Joshua Deringer Comments on Managers Selling Funds to Become Advisers With BoardIQ

In “Managers Selling Funds, Sticking Around as Subadvisers,” BoardIQ turned to investment management partner Joshua Deringer for his commentary on advisers deciding to sell their funds but continuing managing portfolios as subadvisers.

“The boards have to be careful the fees the adviser is getting paid is for advisory services and not distribution,” said Deringer. Directors also should look at the fee split between the new adviser and manager-turned-subadviser, Deringer commented, noting a large amount of excessive fee lawsuits in recent years that focused on how much the primary manager kept of an advisory fee and how much the subadviser received.

“I’d like to think board members in executing their duties don’t put their interests ahead of shareholders,” Deringer noted, adding directors understand their job is to do the best thing for investors. “But they’re putting themselves out of work by approving it.”

The full article is available for BoardIQ subscribers.