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Investment consultants advise the trustees of corporate and public retirement plans, university endowments, foundations, healthcare systems, not-for-profit organizations, high-net-worth individuals and financial intermediaries on what to do with their money.

They help these clients determine the asset allocation that will enable them to reach their investment goals, whether by making sure a pension fund can meet its payout obligations or maximizing the wealth of an endowment. In the process they recommend which fund managers clients should invest with, and what percentage of the client's money should be directed to non-traditional, alternative investments.

Investment consultants will first work with trustees or other fiduciaries to analyze their investment goals and learn how their funds are governed. They want to understand what level of performance the trustees expect and their sensitivity to risk. The consultants then develop liability plans and profiles that enable them to recommend an acceptable investment policy for their clients.

After establishing the appropriate allocation of funds across different asset classes and investment managers, investment consultants help implement their plan by identifying the fund managers who are most likely to meet the goals that have been established with the least overhead costs. It's also the investment consultant's job to monitor how the funds they have recommended perform, and if the managers of those funds are meeting - or failing to meet - the benchmarks that have been established. Most traditional fund managers have lengthy track records they can point to, and investment consulting firms have developed tools and databases that allow them to monitor and rank those managers.

In recent years, one of the biggest issues facing the trustees of large pension funds has been determining the amount of money they should shift out of traditional stocks and bonds and into alternative investments, such as hedge funds or real estate. As the number of hedge funds has exploded, investment consulting firms have had to develop expertise about them in order to better advise their clients.

Some of the larger investment consulting firms include Watson Wyatt, Mercer, Wilshire Associates, Frank Russell Co., Callan Associates, RogersCasey, Evaluation Associates and Capital Resource Advisors.

Roles and Career Paths

Jobs in investment consulting usually fall into one of two main categories: asset allocation and fund selection.

Asset allocation specialists advise clients 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 an extended period of time. It's a complex role that involves examining economic factors like interest rate changes, as well as the timing of the pension fund's liabilities or pay-outs, and the likely risks and returns associated with each type of asset. To help them, asset allocation specialists create mathematical models that forecast how a client's money should be divided among asset classes.

Fund selection specialists spend much of their time analyzing individual fund managers and asking questions about their investment strategy. They scrutinize particular funds and author reports on their strengths and weaknesses. Most investment consulting firms produce confidential lists ranking fund managers according to their likely success going forward.

Within fund selection and asset allocation are also roles for relationship specialists, who are the sector's true consultants. While many asset allocation and fund selection specialists work in research and focus on a particular type of fund or investment product, relationship specialists are usually generalists. They are often more senior members of the firm. Staff in investment consultancies typically begin their careers in research and move into client facing roles as they gain more experience.

Most large investment consulting firms take on graduates. After entering investment consulting, you'll typically go on to gain a professional qualification, such as a Chartered Financial Analyst (CFA) designation.

Skills and Qualities

- Analytical ability and statistical aptitude
- Team-working prowess
- Ability to grow and maintain client relationships
- Powerful reasoning skills