PWC's Kohan sees clients asking for investment help
BOSTON (Reuters) - Facing turmoil in their portfolios, some billionaires are scrapping the tradition of paying only a few managers to watch over their investments and adding a layer of help by hiring a "manager of managers."
The idea is to harness more expertise to monitor the portfolio performance for high-net worth individuals whose broad range of investments is under siege during the worst financial crisis since the Great Depression.
"We are seeing some interest among clients in hiring a manager of managers as opposed to just finding an individual manager to oversee various portions of the portfolio," Richard Kohan, national partner-in-charge of PricewaterhouseCoopers' PWC.UL Wealth Transfer Solutions practice, said on Monday.
These professional money managers would then be able to better select the individual managers who would put wealthy investors' money to work and ensure that the investors' long-term goals are met.
Kohan said many of his high-net worth clients are not panicking, even as stock funds around the world lost an estimated $43 billion in the first days of October, according to TrimTabs Investment Research.
In that way, they may be distinguishing themselves from less affluent investors who have hastily moved to the safety of money market funds or U.S. bonds.
Instead, Kohan's clients, who often run multibillion-dollar businesses, are reviewing very carefully whether their investment advisers and money managers are right for them.
And that includes considering getting more help to manage their portfolios, Kohan said at the Reuters Wealth Management Summit in Boston.
Down the road, Kohan said these clients may shift their money among well known investment managers, but it is too soon to see that trend and say who might win or lose.
Besides selecting managers of managers, ultra-wealthy investors are also considering creating private companies that manage their investments and trusts, and hiring a chief investment officer to keep closer tabs on how the money is put to work.
While that may push up the price for overseeing the portfolio, these chief investment officers may be able to provide better access to top managers and perhaps help reduce those managers' fees.
Already in the hedge-fund industry, pension funds and endowments are relying more on funds of funds, where managers create portfolios of individual managers in order to minimize risk, according to industry analysts.
(For summit blog: summitnotebook.reuters.com/)
(Editing by Jason Szep and John Wallace)
