If eyebrows have been raised by the high stakes involved in some of these internet sites, the proposed revenue lines have literally hit the headlines. InvestorForce and eFrontiers are charging asset managers substantial success fees - starting at 5% of first year fee income - if they are contracted to manage a mandate through their sites. Mandate sizes and management fees vary, but, assuming a 40bps fee, these sites aim to make $20,000 for every $100m worth of mandate searches placed through their systems.
In April this year the fees controversy hit the front page of US magazine Pensions & Investments which reported that InvestorForce had to waive their standard fee after the San Francisco City & County Employees’ Retirement System protested following pressure exerted by asset managers.
But should pension funds care whether an asset manager has to pay a success fee to win their business? Surely the managers have no grounds for complaint either since they stand to save the usual marketing and personnel costs of chasing the business.
On the other hand IPE-Quest has avoided this sort of controversy by establishing a charging structure that is low compared to its rivals. Asset managers pay less than $74 to submit their details in response to manager searches posted on the IPE-Quest site. There are no other fees involved, and, like the two sites mentioned above, there are no fees for pension funds and consultants.
ManagerSelection has not yet declared its fees, but goes against the “free to investors” trend by charging investors/consultants a “low access fee” to search its database and access selected data. While there is no intention to charge asset managers a success fee, they will charge them for the comparative analysis of their products.

Topics