forward.
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