eFinancialCareers

A kind of 'Which? guide to fund managers'.

Investment consultants help pension fund trustees to decide which mix of assets to invest in and which fund managers to put their money with.

Key players

The European investment consulting market is dominated by two key firms – Mercer and Watson Wyatt. There are numerous smaller firms – Aon Consulting, Hymans Robertson and Hewitt Associates, for example.

Roles and career paths

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

• 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 need to pay pensions over the next 30 years or more. It’s a complex role using mathematical models to arrive at the right outcome.

• 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.

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. Mercer, Watson Wyatt and Aon all offer structured graduate programmes. 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

Average pay for student actuaries in the UK is £31.8k, rising to £44k when qualified. The equivalent starting salary for a qualified actuary in, for example, France or Luxembourg, is around €40k, according to recruiter Robert Walters.

Median actuarial salaries in London 2007
Chief actuary £250k
Function head £119k
Section manager £76k
Senior actuary £56k
Actuary £44k
Student actuary £32k
Source: CELRE

Skills

What investment consultants look for most of all, alongside numeracy and technical skills, is an ability to communicate.

“The investment consulting market is client facing, so we will look for people with communication as well as technical skills. We look for the ability to be part of a team, flexibility and adaptability and someone who has a ‘can do’ attitude,” explains Mark Powley, principal at Aon Consulting.

“You will be sitting in meetings with CEOs and FDs on one side and people from the shopfloor on the other. So the need to be able to communicate the intricacies, say, of an inflation swap programme in the same meeting is pretty tough,” says Patrick Race, a principal at Mercer.

Click here to find out about global trends in investment consulting.