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Independent View

It is a nerve-wracking time for any fund management group if one of their

leading investment managers leaves, particularly to go to a competitor.

Unless they can replace him with someone just as good, there is likely to

be an exodus of money following the departure.

It is also a headache for the IFA in deciding whether to advise his

clients to stay put and see what happens or to follow the manager.

The Jupiter saga has quietened down but it does highlight the importance

of key individuals within any company.

Over the years, there have been examples when it has been right to follow the manager and I recall many, many, many years ago advising clients to follow Bob Yerbury when he left Equity & Law to join Perpetual.

On the other hand, there have been many examples when it would have been

right to stay put. When Alan Tory left Aberdeen to join SocGen, John

Pullar-Strecker continued to perform with Aberdeen technology.

William Meaden, after a successful career with Schroder, did well with

Newton high income but, when he left, Toby Thompson continued to make that

fund perform.

In fact, Jupiter made a good move following the departure of William

Littlewood by putting Tony Nutt in charge of Jupiter income.

Conversely, it would have been wrong to stay with Lazard income following

the departure of Tim Russell.

It is perhaps in these circumstances that the unit trust groups&#39 sales

consultants can prove their worth to the IFA. It is obviously in the

interest of their employer to make sure we know when a leading fund manager

is leaving. We should know about it first rather than read about it in the

paper or be told about it by our clients.

More important, who is going to replace him and how is the fund going to

be managed in the future? This is information we need as quickly as

possible so that a decision can be made on what course of action to follow.

Too often, a unit trust group can try and brush off such an episode in an

attempt to play down its importance. This is a big mistake which will only

backfire with the IFA deserting the group altogether.

I am surprised we have not had an FSA consultation paper on the subject of

how to deal with changes of fund manager – we seem to have had one on every

other subject. I note that the recent one across my desk is number 57 but

no doubt there are a few more to come.

I am not sure the people at the FSA enjoy producing such documents any

more than we appreciate receiving them. In conversation the other day with

someone at the FSA, who was in the process of writing a consultation

document, I was asked whetherI was likely to respond to it once I had

received it. He seemed absolutely delighted when I indicated that I

probably would not.

Perhaps we should have a consultation paper on the issue of consultation


They say that nobody likes change but it is something we all have to get

used to. Sometimes it is delayed, like the demutualisation of Standard

Life. I cannot believe the mutual got away with it but I am sure this

question will be revisited again in the future.

We now have the fund supermarkets upon us, apparently revolutionising the

way in which we will buy and sell investments in the future, so we shall

have to see what these have in store for us. At least they will lead us to

get more familiar with the internet and how it might benefit our business.

On a more mundane level, there is the continual conversion of unit trusts

into Oeics.

Nothing stands still in this business and neither should it, it is what

makes it exciting. What we must guard against is knee-jerk reaction to

change when it does occur.

It is far more advisable to take stock and assess the situation before

coming to any conclusion.


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