EUROPE - Spanish consulting firm Novaster has chosen Frank Russell as its ‘preferred provider' of multi-manager products in a move that brings the conflict of interest debate firmly onto continental Europe.
Novaster’s move follows other recent deals in the UK where investment consulting firms, such as Mercer and Towers Perrin, have chosen to lose their independence and go down the preferred provider route.
Diego Valero, chief executive officer of Novaster, said the consulting firm has deliberately structured the deal as he did not want to offer Frank Russell products on an exclusive basis.
Towers Perrin decided last September that it did not want to offer investment consulting and have an alliance with Frank Russell simultaneously partly due to the conflict of interest.
Novaster, which is one of the main consulting firms in the Spanish market and has operations in Dominican Republic and Chile, has left the door open to offer other providers’ manager-of-manager products and Valero said the firm will continue to hold beauty parades. This leaves Frank Russell’s ‘preferred provider’ deal very watered down.
“It is quite different to the Towers Perrin arrangement,” said Valero.
“The independence of a consultant is difficult to define,” he added.
He said that Frank Russell would not pay a fee to Novaster when it recommends Russell’s product to a client.
Switzerland has also seen consulting firms, such as PPCmetrics, sell their research to fund managers (UBS Global Asset Management) for the latter’s manager-of-manager products but have so far deliberately chosen not to offer a preferred provider product because of the conflict of interest involved.
In the UK Mercer has a preferred provider deal with Attica, while Aon offers its own in-house manager-of-manager product, although has decided not to offer it in Denmark.
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