What’s the role of an asset consultant post crisis?

Asset consultants have recently started offering medium-term asset allocation advice, often as a separately priced service.

Watson Wyatt Worldwide calls it “dynamic strategic asset allocation”. Russell Investments calls it “enhanced asset allocation”. Whatever the term, the advice sits between tactical asset allocation at the short end and strategic asset allocation at the long.

But by offering this service the asset consulting fraternity has raised the fundamental question as to what their role is compared with the role of fiduciary funds’ inhouse investment staff, compared with the role of fund investment committees and the role of the plan sponsor or trustee board.

If a fund wants to make medium-term bets away from its strategic ranges, who should make the decisions – specialist managers, consultants, fund staff, investment committees or boards?

Some consultants say they have been offering this advice for years – they just haven’t given it a name.

Some fiduciary funds question why consultants did not look to provide this advice prior to the crisis when valuations seemed stretched. Have they simply invented a new class of work for themselves?