Is it time to break up with your fund manager?

Fund Manager BreakupBy now you probably know that your duty to look after your investments does not end after the initial due diligence of selecting an investment manager. Manager selection is a crucial first step, but that is really only the beginning. You must establish a process to prudently monitor your investments with quantifiable criteria that will systematically generate a review of underperforming investments. Common reasons to replace an investment might include the investment manager retiring, the investment taking excessive risk, or the investment’s performance lagging the benchmark. However, sometimes after a thorough review of your investment it could make sense to retain it instead of replacing it. Let’s look at some of the reasons to not break up with or fire your investment manager.Continue reading

Checksmart Excessive Fee Suit Requires Closer Look at Fund Performance

Excessive Fee Lawsuit FiledA recently filed lawsuit attempts to hold plan fiduciaries to what has been an unprecedented standard until now. Previous lawsuits accused plan fiduciaries (with a slight amount of industry knowledge) of what could be considered “a no brainer”: don’t pay too much. If there is an identical or nearly identical investment option offered at a lower cost, choose the lowest cost option. If it is not feasible to switch to the lowest cost option, retain the fund but rebate revenue sharing. Simple, provided you know what you’re looking for. This new lawsuit requires fiduciaries to put more thought into the plan’s fund lineup, particularly with respect to fund expenses relative to fund performance.Continue reading