Pension Consultants

Pension plan with graphs
Pension consultants offer specialized advice in this field. Kirby Hamilton/E+/Getty Images

Pension consultants are a category of investment advisors who provide analysis and recommendations on investment options to the persons in charge of pension funds. Some pension consultants also may advise educational and charitable endowments.

The primary function of pension consultants is to present independent analysis of investment performance among money managers and to advise pension funds or endowments on the allocation of their funds.

Pension consultants will recommend allocations based on the client's needs, tolerance for risk and investment time horizon.

Positives: ​

Pension consultants have the opportunity to generate significant revenues if they collect fees both from the pension funds that they advise and from money managers to whom they steer business. This can translate into handsome employee compensation packages.

People who work as pension consultants have an opportunity to gain a broad-based knowledge of money management and portfolio analysis. They also can get exposure to a number of potential employers, among both client companies and money management firms, which can enhance their long-range career opportunities.

Negatives: ​

Pension consultants have conflicts of interest inherent in their business if they collect fees from both pension funds and money managers. This arrangement can compromise the independent judgment of pension consultants.

Additionally, as the scandals over the Ponzi schemes run by Bernard Madoff, Bayou Group and others prove, investment advisors such as pension consultants often have been guilty of inadequate due diligence. That is, advisors such as pension consultants frequently take self-reported data from money managers at face value, without auditing their accuracy.