So the New Zealand Superannuation Fund (NZS) finally ran out of patience last week, relieving Milford Asset Management from command of some $281 million.

The pre-emptive move - painted as a temporary one by NZS - caught Milford off-guard, which in a statement said it was "surprised by the decision".

However, the surprise for the rest of the industry was that NZS had taken so long to make the call. And that's not because NZS has any inside information on the outcome of the Financial Markets Authority (FMA) Milford investigation - or it shouldn't have.

But the decision to suspend Milford from active duty is almost certainly the NZS simply engaging its reputational risk management protocols, which are duly described in the fund's 'Externally managed investments policy'.

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"Adverse event reporting," for instance, requires external managers to report to NZS if they are the subject of any "investigation by any governmental or regulatory agency or any self-regulating organisation".

"If we identify any issue that may have a reputational impact on the Fund or the Guardians we immediately report it to the Head of Communications," the NZS manual says.

From there reporting lines continue up to the top under the NZS "no surprises protocol".
(However, there's no mention in the docs of manager 'suspension' - only 'termination' - which may suggest the NZS is improvising in light of the unique situation at hand.)

As I reported in February when the Milford story broke: "Wholesale investors are also notoriously twitchy when a whiff of scandal (or any substantial change) affects their underlying money managers."

There's a sense, too, that the NZS might have done the industry a favour by forcing the FMA's hand.

Until the NZS announcement, there was no end in sight for the Milford investigation, but last week, as part of a coordinated press release assault, the FMA put a vague timeline on the process.

"We expect to conclude the final investigation steps in the next few weeks at which point we will continue our engagement with all the parties based on our findings," the FMA statement said.

The regulator also introduced a new word into the saga, saying the investigation involved "complex matters", although taking pains to point out that the complexity hasn't put "Milford client funds or assets" at risk.

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Speaking of which, Milford assets had another spectacular, weight-gaining year in 2014.

According to Australian actuarial and research house Plan for Life, Milford grew its retail funds under management (that is, excluding wholesale clients like NZS) more than 50 per cent over 2014.

In total, Milford reported retail assets of $2.9 billion as at December 31 last year - which equates to almost 5 per cent of the market.

Losing the $281 million NZS mandate - even if only temporarily - might be a blow to the Milford prestige but it would be truly surprising to see the firm's June 2015 retail figures significantly altered.