Frontier Advisors has just completed a major restructure of how it operates, to equip the fund for the industry’s changing asset consulting needs in a new superannuation environment.
Staff levels have risen from 42 to 50 since Damian Moloney came on board 18 months ago as chief executive officer. New divisions have been created, and Moloney says the team is gradually moving away from just a retainer-based model.
The Global Investment Research Alliance with Segal Rogerscasey, announced two weeks ago, is just one piece of a structure that will allow more clients to access more aspects of Frontier research.
The completion of Frontier’s research database – Mercury – late last year, made the Rogerscasey alliance possible and now means that both parties can access each other’s research anytime.
But the total restructure of the business is a result of some forward-looking planning and consideration about where the investment consulting and investment business will head over the next five to seven years.
“They [funds] are going to use advisers in a very different way,” Moloney says.
“All the changes we are making…are really around trying to reposition our business for the new fund environment where we will largely be dealing with bigger funds [with more specialists].”
Frontier now operates with four research teams of: equities; debt and alternatives; real assets; and capital markets and asset allocation.
In addition to those research teams there are also four major project teams: the quantitative solutions group; Mercury research platform; retirement phase solutions; and governance advisory service (which includes MySuper).
The quantitative solutions group helps funds create analytical tools.
“With the in-house teams they want fairly heavy-duty analytical tools but they don’t want people sitting there creating them,” Moloney says.
“Our quant group is creating tools for clients, particularly around how to model cash flows,”
Of the ongoing structural change in the industry Moloney says that he is noticing a lot of his competitors moving to adapt.
“A lot of the small firms have disappeared. You’ve got to be big enough to employ specialists,” he says.
But many small and medium funds still like the general retainer relationship.
“We’re sort of thinking that clients will have a large relationship [with a consultant] but they will use the other firms for other things,” Moloney says.
That means consultants need a structure that enables clients to pick and chose.
“It will be very similar to how the accounting industry works now.”
By Penny Pryor