Institutional investors that are quick to fire their investment managers over poor performance may actually suffer worse performance under a new manager, according to a study by Watson Wyatt. The consultant, in its report, said there was "room for improvement" in the way institutional investors handled the hiring and firing of managers, Investment & Pensions Europe reports, and suggested that they should "resist acting in the short term and become long term investors in terms of performance outcomes and in the savings of transition costs."
Wyatt said managers with strong records that are hired to replace fired managers would experience performance below that of their predecessors within two years of the change.