JAPAN - Mercer is considering launching its implemented consulting service in the Japanese institutional market.
The firm's investment management business leader for Asia Pacific Stephen Roberts said a formal review of the feasibility of such a move would likely be completed by the end of September.
The implemented consulting service will seek pension fund clients that have between A$500m-$1bn in assets under management with open, defined benefit pension schemes, but do not have large in-house investment teams, Roberts said. The product, Mercer's Dynamic Derisking Solution (MDDS), has already been introduced in Canada, the US, the UK and Ireland.
"Over the past year, we have been analysing the Asian market to gauge the applicability of our investment management services," Roberts said.
"We have been encouraged by the region's response and this has led us to roll out in North Asia first - Korea and greater China. We are also actively reviewing our business potential in Japan at present. Each market is different but we have found common ground on which to base a sensible long term business strategy."
Roberts expects at least some uptake could come from foreign subsidiaries in Japan who already use Mercer in other markets. Mercer is currently deciding whether to pursue the licensing regimes to introduce DDS itself, or to work through a locally based asset management firm as a partner to bring MDDS to the Japanese market.
"Regulation is a requirement in all markets and this takes time and capital, which is why we are considering a local partner," he said.
In addition to meeting the initial criteria, Japan is seen as a good next market for DDS because participants are already aware of fiduciary asset management.
"The service we offer staples defined benefit derisking and fiduciary management," Roberts added. "To be successful, we believe you need to couple an analysis of the asset and the liability. MDDS does this and respond appropriately to each client's requirements."
In addition to bringing DDS to Japan, Mercer is also building its business in South Korea and will obtain its investment license from regulators there, in theory, by the end of the third quarter, Roberts said.
Mercer is also hiring someone to lead the China business from Hong Kong.
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