Addressing questions including: Should we be using internal or external management? What are the advantages and disadvantages of each?
If your manager is not consistently beating the customized benchmark, you should consider an investment manager search.
In fact, irrespective of how the manager is performing, a periodic manager search will automatically keep investment management fees competitive and your relationship with the manager as effective as possible. Strategic Asset Alliance maintains a proprietary database of asset managers from which to draw. If you are an asset manager and wish to be reviewed by SAA for inclusion in this database, please see Investment Manager Information section of our web site.
There continues to be a massive over supply of investment managers chasing insurance investment dollars. This is largely due to two main factors:
1. Large insurers looking for more fee based income figure they can leverage their existing investment departments’ expertise and infrastructure in serving other insurers.
2. Investment managers, seeing the increasingly competitive landscape of institutional and pension business, look at the huge pool of insurance investment dollars, and rub their hands in glee.
This means three major trends are occurring:
1. Investment manager fees for insurers are increasingly competitive. Virtually all investment managers will discount their stated fees. Some even go so far as to have a very low fee number to "buy the business." It is a very small number of managers who do no discount their fee schedule.
2. Investment managers are offering more and more services "for free" (i.e. included in their fee). Some managers will include activities like Schedule D preparation, and asset/liability management in their fee.
3. Not all of the managers that say they understand insurance, actually do. Some of these managers say they want general account assets, but would be more comfortable managing a small part of a larger asset base, where they would not be called upon to offer detailed insurer services.
- Save substantial dollars on lower investment management fees. Sooner or later, the supply of insurance investment management services will shrink and fees will rise. Over the last few years, however, fees have dropped significantly. SAA conducts confidential fee surveys for its clients to get an accurate idea of what the true ‘market’ price is for investment management services at any point in time.
- Improve investment performance. Fees are only part of the story. Managers should be judged after tax, and after fees. The right manager can be the difference between superior and mediocre performance.
- Stay focused on the three most important factors of investment management: Performance, performance and performance.