As the market pushed Lehman Brothers Holdings Inc. into a fire sale last week, some financial advisers and registered representatives said they were sticking with Lehman's storied investment management division,
Neuberger Berman, at least for now.
Meanwhile, some are simply waiting for the dust to settle before making an informed decision.
"If portfolio managers change, if portfolio managers leave, we would look at alternatives for the [clients'] money," said Mark Cortazzo, a certified financial planner and senior partner at Macro Consulting Group of Parsippany, N.J., whose firm manages about $350 million in assets. "But if it's the same team playing in a different stadium, we'll stick."
Mr. Cortazzo said that his firm had placed a "yellow flag" on Neuberger Berman portfolios and funds for more than 50 clients who invest in them. He added he has about $10 million of client assets in those funds.
Both Lehman and Neuberger are based in New York.
An online survey conducted by
InvestmentNews last Thursday and Friday of financial advisers and planners who invest in Neuberger Berman funds revealed that an overwhelming majority was sticking with Neuberger Berman, at least for the moment.
In the survey, 254 advisers and financial planners said they had clients in mutual funds run by Neuberger Berman.
About 82% of those advisers surveyed answered "no" when asked if they were considering moving clients from Neuberger funds in light of the recent developments with its parent company, Lehman Brothers.
One adviser, however, was adamant that he was pulling his clients out of Neuberger Berman funds right now, regardless of the firm's future.
"I'm very concerned about their future as a money management firm and their ability to keep their eye on the ball," said the adviser, who asked not to be identified. "We'll get out unless the tax situation is not feasible."
The adviser expects turnover at Neuberger Berman.
"If you have a proven track record, you're probably updating your résumé right now," the adviser said.
Some advisers who responded to the
InvestmentNews survey are steadfast about keeping clients with Neuberger Berman.
"They are my best-performing money manager," wrote Carolyn Thur, an Oakbrook Terrace, Ill.-based adviser with
UBS Financial Services Inc. of New York. "I would not dream of leaving them."
"We like the manager and don't feel the Lehman woes will affect the funds," wrote Craig Noel, a Bellevue, Wash.-based adviser affiliated with
Raymond James Financial Services Inc. of St. Petersburg, Fla.
Last Wednesday, Lehman chairman and CEO Richard S. Fuld Jr. said the company plans to sell off certain assets, including a substantial stake in its investment management group.
At press time, it was widely reported that the entire firm will be sold. As of Friday morning, the share price of its stock hit new lows, trading at as low as $3.55. Lehman Brothers bought Neuberger Berman in 2003 for $2.63 billion.
Neuberger Berman is not the whole of Lehman's asset management business, but it is certainly the basis of it. Lehman's assets under management have grown since the acquisition, from $9 billion in 2002 to $277 billion at the end of May, according to company reports.
Randall Whitestone, a Lehman spokesman, declined to comment about Neuberger Berman.
One analyst warned investors against pulling money from Neuberger funds in haste. "I wouldn't get out of Neuberger Berman funds just because of trouble at Lehman," said David Kathman, a mutual fund analyst with Morningstar Inc. of Chicago.
"I wouldn't expect [portfolio managers] to leave unless there's a really bad scenario," said Mr. Kathman, who covers all Neuberger's domestic-stock funds, including the $12.6 billion Neuberger Berman Genesis Fund.
He said that the portfolio managers with whom he has spoken at the firm are "pretty much in the dark" about Lehman's future, including what kind of buyer will come forward.
Mr. Kathman added that he expects a potential buyer would "want to keep it going" and not tinker with the firm's success.
Data editor Tim Smith contributed to this story.
E-mail Bruce Kelly at [email protected].
