Last week's moves by Toby Thompson and Richard Buxton underline once again how important individual ...
Last week's moves by Toby Thompson and Richard Buxton underline once again how important individual managers can be to investment groups.
Their departures leave both the Newton and Barings UK equity desks weaker. For intermediaries, the decision has to be made whether to continue backing the existing groups, whether to follow the manager, or whether to use this as an opportunity to go to a third party altogether.
These are not easy decisions to make but they demonstrate a key area where intermediaries have the capacity to add value for clients.
While investment houses in general are ever keener to stress their team-based approach to running money, it is no coincidence it happens at a time when more and more fund managers are leaving to join investment boutiques.
Whether the team approach is encouraging individuals to leave or the team concept is used by groups as a cover to make key departures seem less important, is a moot point.
Again, this is another area where intermediaries can add value for clients, by keeping an eye on the ever-growing number of boutiques on the market, groups with good performance which do not show up on the direct consumer's radar screen.
In addition, the intermediaries' better knowledge of investment groups and the culture within them can be taken into account when considering recommending funds to put clients into.
Quite what large investment groups can do to stem their losses is another question. The problem with generous incentivisation schemes is that after a while almost every fund manager, regardless of their worth, has so much money they are no longer dependent on their employer. The average talents can retire in comfort, the real talent has enough money not just to leave but to help finance their own boutique operations.
This is not much comfort for intermediaries who are looking to invest client money for the long term but at least they are better placed to make decisions than the public at large.
In an era when it is no longer permissible to use past performance to justify buying a fund, all those other intangibles, such as individual motivation or remuneration, will come increasingly to the fore.
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