Are you thinking of making a change to your lineup of international managers? You already might know that process can be pricey.
According to Farris, Gillman & Associates, a Fort Lee, N.J., global investment consulting firm, the aggregate cost of changing an international manager can exceed 20% of the affected portfolio. To address the problem, the firm has started a service it calls "international focus" to quickly assess the manager and provide a detailed analysis on whether the sponsor's concerns are justified. If they are - and if the fund wishes to terminate the manager - Farris Gillman supervises the transitional phase. In this case, Farris, Gillman helps find an appropriate passive manager as a temporary solution if the fund ultimately wants an active manager.
"With this process in place," a fund "can then conduct (its) new manager search without unneeded time pressures," the brochure says. "This approach should result in a substantial reduction in both management fees during the transition as well as the trading costs that would normally impact the portfolio during management changes."
But what does Farris Gillman charge for its service? "At this point it's negotiable," said Barry Gillman, the firm's president. For one thing, "it depends on whether (we) are working in conjunction with a consultant."