Fund manager talent war heats up

The battle between Devon and Brook may be over, but the war for talent in the fund management industry is likely to continue.

Tuesday, March 6th 2012, 5:01PM

by Niko Kloeten

Yesterday Good Returns reported the court action by Brook Asset Management against Devon Funds Management over the poaching of key Brook staff had ended in a confidential settlement.

According to Morningstar head of research Chris Douglas, cases such as this one that actually make it to court are rare in the funds management industry.

However, he said there is a lot of "poaching" going on between managers, and this has intensified in recent years.

"There's no doubt there's a war for talent - we've seen it in a lot of other countries and in the last couple of years in New Zealand where fund managers will go out and poach people and target people," he said.

"You'll see someone move to a different house as they get recruited. Managers think they can attract more clients, get a better portfolio and better results for their firm. People get a lot of kudos in this business."

But although losing key staff can be a big blow for managers, it "doesn't mean the portfolio is going is going to fall over tomorrow," Douglas said.

"If someone leaves for another ship you've got to look at the reason they left and what remains - who are the people, what is the knowledge and have they had anything to do with the process? It does create a level of uncertainty."

He also warned that the grass is not necessarily always greener, both for those who switch firms and the companies doing the poaching.

"When you get known names moving to another firm it's not always a recipe for success either."

Douglas said the fierce competition for talent is a sign of major changes that have taken place in New Zealand's fund management industry in the past five years.

These include the emergence of a number of boutique managers such as Milford, Mint and Devon, creating more competition for a limited amount of money and a relatively small local pool of talent.

"In many ways the New Zealand fund management market is a small cottage industry - there are a few dozen managers at the most competing in that space. In Australia they say there are more fund managers than there are stocks on the ASX 300."

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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