Use of sub-adviser's name: Overview, definition, and example
What is the use of sub-adviser's name?
The use of a sub-adviser's name refers to the permission granted to an investment adviser, fund manager, or similar entity to use the name or brand of a sub-adviser in marketing materials, promotional content, or official documents. A sub-adviser is a professional or firm hired by the primary investment adviser to manage specific assets or provide expertise in a particular area. The sub-adviser’s name may be used to highlight their role, expertise, or contributions in managing investments or portfolios within a larger investment strategy.
For example, in the context of mutual funds or hedge funds, the primary fund manager might employ the services of a sub-adviser who specializes in a particular asset class (like emerging markets). If the primary fund manager wants to advertise their portfolio's expertise, they may use the sub-adviser's name to demonstrate the involvement of an experienced and reputable firm in the management of the fund.
Why is the use of sub-adviser’s name important?
The use of a sub-adviser’s name is important because it helps build trust and credibility with clients or investors by showcasing the expertise and qualifications of the professionals managing the assets. It allows firms to highlight their partnerships with specialized experts, which can make the investment offering more attractive to potential investors.
For the sub-adviser, it can provide exposure and recognition for their expertise in a particular field. The use of their name in the promotional material can be beneficial for building their reputation, marketing their services, and attracting additional clients. However, the use of the sub-adviser’s name should be carefully controlled to ensure that it accurately reflects the nature and scope of their involvement in the investment strategy and complies with legal and regulatory requirements.
Understanding the use of sub-adviser’s name through an example
Imagine an asset management firm that runs a global equity fund. The firm partners with a sub-adviser that specializes in emerging markets. The asset management firm includes the sub-adviser’s name in the fund’s marketing materials to highlight their expertise in managing emerging market investments. This is done to show investors that the fund benefits from specialized knowledge and experience in a particular sector, which can make the fund more appealing to those looking to invest in emerging markets.
In another example, a financial services company that offers retirement planning services might use the name of a sub-adviser who specializes in fixed income securities in their promotional materials. By doing so, they convey to clients that the retirement portfolio has been enhanced by the sub-adviser’s knowledge and experience in managing bonds, potentially attracting more clients interested in secure, fixed income investments.
An example of a use of sub-adviser’s name clause
Here’s how a use of sub-adviser’s name clause might look in an investment agreement:
“The Investment Adviser may use the name and branding of the Sub-Adviser in marketing materials, advertisements, and other promotional content, provided that such use is in compliance with applicable regulations and the Sub-Adviser’s written consent is obtained. The Sub-Adviser’s name shall be used solely to indicate its role in managing specific assets and shall not imply broader involvement or liability than what is stated in the advisory agreement.”
Conclusion
The use of a sub-adviser’s name is a valuable tool in marketing and promoting financial products or services, especially in investment management. By showcasing the sub-adviser’s expertise, investment firms can build credibility and attract more investors. However, it is essential to ensure that the use of the sub-adviser’s name is accurate, properly authorized, and in compliance with legal and regulatory guidelines. This helps maintain transparency, avoid misleading representations, and safeguard both parties’ interests.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.