Firms Weeding Out Star Managers

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    In an effort to avoid the risk posed by ‘star managers’ who can take assets with them when they leave, asset management firms are instead trying to build investment teams, says a report by Moody’s Investors Service. The report shows asset management firms are increasingly placing greater emphasis on succession planning and compensation as they seek to create deep team cultures which they see as a positive by reducing ‘key person risk.’ To facilitate the shift away from stars to teams, firms are investing in ways to ensure knowledge is shared across teams. Additionally, asset managers are using compensation models and incentives to prevent managers from leaving.