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Greg Allen on the Big Themes

Three Key Themes Driving the Institutional Investment Consulting Industry
2 min 14 sec

Greg Allen, Callan’s chief executive officer and chief research officer, recently sat down with Millie Viqueira, head of our Fund Sponsor Consulting Group, to talk about his 30 years at Callan. The wide-ranging interview touched on his start at the firm, what has changed in the industry and how he has changed over the last 30 years, his passion for research and education, and his thoughts on maintaining Callan’s distinctive culture and on ensuring the firm continues to be an attractive place to work.

In this blog post, we share what Greg thinks are three key themes driving institutional consultants strategically over the next five years.

Growth of Private Markets

There are fewer than half the number of publicly traded companies in the U.S. compared to 10 years ago, and more companies are raising capital through the private markets as opposed to the public markets.

Consultants need to react to that because with a decreasing supply of public market opportunities and an increasing supply of private market opportunities, our clients are naturally moving in that direction. They are going to need help with strategic planning, portfolio design, implementation, and monitoring. And consultants need the infrastructure to handle that. That infrastructure includes data, data management, and reporting. But importantly, it’s intellectual capital around private markets, and that’s people.

DB to DC

The second big shift—and this is no surprise to anybody in our industry—is the move from defined benefit (DB) to defined contribution (DC) plans as the dominant retirement savings vehicle in the U.S.

The change from defined benefit to defined contribution has really shifted the conversation away from investment complexity toward simplicity, focusing on how to get people to save, how to reduce costs, how to encourage individuals to do the right thing with their investments to help them retire when it is on them.

I think DC plans are better than they were 10 or 15 years ago. But I think they can get even better, so there’s still a lot of work to do.

Discretionary Capabilities

The third big shift involves discretionary consulting. It was almost unheard of for a consultant to take on a discretionary role, but that is changing. More of our clients and prospects are asking us to consider a discretionary role to take some of the day-to-day administrative tasks or the decision-making off their hands. Consultants need to build out a compliance, legal, and operations infrastructure to be able to do that.

The greatest demand has been with DC plans. Nonprofits are another area where we’ve had some success on the discretionary side.

These three trends (and the desire of many founders to monetize their equity holdings before they retire) are behind the consulting industry consolidation that we are seeing. Scale and resources will be much more important to consultants going forward.

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