Whether investment consultants inform clients of status changes with their money managers may well depend on the consultants’ policies or the specific reasons for removal. The consensus is that informing clients of manager line-up changes is a best practice to maintain good relationships. However, there are compliance considerations on the timing of the manager removal and related communications to clients. According to Founder and President Amy Lynch, if a manager is terminated from a consultant’s investment plan lineup, the fiduciary duty to clients comes into play and the consultant should give the client first access and first choice, where the client has the opportunity to make the decision about the manager’s status first. Ms. Lynch further states that the typical problematic scenario is when the consultant makes an internal decision about a manager’s status that is in conflict with what they are recommending to investor clients. See FundFire (subscription required), “Consultants Give Clients First Shot to Fire Managers Before Changing Own Portfolios”
