Asset consultant market share 2020

Published on
November 2, 2020
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Asset consultant market share 2020

Despite a changing market for asset consultants, the current oligopoly have managed to maintain a firm hold on the market, with market share remaining at 77%, according to research from Rainmaker Information.

JANA (31.8%), Frontier (26.8%) and Willis Towers Watson (18.8%)have totalled very similar market shares since 2016, after a sharpdrop in 2015 from 90%.

Meanwhile, former specialist heavyweights Mercer and Russellhave seen their market share contract as they have reoriented theirbusinesses towards platforms,multi-management and financialadvice.

The new phenomenon in this market is the use of multiple assetconsultants, which now makes up a 22% share of all asset consultantusage.

"Super funds are getting larger and needing to developtheir own investment expertise, which has caused many of them toreview how they use their investment advisers and assetconsultants," said Alex Dunnin, executive director ofresearch at Rainmaker Information.

Australian asset consultants are currently competing for achanging pool of funds, with the $2.2 trillion institutional marketseeing more funds being internally managed by superannuationfunds.

Not-for-profit super funds now internally manage more than $230billion which is almost one-fifth of their funds undermanagement.

As Australia's super funds are running their owninvestments, they are running more investment assets than all butthe biggest funds managers.

"This is profoundly disrupting life for Australia'sinvestmentmanagers. Their super fund clients are fast becoming theirbiggest competitors," said Dunnin.

"As more superannuation funds grow in size and scale,they'll likely want to bring even more of their investmentcapabilities in-house," he added.

"It's not a coincidence that some of the fundsmanaging the most money internally also happen to be some of thelargest funds in Australia."

"With the recent budget announcements heralding furtherconsolidation among superannuation funds, this trend is likely tocontinue. It will present further challenges for asset consultantsand force them to develop new business models and enter newmarkets."

UniSuper, AustralianSuper, QSuper, Aware Super and SouthernState Superannuation Scheme are the biggest super funds thatinternally managed investments in Australia, according toRainmaker's research.

UniSuper manages about 70% of its $83 billion internally.QSuper, AustralianSuper, Rest Super and Aware Super manage about30% each.

Australian equities accounts for the largest share ofsuperannuation assets being internally managed, followed by cash,international equities and Australian bonds.

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