Could the process of fund selection and oversight, along with advisors’ thirst to acquire more clients in an increasingly competitive marketplace, actually worsen participant outcomes by causing feckless, short-sighted fund changes in retirement plans? Has open architecture, in spite of its many benefits, effectively turned investment funds into commodities? Is it the case that having access to thousands of alternatives — funds that are in a constant state of change in performance relative to their competition — is creating an increased tendency to view money managers simply as fund manufacturers and less as strategic partners?
Writing in the latest issue of NAPA Net the Magazine, columnist Jerry Bramlett explores these issues and suggests some prudent policies and practices to assist plan sponsors and their advisors in managing their relationships with investment management firms. The goal: to improve overall investment returns.
Bramlett notes three prudent practices of plan sponsors who don’t fall into the fund rotation trap:
• They know that the money management firm is more important than the individual manager.
• They favor a few seasoned management firms in a lineup.
• They hold managers accountable for implementing their philosophy and process.
Bramlett pens the “Inside Investments” column in NAPA Net the Magazine and writes for the NAPA Net portal.
