In BoardIQ, Investment Management Practice Group Co-Leader Discusses Advisory Fee Reductions

An article published by BoardIQ on Oct. 10 titled “Cuts to Advisory Fees Being Driven by Advisers, Not Boards” reports that mutual funds are cutting management and advisory fees at a higher rate in 2017 than in 2016. According to data from Broadridge as well as interviews with attorneys, consultants and directors, competitive pressures, investor preferences for passive products, and more streamlined platform offerings are resulting in rises in fee reductions by advisers. “The fee calculus has changed for numerous fund managers,” stated investment management partner and practice co-leader Tom Hiller in the piece. “There’s been a progression from considering what is a reasonable fee to what is a saleable fee,” Mr. Hiller adds, noting that despite that shift, boards still are focused on determining a reasonable fee as they proceed through the annual 15(c) process. But in some cases, that emphasis on reasonableness is being overtaken by advisers’ recognition of market realities, Mr. Hiller notes.