eFinancialCareers

A kind of ‘Which Guide to Fund Managers’

Investment consultants advise pension fund trustees on what to do with their money. They help trustees decide which mix of assets to invest in and with which fund management firms. In the process, they look at how fund managers have performed in the past and try to predict how they will perform in future.

Trends

The opportunities for investment consultants in Australia have grown considerably in recent years, along with the spectacular growth in managed funds. Australia has one of the biggest managed funds markets in the world, and the fastest growing, thanks to a government-mandated investment scheme and favourable tax treatment.

Key players

In Australia, the major players are Mercer Investment Consulting, Watson Wyatt and Russell Investment Group, which are all part of global consulting groups that provide advice to clients on everything from paying their staff to building their computer systems. Other investment consulting firms include Access Economics, Aon Consulting, Assirt, Frontier Investment Consulting, Towers Perrin, InTech Fiduciaries, Van Eyk Research, and Jana Investment Advisers.

Roles and career paths

Jobs in investment consulting usually fall into one of two main categories:

1) Asset allocation: Asset allocation specialists advise clients on whether to invest in equities, bonds, private equity funds or alternative asset classes in order to generate the returns they require to pay pensions over the next 30 years or more. It is a complex role using mathematical models to analyse economic factors, such as interest rate changes, as well as the timing of the pension fund’s liabilities and the likely risks and returns associated with each type of asset.

2) Fund selection: Fund selection specialists spend much of their time analysing individual fund managers and asking questions about their investment strategy. Your days will be spent scrutinising particular pension funds and writing reports on their strengths and weaknesses. Most investment consultancy firms produce confidential lists ranking fund managers by their likely future success.

Within fund selection and asset allocation, there are also roles for relationship specialists, who are the true consultants. Relationship specialists are usually more senior – staff in investment consultancies typically start out in research and move into client-facing roles. Most large investment consultants take on a small number of graduates. Russell Australia, for example, take five graduates per year in their programme. Once hired, you will typically study for a professional qualification, either as an actuary or as a chartered financial analyst (CFA). Most firms offer trainees a choice of which exam to take. Actuaries typically work more on asset allocation, while CFA candidates work in fund selection.

Pay

Investment consultants with two to three years' experience can expect salaries in the AU$50k to AU$70k range, although firms say that rates vary widely, depending on the quality of the employee. Small bonuses are often included, and possibly a revenue share agreement.

Skills

• Fiona Trafford-Walker, managing director of Melbourne-based Frontier Investment Consulting, says trainee investment consultants need to be technically competent, and must have excelled in an academic pursuit, although not necessarily in finance. “We look for people who are numerate, team players, self-starters and switched on.”

• Jacquie Wheeler, HR manager at Russell Investment Group in Sydney, says candidates are screened on their studies and their results, but they are also looking for strong personal qualities and attributes. “In general we seek graduates who have the capacity to think analytically, motivate themselves, observe the highest ethical standards, and work as part of a team. We look for graduates who possess strong communication skills and the potential to develop excellent consulting skills.”

• Sophie Best, London-based head of graduate recruitment at Watson Wyatt, says trainee investment consultants need to be numerate, technical and analytical and have good client service skills: “We’re looking for people with a good understanding of business, who can build relationships and work well as part of a team.” Candidates taking the actuarial route typically have a mathematical background, she says.