Pensions & Investments November 25, 2019 | 3

Michael A. Marcotte Hedge Funds Defined Contribution Plan sponsors Managers are jump to meet warming up to changes over custom funds withdrawals By MARGARIDA CORREIA Firms answering the demands of clients Sponsors of 401(k) and 403(b) for more specialized separate accounts plans and their record keepers are moving quickly to satisfy new IRS By CHRISTINE WILLIAMSON POOR MIX: Stephen regulations that will make it easier Cummings called the for plan participants to take hard- The industry is in transition as managers booming market ship withdrawals from their retire- work to provide asset owners with exactly what they want: against a volatile ment accounts. customization. political landscape Beginning Jan. 1, employees will Increasingly, hedge fund managers are acceding to de- ‘an interesting be able to keep contributing to mand from pension funds, endowments, foundations, juxtaposition.’ their accounts should they need to hedge funds of funds and other allocators for custom ver- withdraw funds for hardships such sions of f agship hedge fund strategies that better meet as medical expenses. That marks a their investment goals. departure from previous IRS rules Assets managed in sepa- that required employers to sus- rately managed customized pend employee contributions for hedge fund accounts have six months following a hardship skyrocketed over the past distribution. f ve years, sources said. The new rule is part of a package HedgeMark International of mandatory and voluntary mea- LLC, New York, the indus- SPECIAL REPORT INVESTMENT CONSULTANTS sures that the IRS developed at try’s largest hedge fund Congress’ behest to ease restric- managed account provider, tions on hardship withdrawals. for example, has seen huge Plan sponsors will, for example, growth in assets in sepa- Consultants weighing impact also be able to allow participants to rately managed hedge fund withdraw qualif ed employer con- accounts on its investment tributions, which was previously platform, said Andrew S. of global f nancial challenges forbidden, and will no longer have Lapkin, CEO. to require participants to take all Assets run in separately By DANIELLE WALKER MORE ON CONSULTANTS available plan loans before taking a BOOM: Andrew S. Lapkin said managed hedge fund ac- hardship withdrawal. demand is steadily growing for counts of all kinds on the Investment consultants are focusing on M&A pace is not expected to slow down. The regulations — f nalized Sept. custom hedge fund strategies. HedgeMark platform rose the lasting impacts that macroeconomic Page 22 23 after a nearly yearlong comment 450% to $22 billion as of Oct. trends — the growing wealth gap, longer For the full report, go to pionline.com/ and review period — have earned 31 from less than $4 billion when the f rm was acquired in life expectancy and political uncertainty in consultants19 support among plan sponsors as 2014 by Bank of New York Mellon Corp. an unprecedented bull market — will have they look to encourage participants The proportion of customized hedge fund managed ac- on institutional investors and the asset ever known, while also being in an unset- to preserve their retirement savings counts on HedgeMark’s investment platform is growing, management industry at large. tled political environment — it’s just an in- while also giving them access to the Mr. Lapkin said. In 2019, 30% of new hedge fund accounts Stephen Cummings, Chicago-based CEO teresting juxtaposition.” funds for true f nancial hardships. were for co-investment or other highly customized strate- of Aon Hewitt Investment Consulting Inc. Adding to that are concerns about global While some sponsors had concerns gies compared with 15% per year between 2015 and 2018. and global investment off cer, head of North wealth inequality and the fact that govern- about plan leakage, the f exibility of “Customized strategies are well-suited for dedicated America investments at parent Aon PLC, ments and employers need to grapple with the rules helped alleviate those management accounts. We are seeing a continued increase said his top concern is the stock market ap- the possibility of many people outliving their worries, industry observers said. in (hedge fund) manager interest to offer a (dedicated proaching an 11-year bull run. wealth. Additionally, a “sandwich generation,” Participants already face signif - managed account) to large investors,” Mr. Lapkin said. “Everyone is holding their breath won- which often refers to those simultaneously cant deterrents to taking hardship Among myriad possibilities, sources said popular cus- dering how much longer will this bull mar- caring for elderly parents and their chil- distributions because they must tomized approaches within dedicated managed accounts ket run,” Mr. Cummings said. “To be in the dren, is emerging, Mr. Cummings added. pay taxes on the money plus a 10% SEE CUSTOM ON PAGE 39 longest sustained bull market that we’ve CONTINUED ON PAGE 19 SEE HARDSHIP ON PAGE 36

The wisdom of the crowd As the equity bull market heads into an 11th year, a reasonable view would be that a downturn, or even a recession, should be expected. Given slowing economic growth, a case for a recession on the horizon could be made. Economic concerns were enough to convince the Federal Reserve to cut rates three times this year. But it’s the warning signs from consumers and investors that signal weakness.

Been there: U.S. real GDP has been 2% or Good and bad days: Consumer Runaway train? With fewer good Murky forecast: Lower higher over the past three years. The dip in spending fuels the bulk of GDP. But consumer investment alternatives, U.S. equity forward valuation* estimates private investment could signal low business confdence has been falling this year and prices have grown disproportionately to for 10 of the 12 S&P sectors confdence. more volatile. Personal fnances have been earnings. Low bond yields drove demand mean analysts expect price cited in survey data as chief concerns. for stocks. declines in the coming 12 U.S. economic growth year over year months. Total GDP U.S. real gross U.S. real gross University of Michigan S&P 500 price vs. earnings (left axis) personal private domestic Consumer Sentiment index Price(left axis) Earnings (right axis) Price/earnings ratios consumption investment (right axis) (right axis) Consumer Sentiment index Year-over-year 3,200 220 monthly average (left axis) change (right axis) Backward Forward 3,100 210 Sector P/E P/E 4.0% 25% 120 16% 3,000 200 S&P 500 20.7 18.9 3.5% 20% 110 14% 2,900 190 Info. technology 24.8 21.8 100 12% 3.0% 15% 90 10% 2,800 180 Consumer disc. 24.2 23.0 80 8% 2,700 170 Telecomm. 21.9 18.9 2.5% 10% 70 6% 2,600 160 Consumer staples 21.3 20.8 2.0% 5% 60 4% 2,500 150 Health care 20.8 16.3 50 2% 1.5% 0% 2,400 140 Utilities 20.7 20.3 40 0% 2,300 130 1.0% -5% 30 -2% Materials 19.8 20.1 2,200 120 20 -4% Industrials 19.3 19.1 0.5% -10% 10 -6% 2,100 110 Energy 18.0 20.0 0.0% -15% 0 -8% 2,000 100 201820172016201520142013201220112010 2019 2019201820172016201520142013201220112010 2016 2017 2018 2019 Financials 14.0 13.4 *Price-to-earnings ratios. Sources: Bloomberg LP, University of Michigan, U.S. Bureau of Economic Analysis Compiled and designed by Charles McGrath and Gregg A. Runburg Pensions & Investments November 25, 2019 | 19 Special Report INVESTMENT CONSULTANTS Weighing impact in a world of change

CONTINUED FROM PAGE 3 senior manager and head of the knowledge center for Casey Quirk, “Inequity and longevity will have a practice of Deloitte Consulting big implications on how we think LLP, New York. RobertTjalondo about investing,” he said. While consultants have general- As of mid-2019, the bottom 50% ly had client turnover of around 5% of wealth holders collectively per year, money managers see owned less than 1% of total global higher turnover, around 17% per wealth, while the top 1% owned 45% year, among institutional investor of global wealth, an October report clients, Mr. Cloherty said. from Credit Suisse found. Consultants have targeted “These are global macro trends growth through their OCIO busi- that I believe investors ignore at nesses, but Mr. Cloherty believes their own peril,” Mr. Cummings said. there’s “an underappreciation for As consultants serve in the ca- the revenue volatility this could pacity of advisers — and increas- cause” for consultants since they ingly as discretionary managers “are moving into a more perfor- under the growing outsourced CIO mance-dependent relationship” trend — these are “big-picture with institutions. trends” f rms should be looking at, “As the investment consultant he said. business shifts more toward OCIO, Data from Pensions & Invest- there could be a potential for rela- ments show that worldwide institu- tionships that were long in duration tional investors are increasingly (to be) shortened,” he said. turning to consultants for both ad- This year, 52 investment consul- visory and OCIO services. tants in the survey reported offer- For the year ended June 30, in- ing OCIO services, inclusive of two stitutional assets under advise- f rms that did not offer them the ment grew 9.2% to $41.4 trillion, year prior: CBIZ Inc., which ac- P&I’s annual survey of investment quired Memphis-based invest- consultants found. During the ment consultant Gavion LLC in same period, U.S. institutional tax- July; and Fiduciary Investment BIT OF HELP: Richard Nuzum said the growing focus on OCIO has ‘left some openings’ for Mercer’s more traditional advice approach. exempt AUA also grew 9.2% to Advisors LLC, Windsor, Conn. $22.67 trillion. Despite the growth of OCIO as- to OCIO, the trend “left some open- tions, Mercer acquired the invest- sets, P&I’s survey showed that in- Downturn worries ings” for Mercer in the traditional ment consulting, alternatives OCIO pace quickens vestment consultants still garner Michael C. Patanella, a New advisory space. consulting and wealth manage- OCIO, or discretionary, assets the majority of their annual reve- York-based audit partner and asset Mercer retained its position as ment operations of Pavilion, which grew at a quicker pace over the nue from traditional investment management sector leader at Grant the largest consultant by worldwide had around $716 billion in AUA as year, rising 15.2% to $1.42 trillion as management consulting services Thornton LLP, said the consultant institutional AUA, with $15.04 tril- of June 30, 2018, according to P&I of June 30. for institutional asset owners, industry’s move toward OCIO ser- lion as of June 30, P&I’s survey data. With the Summit Strategies Over the f ve-year period ended which on average accounted for vices could also introduce risks found. Over the year, Mercer world- deal, Mercer acquired all of Sum- June 30, OCIO assets near doubled, 80.7% of their revenues. In compar- when the extended bull market wide institutional AUA grew 29.3%, mit’s businesses except for its pub- growing 94.8% from $731.5 billion. ison, investment outsourcing ser- comes to a halt. widening its lead over the second- lic def ned benef t plan consulting In comparison, institutional AUA vices accounted for 7.8% of f rms’ “We will see how (OCIOs) do in a largest consultant, Aon, which re- unit. and U.S. institutional tax-exempt total revenues. downturn,” Mr. Patanella said, ex- ported $3.52 trillion in worldwide The Summit and Pavilion busi- AUA grew 16% and 19.2%, respec- The revenue breakdown was plaining that investors will be institutional AUA as of June 30, up nesses had a combined $5.5 billion tively, over the same period. similar in 2018 among reporting watching whether OCIOs do a bet- 13% year-over-year. in discretionary AUM as of Dec. 31, The growth of OCIO use brings f rms, with 79.6% of annual reve- ter job of selecting external money Mercer’s assets were boosted in a Mercer spokeswoman said. forth other considerations for in- nues derived from investment managers. part by its acquisitions of Pavilion “We see a lot of our competitors vestment consultants, which have management consulting services Richard Nuzum, the New York- Financial Corp. and most of Sum- focusing on OCIO at the expense of historically had low client turnover for institutions, while 9.3% came based president of Mercer’s global mit Strategies Group in deals that focus on consulting. Probably the in their traditional investment advi- from investment outsourcing, on wealth business, said that as other were completed in the fourth quar- best way to grow your OCIO busi- sory businesses, said Tyler Cloherty, average. consultants have shifted their focus ter of last year. With the acquisi- SEE IMPACT ON PAGE 22

Investment management consultant Growth of institutional Consultants’ average stats at a glance advisory assets revenue breakdown Assets are in trillions as of June 30. As of June 30; data in parentheses are Assets are in millions as of June 30. previous year. 1-year 5-year Total assets U.S. inst’l tax-exempt Assets change change $41.40 Investment consulting services for inst’l asset Total assets under advisement $42,127,772 9.8% 16.8% $37.95 $37.92 owners $35.70 $36.07 80.7% (79.6%) Institutional $41,399,703 9.2% 16.0% $34.23

U.S. institutional tax-exempt $22,671,588 9.2% 19.2%

Number of money manager 10,371 -0.6% 31.2% Investment outsourcing searches $22.67 7.8% (9.3%) Assets under management $937,155 5.6% 48.0% $20.49 $20.76 Other consulting clients $19.02 $18.87 $18.36 6.5% (7.1%) Outsourced CIO assets $1,424,984 15.2% 94.8% Managing funds of funds Number of cybersecurity and/or separate accounts professionals: 3.2% (1.9%) Services provided to Working on internal issues 87 — — money management frms 0.5% (1.6%) Working with clients 12 — — Other services Historical data may include retroactive updates. 2014 2015 2016 2017 2018 2019 1.3% (0.5%) 20 | November 25, 2019 INVESTMENT CONSULTANTS Pensions & Investments

The largest investment consultants Ranked by worldwide institutional assets under advisement, in millions, as of June 30.

Rank Consultant Assets Rank Consultant Assets Rank Consultant Assets

1 Mercer $15,043,914 31 DiMeo Schneider $84,400 61 Highland Consulting $14,184

2 Aon $3,524,407 32 Portfolio Evaluations $79,522 62 SECOR Asset Mgmt. $13,638

3 Willis Towers Watson Investments $2,600,000 33 Cliffwater $73,204 63 Atlanta Consulting Group $12,000

4 Callan $2,508,232 34 TorreyCove Capital $68,282 64 Compass Financial $11,771

5 Russell Investments $2,450,000 35 Ellwood Associates $65,604 65 Benef t $11,436

6 RVK $2,380,063 36 Gallagher Fiduciary $64,962 66 Canterbury Consulting $10,826

7 Cambridge Associates $2,172,749 37 Fund Evaluation Group $64,209 67 Quan-Vest Consultants $9,602

8 Meketa Investment Group $1,975,867 38 River & Mercantile Solutions $53,582 68 Francis Investment Counsel $9,459

9 NEPC $1,072,412 39 Bellwether Consulting $51,789 69 Asset Advisors $8,000

10 Wilshire Associates $983,747 40 Cook Street Consulting $50,982 70 Fourth Street Performance $7,800

11 Rocaton Investment Advisors $641,210 41 Prime Buchholz $50,732 71 PlanPilot $7,592

12 PPCmetrics $536,000 42 CBIZ Retirement/Investment/Gavion $50,259 72 BilkeyKatz Investment $7,291

13 Nomura Securities $518,039 43 Investment Performance $46,860 73 Bolton Partners $6,534

14 Verus $425,371 44 Milliman $43,032 74 Sellwood Consulting $5,536

15 Hamilton Lane $408,957 45 Colonial Consulting $38,700 75 Conrad Siegel $5,492

16 CAPTRUST Financial $331,206 46 Concord Advisory Group $33,979 76 Arnerich Massena $5,393

17 Segal Marco Advisors $330,304 47 Newport Group $32,696 77 Cafaro Greenleaf $5,150

18 /Graystone $321,668 48 Hyas Group $32,000 78 Cornerstone Advisors $4,985

19 Cardinal Investment Advisors $239,530 49 Angeles Investment Advisors $31,680 79 Strategic Capital Allocation $3,900

20 Marquette Associates $217,927 50 Highland Associates $27,173 80 Hamilton $3,386

21 StepStone Group $216,488 51 DeMarche $25,198 81 Alpha Investment Consulting $3,326

22 BofA Merrill Lynch $188,182 52 Multnomah Group $24,914 82 Hooker & Holcombe $3,209

23 NFP Retirement $163,882 53 Portfolio Advisors $23,521 83 Comperio Retirement $3,179

24 UBS Institutional Consulting $148,552 54 Innovest Portfolio Solutions $21,802 84 Berla Investment Consulting $2,533

25 Cammack Retirement $102,509 55 Advanced Capital Group $20,660 85 HM Capital $2,494

26 SageView Advisory $102,000 56 George & Bell Consulting $20,400 86 Morrison Fiduciary $1,242

27 LCG Associates $99,123 57 Strategic Capital Investment $15,886 87 Guidance Point Retirement $1,074

28 Alan Biller $97,272 58 Dahab Associates $15,600 88 Benef t & Investment Consulting $74

29 AndCo Consulting $92,246 59 Institutional Investment Consulting $14,783 TOTAL $41,399,703 30 Fiduciary Investment Advisors $85,800 60 MJM401k $14,529

The largest investment consultants The largest investment consultants The largest investment ranked by total worldwide advisory ranked by U.S institutional, tax- consultants ranked by assets exempt assets managed assets Iin millions, as of June 30. In millions, as of June 30. In funds of funds or other discretionary products, in millions, as of June 30. Total Retainer Non-retainer Total Rank Consultant assets clients clients Rank Consultant assets DB plans DC plans Total 1 Mercer $15,043,914 $12,127,032 $2,916,882 1 Mercer $4,245,561 $1,061,720 $1,079,041 Rank Consultant assets 2 Aon $3,524,407 $3,196,190 $328,217 2 Aon $2,946,847 1 Russell Investments $297,800

3 Willis Towers Watson $2,600,000 3 Callan $2,507,047 $1,807,155 $324,345 2 Mercer $282,940 Investments 4 RVK $2,196,544 $1,420,494 $714,003 3 Hamilton Lane $64,304 4 Callan $2,508,232 $1,582,777 $925,455 5 Meketa Investment $1,975,867 4 Morgan Stanley/Graystone $61,971 5 Russell Investments $2,450,000 Group 5 StepStone Group $54,969 6 Cambridge Associates $2,426,032 $2,426,032 6 NEPC $1,067,797 $695,337 $178,141 7 RVK $2,380,063 $1,008,938 $1,371,125 7 Wilshire Associates $982,847 $883,529 $38,228 6 Aon $40,629 8 Meketa Investment $1,975,867 $1,434,457 $541,410 8 Cambridge Associates $952,575 7 River & Mercantile Solutions $33,400 Group 9 Russell Investments $728,800 8 SECOR Asset Mgmt. $27,200 9 Wilshire Associates $1,170,347 $1,170,347 $583,059 $147,266 $228,279 10 Rocaton Investment 9 Willis Towers Watson Invest. $19,082 10 NEPC $1,080,244 $1,080,244 Advisors 10 Portfolio Advisors $14,034 11 Rocaton Investment $641,210 $641,210 11 Willis Towers Watson $536,262 $290,260 $246,001 Advisors Investments 11 NFP Retirement $10,000 12 Segal Marco Advisors $540,042 $540,042 12 Verus $425,371 $344,520 $8,688 12 Highland Associates $6,410 13 PPCmetrics $536,000 $440,000 $96,000 13 Segal Marco Advisors $330,304 $211,203 $101,533 13 Segal Marco Advisors $5,923 14 Nomura Securities $518,039 $293,206 $224,833 14 Marquette Associates $217,927 $122,219 $39,356 14 Cornerstone Advisors $3,152 15 Verus $425,371 $425,371 15 Hamilton Lane $202,021 $199,151 15 Angeles Investment Adv. $2,695 16 Hamilton Lane $408,957 $408,957 16 Morgan Stanley/ $200,470 $59,310 $102,202 Graystone 17 CAPTRUST Financial $340,848 $340,848 16 UBS Institutional Consulting $2,100 17 NFP Retirement $163,882 $8,164 $155,718 18 Morgan Stanley/ $321,668 $321,668 17 Callan $1,961 Graystone 18 StepStone Group $154,949 $138,044 $16,904 18 Newport Group $1,875 19 Cardinal Investment $239,530 $239,530 19 CAPTRUST Financial $148,032 $3,694 $144,176 Advisors 19 CAPTRUST Financial $1,505 20 UBS Institutional $142,610 20 Marquette Associates $225,088 $225,088 Consulting 20 Fiduciary Invest. Advisors $1,500 Meeting Your Objectives Takes SOPHISTICATED SOLUTIONS with FEWER RESOURCES

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For Professional Clients only Investment advice and consulting services provided by Aon Hewitt Investment Consulting, Inc., an Aon company. Nothing in this document should be construed as legal or investment advice. Please consult with your independent professional for any such advice. To protect the confidential and proprietary information included in this material, it may not be disclosed or provided to any third parties without the approval of Aon. © Aon plc 2019. All rights reserved. Aon Hewitt Investment Consulting, Inc. 200 E. Randolph Street, Suite 700, Chicago, IL 60601

19pi0314.pdf RunDate: 11/25/19 Full Page Color: 4/C 22 | November 25, 2019 INVESTMENT CONSULTANTS Pensions & Investments

Investment consultants offering Pace of M&A deals not seen outsourced CIO services Impact As of June 30. CONTINUED FROM PAGE 19 to slow down anytime soon ▶ Angeles Investment ▶ DeMarche ▶ NEPC ness is to do a good job in your Advisors After a busy year for mergers ▶ DiMeo Schneider ▶ Newport Group (non-discretionary) consulting,” Mr. ▶ Aon Nuzum said. and acquisitions in the industry, ▶ Ellwood Associates ▶ NFP Retirement investment consultants still see a ▶ Arnerich Massena Mercer’s managed assets in dis- ▶ Fiduciary Investment ▶ PlanPilot cretionary products as of June 30 potential for new deals moving ▶ Asset Advisors Advisors ▶ Prime Buchholz were $282.9 billion, up nearly 17% forward. ▶ Atlanta Consulting ▶ Fund Evaluation ▶ River & Mercantile from a year earlier. The f rm ranked Stephen Cummings, CEO of Group Group Solutions second in assets in this universe, Aon Hewitt Investment Consult- ▶ BofA Merrill Lynch ▶ Gallagher Fiduciary following Russell Investments, ▶ Rocaton Investment ing Inc. and global investment which had $297.8 billion in man- ▶ Alan Biller ▶ Highland Associates Advisors off cer, head of North America aged assets in the No. 1 spot, up ▶ Cafaro Greenleaf ▶ Highland Consulting ▶ Russell Investments 2.7% from last year. investments at Aon PLC, ▶ Callan ▶ Hyas Group ▶ SECOR Asset Mgmt. Chicago, expects that the recent pace of consolidation in the ▶ Cambridge ▶ Investment ▶ Segal Marco ESG and manager culture investment consultant industry Associates Performance Advisors Moving forward, consultants can OPPORTUNISTIC: Callan’s Gregory ▶ Canterbury ▶ LCG Associates ▶ Sellwood Consulting expect to focus more of their man- “will likely continue.” Allen said his f rm is ‘always open’ to Consulting ager research efforts on environ- On its part, Aon is “always ▶ Marquette ▶ Strategic Capital acquiring smaller consulting f rms. mental, social and governance is- ▶ CAPTRUST Financial Associates Investment keeping (its) eyes open for things sues, which often includes assessing that may be interesting for our inked a deal this spring to acquire ▶ CBIZ Retirement/ ▶ Meketa Investment ▶ UBS Institutional implementation of ESG in the in- Investment/Gavion Group Consulting clients,” Mr. Cummings said of Pension Consulting Alliance LLC, vestment decision-making process potential acquisitions — though Portland, Ore., which boosted the ▶ Cliffwater ▶ Mercer ▶ Verus as well as vetting f rm’s corporate its sights aren’t set on acquiring f rm’s collective client AUA to ▶ Colonial Consulting ▶ Milliman ▶ Willis Towers Watson culture and diversity and inclusion Investments practices, multiple sources said. any particular set of capabilities. approximately $1.8 trillion, up ▶ Compass Financial ▶ Morgan Stanley/ “As the second-largest from up around $1.1 trillion prior Graystone ▶ Wilshire Associates “In general, and this is particu- ▶ Conrad Siegel larly for their endowment and (investment consulting) f rm out to the combination. ▶ Morrison Fiduciary ▶ Cornerstone foundation-type clients, (institu- there, we have a lot of capabili- As of June 30, Meketa was Advisors ▶ Multnomah Group tions) are interested in ESG sup- ties, but we’re certainly always ranked No. 8 by worldwide port other than just a negative aware of what’s going on,” he institutional AUA with $1.98 screen on the underlying invest- said. trillion, up 76.6% from the Independent investment consultants ment,” said Laura Levesque, senior Aon’s most recent deal closed previous year, Pensions & analyst for the institutional practice Consultants not providing services to/collecting fees from money in January 2018, when it Investments’ survey showed. at Cerulli Associates, Boston. management f rms, as of June 30. Meanwhile, Callan LLC, San Not only that, consultants are be- completed its acquisition of real ing asked to research “how many estate investment management Francisco, has separately said it ▶ Advanced Capital ▶ Comperio ▶ Marquette and consulting f rm the Townsend is open to considering the Group Retirement Associates women and minorities are on the senior management team” at mon- Group for $475 million. The deal acquisition of smaller players in ▶ Alpha Investment ▶ Concord Advisory ▶ Meketa Investment ey managers. to acquire Townsend, which was the consulting space, said Consulting Group Group “They are looking at the culture majority owned by Colony Gregory Allen, CEO and chief ▶ AndCo Consulting ▶ Conrad Siegel ▶ Milliman of the entire f rm” and how manag- NorthStar Inc., helped Aon research off cer. ▶ Angeles Investment ▶ Cook Street ▶ MJM401k ers are integrating ESG throughout signif cantly expand its invest- While Callan has the scale Advisors Consulting ▶ Morgan Stanley/ the organization and not just on in- ment capabilities, such as where it wouldn’t need to merge vestment teams, she added. ▶ Aon ▶ Cornerstone Graystone outsourced CIO and advisory with a larger f rm, “there are Advisors Steve Carlson, head of invest- ▶ Arnerich Massena ▶ Morrison Fiduciary services for large and midsize smaller f rms where it might make ▶ Dahab Associates ment, Americas, at Willis Towers ▶ Asset Advisors ▶ Multnomah Group Watson PLC in Chicago, said that global organizations, Aon said in sense to merge (with) us, so we ▶ DiMeo Schneider ▶ Atlanta Consulting ▶ Newport Group over the past couple of years the an announcement at the time. are looking at that,” he said. Group ▶ Ellwood Associates ▶ NFP Retirement f rm has done much more talking Townsend advised on $175.7 “We are always open. People ▶ BofA Merrill Lynch ▶ Fiduciary Investment with money management f rms to billion in global assets and do approach us, and we do ▶ Nomura Securities Advisors ▶ Bellwether see how they are thinking about a managed $14.5 billion in assets entertain those conversations. ▶ PlanPilot Consulting ▶ Fourth Street range of factors that can impact when the deal was announced in But (as far as) us being ab- Performance ▶ Portfolio Advisors culture, such as workforce diversi- ▶ Benefit & Invest. September 2017. sorbed into a larger organization, Consulting ▶ Francis Investment ▶ Portfolio Evaluations ty, pay structure and hiring prac- More recently, Aon considered I don’t think the economics tices. Counsel combining its business with Willis would make much sense for ▶ Benefit Financial ▶ PPCmetrics Over the year ended June 30, Services ▶ Fund Evaluation ▶ Prime Buchholz Towers Watson but quickly them or us,” he added. Group Willis Towers Watson’s worldwide ▶ Berla Investment announced in March that it was While Mr. Allen said the f rm ▶ Quan-Vest institutional AUA grew by 18.2% to Consulting ▶ Gallagher Fiduciary Consultants $2.6 trillion, propelling the f rm to no longer pursuing the deal, does not have a strategic ▶ BilkeyKatz ▶ George & Bell which could have been the initiative in place now to search ▶ River & Mercantile the No. 3 spot in the ranking of the Investment Consulting Solutions largest consultants, up from No. 7 industry’s largest merger. for particular capabilities, Callan ▶ Alan Biller ▶ Guidance Point last year. Willis Towers Watson re- ▶ Rocaton Investment As for the other big tie-ups, is “going to be opportunistic Retirement ▶ Bolton Partners Advisors ported $536.3 billion in U.S. institu- another large investment when an opportunity comes ▶ Hamilton tional tax-exempt advisory assets ▶ Cafaro Greenleaf ▶ Russell Investments consultant, Meketa Investment along.” as of June 30, down 15% from the ▶ Hamilton Lane Group Inc., Westwood, Mass., — DANIELLE WALKER ▶ Cambridge ▶ RVK year prior. Associates ▶ Highland Associates ▶ SageView Advisory ▶ Cammack ▶ Highland Consulting More due diligence ▶ SECOR Asset Mgmt. Retirement ▶ HM Capital The tough competitive land- them (to keep it open),” Mr. Allen will often “merge” similar products ▶ Segal Marco ▶ Canterbury scape for managers today also said. together, resulting in closures, re- ▶ Hooker & Holcombe Advisors Consulting means that consultants’ clients are Money managers are focusing quiring consultants “to go in and ▶ Hyas Group ▶ Sellwood Consulting ▶ CAPTRUST Financial often invested in products that company resources on products with look at each one of those situations ▶ Innovest Portfolio ▶ StepStone Group might be subject to consolidation, a competitive advantage, and have individually,” Mr. Allen said. ▶ Cardinal Investment Solutions which creates additional due dili- “limited time and money to spend on PricewaterhouseCoopers LLP Advisors ▶ Strategic Capital ▶ Institutional Investment gence for consultants and can also promoting products,” he said. This recently predicted that 2019 will be ▶ CBIZ Retirement/ Investment impact a manager’s culture, said can all carry its own impact on orga- a year of record merger and acqui- Investment/Gavion ▶ TorreyCove Capital Consulants Gregory Allen, CEO and chief re- nizational culture, he added. sition activity for asset and wealth ▶ Colonial Consulting ▶ Verus ▶ LCG Associates search off cer at Callan LLC, San “It’s much easier for everyone to management f rms, according to an ▶ Compass Financial Francisco. be happy when there’s more than October report. So far, total deal Callan was the fourth-largest enough to go around. The really tal- value for the f rst nine months of investment consultant ranked by ented people are going to be at- 2019 was $13.7 billion, nearly three worldwide institutional AUA, mov- tracted to growing organizations,” times the total during the same pe- Consultants providing services to/ ing up one spot from No. 5 last Mr. Allen said, adding that a f rm riod in 2018, the report said. collecting fees from money managers year. The f rm had $2.51 trillion in that is getting smaller every year “Generally speaking, clients feel worldwide institutional AUA as of “can create (staff) turnover, and cli- more comfortable when there’s not As of June 30. June 30, up 7.6% from the year ear- ents don’t want that.” change. … All of that creates the po- lier. Consolidation among money tential for negative outcomes. Every ▶ Callan ▶ Mercer ▶ UBS Institutional Consulting “We do have to be cognizant managers, which is ramping up in time there’s one of these mergers, ▶ DeMarche ▶ NEPC more so than in the past of the risk the industry, can also have this our manager research people are ▶ Wilshire Associates ▶ Investment ▶ Strategic Capital of a f rm closing a product because same effect. When mergers and ac- (looking), so that’s actually creating Performance Allocation it doesn’t make economic sense for quisitions occur, money managers new work,” Mr. Allen said.