Rating the superannuation consultants

Superannuation funds are famous for outsourcing everything, from administration to tender considerations to technology. This offers an environment ripe for consultancies focused on the industry to find success, and Super Review ran an extensive survey throughout June to determine which consultants were the best, as determined by their clients - funds.

Asked to rate the services of consultants they had used, or were using, as ‘excellent’, ‘average’ or ‘poor’, the survey found that, across different categories, stand-out firms were JANA, Frontier, Willis Towers Watson, QMV, and, to a lesser extent, Deloitte and KPMG.

While an overall winner for the best consultancy will be announced at Super Review’s Super Fund of the Year Awards in August, based on both the quality of services offered and the reliance of superannuation funds on consultancies for that service, analysis of the survey results showed that the strongest performing consultants for different areas vary depending on their specialisation.

Further, the results also revealed that, while the quality and expertise of consultancy firms’ staff was largely viewed favourably, many felt that they were not as expert as they held themselves out to be, and the value for money offered by consultants raised some concerns amongst respondents.

Most frequently used services

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Unsurprising given the reliance of the superannuation industry on outsourcing, the most frequently used service offered by consultancies to superannuation funds was tender consultancy, as the chart below shows. This included the selection of group insurers, administrators, custodians, and technology providers.

Nearly half of respondents (42.11 per cent) reported that they ‘often’ use consultants for tenders, with 15.79 per cent saying that they ‘always’ did. A further 21.05 per cent responded that they ‘sometimes’ did, while the same portion ‘never’ did.

This was also the category to garner the most responses, with a majority of respondents expressing their feelings toward tender consultancy services.

The next most frequent specific use of superannuation consultancies, as judged by the survey respondents, was fund selection, with a combined 41.67 per cent of respondents answering the question saying that they ‘always’ or ‘often’ utilised this service.

Significantly however, an equal portion of respondents said that they ‘never’ used consultants for fund selection, somewhat diminishing the meaningfulness of the size of the portion who did. A further 16.67 per cent said they ‘sometimes’ did so.

Suggesting that investment decisions are increasingly made in-house, an even larger percentage of respondents said that they ‘never’ used consultants for asset allocation advice, although the overlap between funds using neither that nor fund selection assistance wasn’t measured.

The majority of respondents answering that question ‘never’ sought assistance from consultants on asset allocation, at 54.55 per cent, while 9.09 only ‘sometimes’ did. Equal portions reported that they ‘often’ or ‘always’ did, at 18.18 per cent of respondents for each.

It’s worth noting that this last category received the lowest portion of responses of the options shown in chart one however, suggesting that more weight should be given to the figures reached for the other services.

Finally, many respondents used superannuation consultancies for reasons other than those specifically listed in the survey. These included research and analytics, industry knowledge, core superannuation system development, governance advice, business analysis, process analysis, strategic advice, investment surveys, and guidance on marketing, technology and member experience.

There was also a heavy emphasis on using superannuation consultants on project work, with respondents saying they engaged firms for help with project resourcing and ad hoc project work, business and system consulting for projects, project delivery, and project management.

Of the respondents, 80 per cent ‘often’ or ‘sometimes’ used consultants for other work such as the types listed above, with 13.33 per cent ‘always’ did and 6.67 ‘never’ did.

The best tender consultants

The stand-out consultancy for tender advice, with both the highest amount of ‘excellent’ ratings and the equal second-highest number of respondents using them for this service, was QMV. Over 85 per cent of respondents rated their services in this area as ‘excellent’, with the small remainder calling them ‘average’.

The next best consultancies with a statistically significant number of respondents rating them in this space were KPMG and Deloitte, with both having around two-thirds label their services as ‘excellent’ and the remainder evenly split between ‘average’ and ‘poor’. Rice Warner rounded out the top four, with equal amounts of respondents calling their tender consultancy services ‘excellent’ or ‘average’, and just 14.29 per cent finding them ‘poor’.

The most-used consultancy in this space was also the worst-rated. The Heron Partnership had 62.50 per cent of respondents rate its tender services as ‘poor’, with just one-eighth believing they were ‘excellent’.
PwC was also a poor performer in this area – despite the high number of respondents using the consultancy, half thought it was ‘poor’ and the remainder leaned strongly toward ‘average’ over ‘excellent’. SuperRatings, too, disappointed respondents, with none rating it as ‘excellent’ although 83.33 per cent found it ‘average’.

Chant West was the final consultancy to see a high number of respondents utilising its services, with results concentrated in the ‘average’ category but also showing some answers in ‘excellent’ and ‘poor’.

The best asset allocation consultants

Asset allocation expert, JANA, was the most used consultant in this category, recording largely glowing feedback from funds utilising its services. An overwhelming majority reported its services were ‘excellent’ or ‘average’, with most falling into the former category. Only around a tenth rated its asset allocation consulting as ‘poor’.

Frontier and Willis Towers Watson were the next most favourably reviewed asset allocation consultants, with all respondents to utilise the firms for these services rating them as ‘excellent’ or ‘average’, and two-thirds awarding them the top rating.

Other consultancies to see a high volume of funds utilising their services in this area were Mercer and Chant West, but with more mixed results. Both were rated largely as ‘average’, with 62.50 per cent of respondents rating each fund as thus. The research house saw 37.50 per cent of respondents grant it an ‘excellent’ rating however, while Mercer had just 12.50 per cent rate it as such while a quarter slammed it as ‘poor’.

There were also some strong performers amongst the less used funds as well, with the caveat that they still had enough respondents reporting their use to be statistically significant. Around three-fifths of QMV’s asset allocation clients who responded to the survey rated their services as ‘excellent’, with the remainder labelling them ‘average’. Rice Warner received the opposite portions under each category, with neither being rated as ‘poor’.

PwC also had a largely satisfied audience, with a third of respondents who had used the firm for asset allocation rating its services as ‘excellent’ and two-thirds as ‘average’. The other Big Four consultancies didn’t fare as well however, with half of respondents rating Deloitte calling its asset allocation services ‘poor’ and 20 per cent of EY’s doing the same. The latter didn’t offset this with any ‘excellent’ ratings either, with the remainder being ‘average’. KPMG was slightly more mixed, with around half describing its asset allocation consulting as ‘excellent’ and the rest evenly split between ‘average’ and ‘poor’.

Finally, the worst performing consultant in this category was the Heron Partnership, albeit from a smaller sample that the above firms. It had the highest portion of ‘poor’ ratings at around 75 per cent, with the rest of its responses being ‘average’. Russell Investments and SuperRatings also delivered disappointing results, with half of respondents labelling their services as ‘poor’ and the other half as ‘average’, with no ‘excellent’ responses.

The best fund selection consultants

While they weren’t the most-used consultancies for fund selection advice, JANA and QMV were by far the strongest. All respondents rated their services here as ‘excellent’. The most frequently used consultant by respondents, Willis Towers Watson, was also a strong performer, with 28.57 per cent rating it as ‘excellent’, 57.14 per cent as ‘average’, and just 14.29 per cent as ‘poor’.

Other funds to be heavily used in this space were Chant West, Mercer, Deloitte, SuperRatings and Frontier. Frontier was the strongest, with all respondents ratings it as ‘excellent’ or ‘average’, with Chant West close behind them with similar responses, just with a leaning more toward ‘average’.

Deloitte offered a mixed bag. While around three-fifths of respondents labelled their services in this category as ‘excellent’, the rest were evenly divided between ‘average’ and ‘poor’. Mercer was similar; while 16.67 per cent of respondents found it ‘excellent’, double that amount called it ‘poor’ and the rest were ‘average’.

SuperRatings was the worst of the most-used funds. There wasn’t a single respondent to rate its fund selection services as ‘excellent’, and a bit under half called them ‘poor’. Other consultants to receive such results, although for less significant numbers of respondents, were EY and the Heron Partnership.

Overall service provision

The survey also asked respondents to rate consultants they were or had previously used as ‘excellent’, ‘good’, ‘average’ or ‘poor’ in terms of the quality and expertise of staff, the feedback they offered, value for money, and their overall service.

From the respondents’ feedback, Frontier had strong personnel, with two-thirds rating its staff as ‘excellent’ and one-third as ‘good’. This was based on spending over three hours with them, and in some cases more than 10.

Chant West also had consistently positive feedback on its personnel, with all respondents utilising its services labelling its staff as ‘excellent’ or ‘good’. They were praised as being “technically great”, but one respondent did believe that they were ‘too focused on awards’. This was based on respondents typically spending under 10 hours with the consultant’s representatives.

Turning to the big four consultancies, Deloitte received largely positive responses for its personnel, albeit not glowing, and one respondent felt the staff were “not as expert as they say”. Similar sentiment was expressed toward KPMG; while no respondents felt that the quality and expertise of KPMG’s staff was ‘poor’, one did feel that “they say they are experts, [but] output suggests otherwise”. This was based on more time spent with the consultants than was typical across the consultancies surveyed.

SuperRatings personnel were praised as consistently ‘excellent’ or ‘good’, as was the research house’s value for money. One respondent also noted that it didn’t fall into the same bias traps that many ratings houses do, saying that it was “trying hard to shake their inherent bias”.

Willis Towers Watson, too, was consistently given positive ratings for its personnel, as it did for its feedback and value for money. They did receive some questionable feedback, however, with one respondent saying they were “stuck in the 1990s” and another response being “there are consultants who make things happen, those who watch what happens. Willis Towers Watson wonders what happened”.

All respondents felt that the quality and expertise of QMV’s personnel was ‘excellent’, as was its feedback, with many offering specific comments. They were described as “professional, knowledgeable, insightful and experienced”, “everything we need from consultants”, “very responsive”, and “tightly embedded in our project”. This was usually spent on spending more than 10 hours with the company’s representatives.

One respondent labelled the Heron Partnership’s staff as “opinionated”, which arguably is part of a consultant’s role, with half rating their quality and expertise as ‘good’ and the rest split between ‘average’ and ‘poor’. The feedback received from Heron was sticking point; while respondents were mostly neutral toward the feedback they got from consultants, with ‘good’ and ‘average’ being the most common responses’, Heron’s performance in this category was mostly ‘average’ with ‘poor’ also making appearances.

Pertinently considering that Heron also provides ratings, one respondent said they found the firm “appeared to have biases”, and was unsure whether they were genuine or not.

JANA’s staff were consistently rated as ‘good’, although one respondent found them “a little condescending”. All respondents also believed that the firm’s overall quality of service was ‘good’, and most said the same for its value for money and feedback, painting an image of an adequate if not inspiring user experience.

The quality and expertise of Rice Warner’s personnel was equally described as ‘excellent’, ‘good’ and ‘poor’, with one respondent feeling they were “better than most”. This was largely based on over 10 hours spent with them. The quality of the firm’s feedback received the same results, with similar value for money too.

Mercer largely didn’t receive any ‘excellent’ feedback in these categories, with the exception of personnel, recording even splits over ‘good’, ‘average’ and ‘poor’ ratings for feedback and value for money.

A common issue amongst the big four was pricing. One user said that Deloitte “charged like a wounded bull”, and not a single respondent to use their services felt they offered ‘excellent’ value for money. Around half thought their value for money was ‘good’, with the remainder split between ‘average’ and ‘poor’.

KPMG saw slightly better results, with a third of respondents feeling they offered ‘excellent’ value for money, but still received a comment that they “overcharge for their minimal expertise”.

The consultant to offer the best value for money was QMV, as 85.71 per cent of respondents felt that the consultancy offered ‘excellent’ value for money, with the remainder rating it as ‘good’. All respondents labelled the overall quality of services provided by QMV as ‘excellent’.

Overall, respondents signalled they wanted more transparency from consultants in general about their charging and where their revenue comes from. One respondent summarised this view, saying “they should have to disclose the $ value that they receive from various funds, managers and insurers”.

Who are the best consultants?

Ultimately, the results of the survey suggest that the best consultant to turn to depends, unsurprisingly, on the service the fund seeks. Those that stood out in asset allocation, for example, generally didn’t provide similarly strong performances in tender consultancy.

Most offered decent personnel and feedback, but value for money remained a sticking point for many respondents. The more niche consultants focused on the superannuation industry specifically did better in this area than the companies that had a broader service offering, whether by also providing ratings and research or, like the big four, consulting on several sectors.

It’s also worth noting that there are several consultancies that were covered in respondents’ answers but not in this analysis, as there were too few respondents utilising their services to provide meaningful data.