Is manager selection a thankless task for financial advisors?
A new article from Research Affiliates — "Is Manager Selection Worth the Effort for Financial Advisors?" by John West and Trevor Schuesler — examines if the resources financial advisors are allocating to manager selection add value to their clients' and their own bottom lines.
According to the article, manager selection is the most commonly marketed service by financial advisors. West and Schuesler looked at what services the Forbes top 100 financial advisor firms offer and how they staff those services.
The pair found that manager selection was listed by 39 firms in their Form ADV Part 2 brochures, with an average of more than four employees per firm participating in the activity.
By comparison, the second most commonly cited service is asset allocation, offered by 28 firms, but with less than half as many employees participating.
"Today, manager selection is the top service advisors market to clients, and the process required to provide the service claims a meaningful amount of a firm's resources," the article states.
So, is this an efficient allocation of resources or misappropriation of an advisor's time?
The article suggests advisors "carefully and honestly" assess manager selection via the impact–effort matrix. Although, the article admits that the determination of whether manager selection falls into the category of a "low–impact/high–effort thankless task" comes down to expectations.
