What Are Consultants Thinking?

At the recent Foundation Research Associates (FRA) Conference Mastering Client Services and RFPs for Institutional Investors in New York City, I moderated a panel on “What Are Consultants Thinking,” where Sean Holland, Principal, Comave Advisors and Safia Mehta, the Managing Director of Emerging Managers and ESG at Manager Analysis Services, shared their views with the delegates.

Here were a few takeaways from the panel:  

Investment Strategies:

• ESG, an acronym for investing based on environmental, social, and governance criteria, has gained steam in Europe but in the U.S., public pension plans have been more resistant and consultants are still determining how to meet the fiduciary requirements given its lack of consistency in guidelines on how to manage risk. Investors have expressed interest in both ESG-dedicated funds along with funds that implement ESG principles.
• Crypto has two opportunities, including blockchain and cybercurrencies. Panelists concurred that blockchain presents positive opportunities while cybercurrencies have faced more headwinds in generating positive returns.
• Qualified Opportunity Zones (QOZs) have been more popular amongst family offices and high-net-worth individuals than institutional investors and are attractive because of their tax benefits and because these allocators want to invest as a way to give back to lower-income communities.   

Role of Consultants:

• Investment consultants, known to be the key drivers of investment advice for their clients, have emphasized that institutional investors should examine their asset allocations from a risk perspective since risk plays an instrumental role in generating return.
• The role of consultants has evolved over the last handful of years. Some manage money including setting up their own funds, others given investment advice and others partner with specific hedge funds, hence wearing various hats. Currently there is no regulation amongst activity of consultants and if any is implemented, it might standardize their roles.