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‘Manager carousel is driving IFAs to the multi-fund firms’

Fund management firms are driving IFAs towards multi-manager funds by failing to keep hold of their talented managers, says Chelsea Fin- ancial Services managing director Darius McDermott.

He says that many IFAs spend money they can ill afford researching the performance and fundamentals of funds in order to recommend them to clients, only to see fund managers leave. The rapid turnover of managers means firms are losing direct sales as frustrated IFAs choose to employ multi-managers to keep track of changes on their behalf, leaving them to get on with building client relationships.

McDermott has just had to remove Alix Stewart’s Gartmore high yield corporate bond fund from his buy list a fortnight after recommending it, and telephone clients expressing an interest in the fund to tell them about Stewart’s defection to Swip. In the past he had to remove Neil Pegrum’s UK dynamic fund from his buy list the day it went on, as Pegrum quit for Cazenove, and Patrick Evershed’s Rathbones special situations fund after three days when he quit for New Star in 2001.

McDermott says: “While brokers with our research capacity can keep up with the changes, it is frustrating for many IFAs to see all this movement.

“Having been through all the due diligence to research a fund and recommend it to their clients, a fund manager leaves and all the hard work is wasted. It is often easier for IFAs to switch into using a fund of funds.”

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