RFP - Ventura County, California
VENTURA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
Request for Proposals for
General Investment Consulting Services and/or
Discretionary Consulting Services
Table of Contents
|Section I: Background and Description of Services Required |3 |
|A. Ventura County Employees’ Retirement Association (VCERA) |3 |
|B. VCERA’s Investment Program |4 |
|C. Reasons for the Request for Proposal |6 |
|D. Nature and Scope of Services |6 |
|E. Frequently Asked Questions (FAQ) |9 |
|F. Minimum Qualifications for the Proposal |11 |
|Section II: Process for Submission of Proposal |12 |
|A. Preparation of the Proposal |12 |
|B. Submission of the Proposal |13 |
|C. Timeline for the Search and Selection Process |13 |
|D. Questions and Communication Regarding the RFP |14 |
|E. Intent to Respond and Shortened Proposal Option |14 |
|F. Cancellation of the RFP |15 |
|G. California Public Records Act |15 |
|Section III: Information to Be Provided |17 |
|A: Letter of Transmittal |17 |
|B: Questionnaire |18 |
|C: Philosophy and Approach to Consulting |41 |
|D: Additional Materials & Documents |43 |
|E: References |44 |
|F: Fee Proposal |45 |
|Appendix 1: Mandatory Provisions for Investment Consultant Services Contract | |
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Section I – Background and Description of Services Required
A. Ventura County Employees’ Retirement Association (VCERA)
VCERA is a cost-sharing multiple-employer defined benefit pension plan covering the employees of the County of Ventura and other participating agencies pursuant to the County Employees Retirement Law of 1937, California Government Code Section 31450, et seq. VCERA operates as an independent governmental entity separate and distinct from the County of Ventura.
VCERA provides lifetime retirement, disability, and death benefits to its members.
VCERA is governed by the Board of Retirement (Board). The Board consists of nine members and two alternates. The County Treasurer is a member of the Board by law. Four members are appointed by the Board of Supervisors, one of whom may be a County Supervisor. Two members are elected by the general membership; one member and one alternate are elected by the safety membership, one member and one alternate are elected by the retired members of the Association. All members of the Board serve terms of three years except for the County Treasurer whose term runs concurrent with his term as County Treasurer.
The Board is responsible for the administration of the plan and the investment of VCERA’s assets. Its specific responsibilities include but are not limited to:
• establishing and implementing an investment policy manual and statement;
• adopting employee and employer contribution rates based on annual actuarial studies; and
• establishing policies for the effective operation of VCERA.
It is also responsible for establishing policies governing the administration of VCERA, and oversees the Retirement Administrator and other staff in the performance of their duties in accordance with the Government Code and the Board’s Rules, Regulations and Policies.
The Board employs a staff of twenty (20) to administer the plan. The Board also retains various advisors and consultants on a contractual basis, including, but not limited to, the following:
• General Investment Consultant
• Independent Actuary
• Independent Auditor
• Board Counsel
• Fiduciary Counsel (as necessary)
• Investment Legal Counsel (as necessary)
VCERA is actuarially funded by employer and employee contributions. The Board retains an independent actuary to perform an annual valuation of the plan. Based on such valuations, the Board determines rates of contributions and recommends such employer and employee rates to the County of Ventura for adoption by the Board of Supervisors.
B. VCERA’s Investment Program
The Board is responsible for the prudent investment of member and employer contributions and defraying reasonable expenses of administration, making benefit determinations, and managing the investment of VCERA’s assets.
Total assets for VCERA, as of December 31, 2012, were approximately $3.5 billion, and the assets of VCERA are, or are in the process of being, invested in the following asset classes:
• U.S. Equity
• International Equity
• Global Equity
• U.S. Fixed Income
• Global Fixed Income
• Real Estate
• Private Equity
• Liquid Infrastructure (MLPs)
• Global Tactical Asset Allocation (GTAA)
• Risk Parity
• Cash (overlay, synthetic rebalancing, and tactical rebalancing)
VCERA’s custodial bank holds system assets which are externally managed by, presently, sixteen (16) registered investment managers. VCERA has a small portion of cash held by the County of Ventura Treasurer and Bank of America.
VCERA has established an asset allocation policy and investment manager structure as shown below, and a portion of it is still being developed for current searches:
|Asset Class |Target |Investment Managers |
|U.S. Equities |36% |BlackRock Extended Equity Index |
| | |Western Index Plus |
| | |BlackRock Equity Market Fund |
|International Equities |19% |BlackRock ACWI ex-U S. Index |
| | |Sprucegrove |
| | |Hexavest |
| | |Walter Scott |
|Global Equities |10% |GMO Global Equity |
| | |BlackRock MSCI ACWI Equity Index |
|Fixed Income |25% |Western |
| | |BlackRock U.S. Debt Fund |
| | |Reams |
| | |Loomis Sayles |
|Global Fixed Income |2% |Loomis Sayles Global |
| | |PIMCO Global |
|Real Estate |8% |Prudential Real Estate |
| | |UBS Real Estate |
| | |Guggenheim (To be liquidated 3/31/13) |
| | |RREEF America III |
|Private Equity* |5% |Adams Street Primary Fund of Funds |
| | |Pantheon Secondaries Fund of Funds |
| | |To Be Determined (search underway) |
|Liquid Infrastructure* |3% |Tortoise |
|MLPs | | |
|Liquid Real Return* |7% |To Be Determined (search underway) |
|GTAA | | |
|Risk Parity | | |
|Cash |0% |Clifton Group (cash overlay, synthetic |
| | |rebalancing, and tactical rebalancing) |
* Redistribution of traditional asset class allocations pending final allocations to new and evolving asset classes.
C. Reasons for the Request for Proposal
The current investment consultant firm has served VCERA for approximately 12 years. This RFP is being issued in order to invite proposals from qualified investment consulting firms to help the Board ensure that it will have appropriate consulting resources for the future. The Board will consider engaging an investment consultant to provide either general investment consulting services or discretionary consulting services (also referred to as an outsourced CIO model). Responses to this RFP may contain proposals for general investment consulting services, discretionary consulting services, or both.
The Board reserves the right, at its sole discretion, to enter into either a general investment consulting OR a discretionary consulting relationship at the completion of this search process. The current investment consultant is not precluded from submitting a proposal in response to this RFP.
D. Nature and Scope of Services
General Investment Consulting Services
In general, the firm will report to the Board and assist the Board in the ongoing process of investment policy development and implementation. The firm will serve in a fiduciary capacity and will acknowledge in writing its fiduciary status, without qualification. In all cases, the firm and its representatives will offer advice to the Board that is solely in the interest of the plan participants and beneficiaries of VCERA. The services required include, but are not limited to, the following:
1) Investment Policy and Asset Allocation
a) Upon engagement, and annually thereafter, conduct a comprehensive review and analysis of investment policies, objectives, asset allocation and portfolio structure, and recommend changes, if appropriate. Review and update VCERA’s investment policy statement.
b) Work with staff and the actuary and conduct an asset/liability study of the fund at least every three years, including recommending methodologies, assumptions, asset classes for consideration, and alternative asset allocations.
c) Develop an appropriate investment management structure for VCERA and each asset class that considers the role of active versus passive strategies and investment management styles under different market conditions.
d) Analyze the investment characteristics of available asset classes and the risk/return potential of alternative asset mix policies.
e) Develop policies, guidelines and procedures for rebalancing the asset mix.
f) Advise VCERA about new developments in investment management techniques and portfolio management strategies. Analyze how new techniques might improve the investment program and provide advice as to whether they should be implemented.
g) Provide advice and recommendations on various other investment policy issues including, but not limited to: currency management, derivatives, rebalancing, use of soft dollars, securities lending, proxy voting, etc.
2) Investment Manager Search, Selection and Review
a) Provide advice and recommendations on investment manager allocation and structure, manager mandates and performance benchmarks.
b) Provide ongoing monitoring and oversight of investment managers to ensure compliance with laws and regulations, investment policies and manager mandates. Have periodic discussions with managers on investment performance and organizational issues (such as changes in ownership, staff, new products, etc.). Report to the Board as necessary.
c) Advise on manager retention/termination, and develop a formal manager review process.
d) Provide investment manager search and selection services from time to time and make recommendations as necessary.
e) Assist in negotiating appropriate investment management fees and with monitoring and evaluating manager trading and transaction costs.
f) Participate in Board due diligence visits.
3) Performance Monitoring and Reporting
a) Compare the investment performance of the total fund, asset classes and investment managers to relevant benchmarks and “peer group” samples.
b) Conduct performance attribution analysis to determine the value added by investment policy, asset allocation and security selection.
c) Prepare and present quarterly performance reports, including attribution analyses, and monthly performance summaries to the Board.
d) Recommend appropriate performance benchmarks for the total fund, each asset class, portfolio composite and investment manager.
e) Provide access to performance evaluation and attribution analytics, tools and software.
4) Client Service and Education
a) Attend 11 regular monthly meetings of the Board and 1 investment retreat, as well as special meetings pertaining to investments that may be necessary from time to time.
b) Formulate, under the direction of the Board, the agenda of the full-day investment retreat.
c) Coordinate effectively with staff, the actuary and the custodian bank.
d) Respond to inquiries between meetings in an appropriate and timely manner.
e) Report any significant changes in the firm’s ownership, organizational structure and personnel in a timely manner.
f) Assist on special projects as needed from time to time.
g) Provide all other investment advisory-related services as requested.
h) Provide education to Board and staff on investment issues and participate in ad hoc workshops as requested by the Board from time to time.
i) Make available all firm research, including proprietary research, and provide consultation with research staff.
5) Review, Search and Selection of Other Investment-Related Vendors
a) Provide advice and recommendations on custodial arrangements, (including conducting custodian review and search services, securities lending, and securities litigation processing).
b) Assist with evaluation, search and selection involving other investment-related consultants and vendors as required.
Discretionary Consulting Services
As noted in Section C, the Board is also considering a discretionary consulting relationship (also known as an outsourced CIO model). The discretionary investment consultant will be required to perform all the activities set forth in Sections D.1 to D.5 above, as modified for a discretionary consulting relationship. This RFP includes a questionnaire containing a series of questions regarding the potential scope of such a relationship, and the proposing firm’s qualifications, experience, and approach to discretionary consulting. The Fee Proposal of this RFP also contains a separate fee schedule for the provision of discretionary consulting services.
E. Frequently Asked Questions (FAQ)
1. What are the major investment issues or challenges that VCERA is currently confronting?
VCERA is currently struggling with capital market assumptions and an asset allocation that makes it difficult to achieve an earnings assumption of 7.75%. Further, VCERA is managing $3.5 billion in assets without dedicated staff, splitting responsibilities between the Retirement Administrator, Chief Financial Officer, outside money managers, and the full service investment consultant.
2. When was the annual actuarial valuation study last conducted? What is the current funded status of VCERA?
The annual actuarial valuation and review, as of June 30, 2012, shows a current valuation value of assets to actuarial accrued liabilities of 77.69%, and a current market value of assets to actuarial accrued liabilities of 73.39%.
3. Do you anticipate making any major changes in the asset allocation or the investment management structure of the Fund in the near future? Are you considering any new asset classes?
VCERA recently awarded Tortoise an MLP allocation of 3% of assets (or $105 million), and will be considering an additional private equity fund of funds allocation of $150 million on March 18, 2013. On April 15, 2013, VCERA will consider an allocation of 7% of assets (or $245 million) split between Global Tactical Asset Allocation and Risk Parity in either a 70/30, 50/50, or 30/70 ratio. VCERA also plans to complete an RFP for Plan Custodian, but does not foresee available staff resources permitting it until November 2013, or later.
4. What strategic decisions are currently pending before the Board that the new consultant would likely be involved in?
The Board is currently evaluating a governance, risk management, and performance aggregating iPad application “dashboard” in an effort to provide more concise, clear, and timely information in a paperless environment. The Board is also looking at further development of VCERA’s private equity allocation, further review of transitioning bond allocations into unconstrained vehicles, and continued review of asset management fees and asset manager performance.
5. Would the general investment consultant be involved in decisions with respect to real estate and alternative investments? Does the Board use specialty consultants for these asset classes?
VCERA currently employs a general investment consultant with respect to real estate and alternative investments. It does not use specialty consultants. VCERA expects that the general investment consultant or discretionary consultant would continue to provide advice concerning real estate and alternative asset classes.
6. What is the Board’s schedule with respect to monthly meetings that the investment consultant would be expected to attend?
The Board generally meets on the third Monday of the month for investment and business items, unless there is a holiday or other extenuating circumstances. The Board generally determines its calendar at its November Business meeting. The calendar for 2013 business meetings is as follows:
|Business Meeting Dates |
|January 28 |July 15 |
|February 25 |September 16 |
|March 18 |October 21 |
|April 15 |November 18 |
|May 20 |December 16 |
|June 17 | |
In addition, VCERA has its managers (usually one to three of them) provide annual status reports at business meetings, along with the general investment consultant, who is expected to provide a related market overview.
The Board also meets on the first Monday of the month, for disability and other business items, unless there is a holiday or other extenuating circumstances; while investment information may be presented at such meetings, the investment consultant is not expected to be present at those meetings.
f. Minimum Qualifications for the Proposal
The proposing firm must meet all of the following minimum qualifications to be given further consideration. Failure to satisfy any of the minimum qualifications will result in the immediate rejection of the proposal.
a) The firm must have been in business at least three (3) years as of December 30, 2012.
b) The firm must be registered as an investment advisor under the Investment Advisor Act of 1940.
c) The firm must provide investment consulting services on either a general investment consulting basis OR discretionary consulting basis, OR both, to institutional clients with aggregate assets totalling at least $5 billion.
d) The firm must have at least three (3) public pension fund clients on either a general investment consulting basis OR discretionary consulting basis, OR both, at least one of which must have assets in excess of $1 billion dollars.
e) The primary consultant assigned to this account must have a minimum of seven (7) years experience providing investment consulting services to public and/or private sector pension plans, the last three years of which must have been with the proposing firm or team.
f) The firm must carry professional liability or errors and omissions insurance coverage or must have applied for it by the date of submission of the RFP. Such insurance will be required to be in place prior to entering into a contract with VCERA.
Section II – Process for Submission of Proposal
A. Preparation of the Proposal
1. Format of Proposal
The proposal must be sequentially page numbered, organized and indexed in the following format:
a) Letter of Transmittal
b) Response to Questionnaire
c) Philosophy and Approach to Consulting
d) Additional Documents and Materials
e) References
f) Fee Proposal
2. Response to Questions and Requests for Information
Respond to all questions, and requests for information, in the order that they are presented in Section III of this RFP (with the exception of the additional documents and materials requested in Section III: Part D, which may be included in one or more appendices to the proposal).
Be clear and succinct in the response. Ensure that each response is specific to the question asked or information requested. Unnecessary or superfluous information will be disregarded. Any additional comments or information may be provided in Section III, Part D.
3. Incomplete or Misleading Responses and Rejection of Proposal
Incomplete or misleading responses may lead to the rejection of the proposal and elimination of the firm from the search process. VCERA reserves the right to waive or permit correction of any minor inconsistencies, errors, or omissions prior to the final evaluation of the proposal, and to ask for clarification on any issues, or to take any other measures with respect to this RFP in any manner necessary to serve the best interests of VCERA and its beneficiaries.
B. Submission of the Proposal
The deadline for submission of the proposal is April 17, 2013. The proposing firm must submit one (1) complete electronic copy and one (1) paper copy of the proposal to:
Donald C. Kendig, CPA, Retirement Administrator
Ventura County Employees' Retirement Association
1190 South Victoria Avenue, Suite 200, Ventura, CA 93003
Donald.Kendig@
Note that both the electronic copy and the paper copy shall include the signatures as required by this RFP. The electronic copy may be sent by e-mail, or included on a CD or flash key and included with the hard copy.
A proposal may be withdrawn and resubmitted prior to the proposal deadline. Any cost incurred in the preparation, submission or presentation of the proposal shall be borne solely by the proposing firm.
C. Timeline for the Search and Selection Process
The following are the key dates and time periods pertaining to the search and selection process:
March 18 RFP to be posted on VCERA’s website
March 22 Indicate intent to respond to RFP
March 28 Deadline for submission of questions concerning the RFP
April 1 Responses to questions to be posted on VCERA’s website
April 17 Deadline for submission of proposal
May Board to complete review of proposals and select finalist candidates*
June Site visits to finalist firms*
July 1 Final interview and selection by the Board *
Sept. 16 Negotiation of fees and contract with selected firm*
* These dates and time periods may be changed at the discretion of the Board, in consultation with the finalist candidates, as appropriate.
D. Questions and Communication Regarding the RFP
VCERA has engaged Cortex Applied Research Inc. (Cortex) to assist in the investment consultant search and selection process. The role of Cortex is to summarize and tabulate the responses to the RFP for subsequent review by the Board and staff. The Board, with the support of its staff, is solely responsible for the selection and appointment of the investment consultant.
On February 4, 2013, the Board designated a “quiet period” for the duration of the investment consultant search and selection process, during which time Trustees may not knowingly communicate with consultant candidates, with the exception of official search-related interviews and due diligence and ongoing business with the current consultant. The tentative timeline for the quiet period is February 4, 2013 through July 1, 2013 and could be subject to change.
To assist the Board and VCERA staff in implementing this quiet period, all questions regarding the intent or content of this RFP or the proposal process must be directed in writing to Cortex, either by email to Mr. Tom Iannucci at tiannucci@ and Mr. Michel Long at mlong@, or via fax to Mr. Tom Iannucci at (416) 967-2711, on or before March 28, 2013.
E. Intent to Respond and Shortened Proposal Option
Firms intending to respond to this RFP are asked to send an e-mail to Mr. Tom Iannucci at tiannucci@ by March 22, 2013, with a copy to Mr. Michel Long at mlong@ and Mr. Donald Kendig at Donald.Kendig@. Failure to do so shall not preclude firms from nevertheless submitting a proposal by April 17.
Firms that submit their intent to respond and that have previously participated in an investment consultant search coordinated by Cortex may be contacted by Cortex concerning the option of completing a shortened proposal. Any firms completing a shortened proposal will be required to review responses and information submitted in a previous consultant search, and either confirm or update such information. Any questions concerning the shortened process must be submitted to Cortex in accordance with the rules concerning communications and questions set out in Section II.D above.
F. Cancellation of the RFP
VCERA reserves the right to cancel this RFP at any time, and to reject any and all proposals submitted in response to this RFP if it is in VCERA’s best interest. This RFP in no manner obligates VCERA to the procurement of services until a written contract is entered into, negotiation of which may be terminated at any time by VCERA. If negotiations fail, VCERA may accept another submitted proposal, at its option.
Progress toward this end is solely at the discretion of VCERA and may terminate at any time prior to the signing of a contract.
This procurement and any agreement with proposers that may result shall be governed by the laws of the County of Ventura and the State of California. Submission of a proposal constitutes acceptance of this condition.
G. California Public Records Act
Materials contained in proposals are subject to the California Public Records Act (Cal. Gov. Code Sections 6250 et. seq., “The Act”), and, after a contract has been awarded, may be viewed and copied by any member of the public, including news agencies and competitors. If any portion of a proposal is believed to be exempt from public disclosure under the Act, such portion must be marked “TRADE SECRETS”, “CONFIDENTIAL” OR “PROPRIETARY”, as applicable, and made readily separable from the rest of the proposal. Proposals marked in their entirety with a confidential designation, or other designation indicating exemption from public disclosure will not be considered confidential or exempt from disclosure under The Act, and VCERA will not deny public disclosure of all or any portion of such proposals. By submitting a proposal with material marked “TRADE SECRETS”, “CONFIDENTIAL” OR “PROPRIETARY”, the proposing firm represents it has a good faith belief that the material is exempt from disclosure under the Act; however, such designations will not necessarily be conclusive, and the proposing firm may be required to justify in writing why such material should not, upon request, be disclosed by VCERA under the Act.
If VCERA denies public disclosure of any portions so designated, by submission of a proposal the proposing firm agrees to reimburse VCERA for, and to indemnify, defend and hold harmless VCERA, its officers, fiduciaries, employees and agents from and against: (a) any and all claims, damages, losses, liabilities, suits, judgments, fines, penalties, costs and expenses including, without limitation, attorneys’ fees, expenses and court costs of any nature whatsoever (collectively, “Claims”) arising from or relating to VCERA’s non-disclosure of any such designated portions of a proposal; and (b) any and all Claims arising from or relating to VCERA’s public disclosure of any such designated portions of a proposal if VCERA reasonably determines disclosure is deemed required by law, or if disclosure is ordered by a court of competent jurisdiction.
Section III – Information to Be Provided
Part A: Letter of Transmittal
The Proposal must include a Letter of Transmittal or cover letter signed by one or more individuals who are authorized to bind the firm contractually. The Letter of Transmittal shall be considered an integral part of the Proposal and must contain the following:
1. The firm’s name, address, telephone and fax number.
2. The name, title or position, telephone number and email address of the individual signing the Letter of Transmittal.
3. A statement that the signatory is authorized to bind the firm contractually.
4. The name, title or position, and telephone number of the primary contact for the proposal, if different from the individual signing the Letter.
5. A statement that the Proposal is a firm and irrevocable offer good for six (6) months from the deadline for submission of the Proposal.
6. A statement that the proposing firm meets the Minimum Qualifications for the Proposal set out in Section I.F of this RFP.
7. A statement confirming, that if selected, the firm is prepared to enter into a contract providing that it has a fiduciary obligation in providing investment consulting services to VCERA.
8. A statement indicating whether the firm is proposing to provide:
a. General (non-discretionary) investment consulting services only;
b. Discretionary consulting services only; or
c. General investment or discretionary consulting services, to be determined by VCERA;
and, furthermore, that the firm has the ability in terms of staff, expertise and resources required to perform all such services specified in this RFP.
9. A statement accepting VCERA’s mandatory contractual provisions as provided in Appendix 1 to this RFP, subject to written objections, if any, which should be specifically identified by the proposer in the Letter of Transmittal.
10. A statement that the firm acknowledges that all documents submitted pursuant to this RFP will become a matter of public record, except those portions which are claimed and determined to be exempt from disclosure under The Act, as set forth in Section II.G above.
Part B: Questionnaire
Questions #1 to #65 must be completed for those firms proposing to provide general investment consulting services OR discretionary consulting services, OR both.
All questions and requests for information shall be responded to in the order that they are listed. Indicate the question/request number and restate the question/request prior to providing your response. Enter your response in the tabular format where required. Be clear and succinct in the response. Ensure that each response is specific to the question/request asked. Unnecessary or superfluous information will be disregarded. Additional information or comments may be provided in Section III, Part C: Philosophy and Approach to Consulting, or in Section III, Part D: Additional Materials and Documents.
Name and Contact Information
1. Provide the following information on the firm:
| |Information on the firm |
|Name of the firm | |
|Address of Head Office | |
|Telephone Number | |
|Website | |
2. Provide the following information on the primary RFP contact for the firm:
| |Primary RFP Contact |
|Name | |
|Title | |
|Telephone Number | |
|Fax Number | |
|E-mail Address | |
History, Ownership and Organization
3. (a) When was the firm founded or established?
(b) Who were the founders?
(c) Provide the names of any predecessor companies or other organizations with which the founders were previously associated.
(d) If the firm was subsequently acquired by another company, when did this take place? What is the name of the parent company?
4. Provide the names of the current owners of the firm and indicate their respective percentage of ownership.
5. Provide a brief description of the ownership and organizational structure of the firm. Indicate the names of any subsidiary or affiliated companies and briefly describe the nature of their business, and the relationship between the firm and these other companies.
6. What significant changes, if any, have there been in the firm’s ownership, structure or organization over the past three years? Does the firm anticipate any significant changes (including any proposed sale or merger of the firm) in the future?
7. Provide the locations of all offices and the total number of employees in each office. Indicate the office that would service this account.
8. Is the firm registered as an investment advisor under the Investment Advisor Act of 1940?
Sources of Revenue
9. When did the firm begin providing investment consulting services to pension plans?
10. Using the table below, indicate the percentage of the firm’s investment consulting revenue received during the most recent fiscal year from general investment consulting relationships, and from discretionary consulting relationships.
|Source of Investment Consulting Revenue |Percent of Revenue |
|General Investment Consulting Relationships | |
|Discretionary Consulting Relationships | |
11. (a) Does the firm or any affiliate of the firm (including any subsidiary companies or parent company) provide any services in addition to investment consulting?
(b) If so, indicate the percentage of total revenue received by the firm (including any subsidiary companies) from investment consulting and other services listed below during the most recent fiscal year.
|Source of Total firm Revenue |Percent of Revenue |
|Investment Consulting | |
|Human Resources, Actuarial and Benefits Consulting | |
|Investment Management Services (excluding Fund-of-Funds) | |
|Fund-of-Funds Services | |
|Broker/Dealer Services | |
|Other (specify): | |
(c) If the firm has a parent company, please indicate the percentage of total revenue received by the parent company from the following sources during the most recent fiscal year?
|Source of Parent Company Revenue |Percent of Revenue |
|Plan Sponsor Clients | |
|Investment Manager Clients | |
|Brokerage Clients | |
|Other (specify): | |
Independence, Objectivity and Conflict of Interest
12. (a) Does the firm or any affiliate provide any services to, or receive any compensation from, investment managers, including but not limited to: (i) charges for inclusion in the firm’s database, (ii) conference fees, (iii) brokerage commissions, (iv) purchase of software, (v) consulting services, etc.?
(b) If so, describe briefly the nature of these services and compensation.
(c) Does the firm or any affiliate provide any services or conduct any business with VCERA’s current investment managers?
13. Does the firm have any arrangements with broker-dealers under which it, or any affiliated company, will benefit if investment managers place trades for their clients with such broker-dealers?
14. (a) What is the firm’s policy concerning soft dollar arrangements?
(b) Does the firm enter into soft-dollar arrangements with its investment managers? If so, provide details on the type of arrangements.
15. Does the firm accept a pension plan’s brokerage commissions as payment for its services? If so, explain briefly how it ensures that the plan receives best execution in securities transactions.
16. Disclose any potential conflicts of interest that may arise from the firm’s representation of VCERA, including the activities of any affiliated companies.
17. Has the firm or anyone in the firm provided any gifts or other remuneration, or paid any expenses for travel, hotel, meals or entertainment for or on behalf of a Board member or staff of VCERA during the past twelve months. If so, indicate the amount and purpose of the payments.
18. Has the firm or anyone in the firm had any professional relationship with VCERA’s plan sponsor or legislative bodies during the past three years? If so, describe the nature of the relationship.
Institutional Clients
19. (a) How many institutional clients does the firm currently provide general investment consulting, full-service services on a retainer basis?
(b) What are the total assets under advisement for these types of clients?
(c) Please provide a breakdown of these clients using the table below:
|Type of General Investment Full -Service |Under $1 |$1 - 10 billion|$10 - 25 |Over $25 |
|Institutional Clients |billion | |billion |billion |
|Public Pension Plans | | | | |
|Corporate Plans | | | | |
|Union/Taft-Hartley Plans | | | | |
|Endowments, Foundations & Hospitals | | | | |
|Other | | | | |
|Total | | | | |
20. (a) How many of the firm’s general investment consulting, full-service retainer institutional client relationships were ended during the three year period ending December 31, 2012?
(b) Using the table below, indicate the reasons the above relationships ended and the value of assets involved for the same period?
|Reasons for Termination |Number of Cases |Value of Assets |
|Firm Dismissed Outright | | |
|Contract Rebid – firm Not Retained | | |
|Firm Asked Not to Bid | | |
|Firm Resigned Client Relationship | | |
|Plan Merger or Consolidation | | |
|Fund Management Outsourced | | |
|Other (specify): | | |
|Total Terminations/Resignations | | |
21. Using the following table, indicate the number of general investment consulting, full-service retainer, public pension clients that the firm currently has by length of service with the firm.
|Length of Service |Number of Clients |
|Less than 1 year | |
|1 – 5 years | |
|5 – 10 years | |
|Over 10 years | |
Professional Staff
22. Indicate the number of professional staff (not administrative or clerical staff) that the firm currently employ in each of the following categories. (Each person should be assigned to only one category.)
|Category of Professional Staff |Number of Staff |
|Senior Consultants | |
|Consultants | |
|Analysts (including Research, Economics, etc.) | |
|firm Management | |
|Marketing | |
|Technical/Systems | |
|Total Professional Staff | |
23. Indicate the turnover in professional staff (including consultants, analysts, firm management) during 2011 and 2012.
|Staff Turnover for 2011 |Number of Staff |
| |Consultants |Analysts |Firm Management |
|Hired | | | |
|Terminated | | | |
|Resigned | | | |
|Retired | | | |
|Other: (specify) | | | |
|Staff Turnover for 2012 |Number of Staff |
| |Consultants |Analysts |Firm Management |
|Hired | | | |
|Terminated | | | |
|Resigned | | | |
|Retired | | | |
|Other: (specify) | | | |
24. Provide the average number of clients per consultant, both lead and support consultant. Indicate the maximum limit, if any, on the number of clients assigned per consultant.
|Role as Consultant |Average No. of Clients |Maximum Limit per |
| | |Consultant |
|Lead Consultant | | |
|Support Consultant | | |
25. How many staff have acquired professional designations such as the CFA, CAIA, FSA, etc.? How many are currently enrolled in these programs?
|Professional Designation |Acquired |Enrolled |
|Chartered Financial Analyst (CFA) | | |
|Chartered Alternative Investment Analyst (CAIA) | | |
|Fellow of the Society of Actuaries (FSA) | | |
|Other (specify): | | |
26. Using the table below, indicate which of the following types of compensation are provided to professional staff. Indicate whether the compensation applies to all staff, senior staff, key employees, or principals only.
|Type of Compensation |All/Senior/Key/Principals |
|Salary | |
|Bonus | |
|Profit Sharing | |
|Stock Ownership | |
|Stock Options | |
|Equity Participation | |
|401(k) or Other Deferred | |
|Other (specify): | |
27. How many professional staff will be assigned to this account?
28. Provide the following information on the lead consultant and, if applicable, the support consultant to be assigned to this account:
| |Lead |Support Consultant |
| |Consultant | |
|Name | | |
|Title | | |
|Role and/or Function | | |
|Number of Years of Experience |Institutional Investments | | |
| |Investment Consulting | | |
| |With the firm | | |
|Educational Qualification (including Name of | | |
|College/University) | | |
|Number of Accounts as Lead Consultant | | |
|Names of Accounts as Lead Consultant | | |
| | | |
| | | |
|Number of Accounts as Support Consultant | | |
|Names of Accounts as Support Consultant | | |
| | | |
| | | |
29. Provide the name and title and/or role of any other members of the team to be assigned to this account.
Asset Allocation
30. When did the firm begin conducting asset allocation studies for pension plans? How many studies (formal comprehensive studies rather than informal reviews or updates) has the firm conducted during each of the following three calendar years: 2010, 2011 and 2012:
|Year |Number of studies: |
|2010 | |
|2011 | |
|2012 | |
31. Describe the firm’s asset allocation methodology by responding to the following questions:
a) Is the asset allocation process based on analysis of both assets and liabilities of the pension plan, or assets only?
b) Is the asset allocation process stochastic or deterministic with respect to (i) assets and (ii) liabilities?
c) Explain briefly how the modelling of the assets is linked to or integrated with the modelling of the liabilities.
d) Does the process incorporate analysis of different economic scenarios?
32. Does the firm analyze the impact of asset allocation over different future time periods? If so, what future time periods and why?
33. How does the firm analyze the trade-off between risk and reward of alternative asset allocation policies for a defined benefit pension plan? How does it define and measure reward? How does it define and measure risk?
34. (a) List the various steps or components of the asset allocation model (e.g. mean-variance optimization, projection of liabilities, multi-period simulation, etc.).
b) Which components of the asset allocation model were internally developed, and which, if any, are licensed from one or more third-party vendors?
c) Provide the names of the third-party vendors if any.
35. (a) How are investment assumptions developed with respect to returns, volatility and correlations – i.e. the inputs to the asset allocation model?
b) To what extent are these assumptions derived from historical data or trends, or reflect current market conditions, or are based on future expectations of inflation, real yields, risk premiums, etc.? Explain briefly.
c) Who in the firm is involved in developing the assumptions?
d) How often are these assumptions updated or revised?
36. (a) If the asset allocation model includes pension liabilities, how are liability projections developed? Explain briefly.
b) Does the firm use its own actuarial assumptions and methodology or does it rely on the benefit projections of the retirement system’s actuary?
c) Does the firm have any actuarial staff and expertise of its own?
37. (a) Are there any asset classes or market segments that are NOT included in the asset allocation model?
b) If so, how is the allocation to these asset classes determined in the asset allocation study?
c) If alternative or non-traditional asset classes (such as real estate, private equity, hedge funds, etc.) are included, how does the model deal with non-market valuations and/or non-normal distribution of returns for these asset classes?
38. (a) If hired, how frequently would the firm conduct a formal comprehensive asset allocation study within the flat fee proposed in Part C?
b) What type of follow-up analysis or review of asset allocation would the firm perform between comprehensive asset allocation studies?
c) How frequently would such follow-up reviews be conducted?
39. What approach does the firm recommend toward rebalancing the asset allocation of the Fund? Explain briefly.
40. Does the firm advocate short-term or tactical changes in asset allocation in response to changing market conditions? If so, what approach does it recommend toward making such changes?
Investment Manager Search and Selection
41. What is the firm’s approach to investment manager search and selection? Does it undertake every manager search starting from scratch? Or does it develop and maintain a list of preferred managers for various asset classes and investment mandates and recommend managers from that list?
42. (a) Does the firm undertake a self-evaluation of its success in recommending investment managers that outperform their benchmark over the first capital market cycle for new client mandates?
(b) If so, what changes, if any, has the firm made to its manager search and selection process based on those self-evaluations?
(c) What results based on these changes have the firm achieved?
43. How many investment manager searches has the firm conducted over the past three years ending December 30, 2012 for the following asset classes and investment strategies? What was the total value of assets involved in each type of search?
|Investment Manager Searches |Number |Value of Assets |
|Domestic Equities – all styles & market caps | | |
|Domestic Fixed Income – incl. high-yield bonds, mortgages, etc.| | |
|International and Global Equities – incl. emerging & frontier | | |
|markets | | |
|International and Global Bonds – incl. emerging & frontier | | |
|markets | | |
|Alternative Investments – real estate, |Individual funds or | | |
|private equity & hedge funds |managers | | |
| |Fund-of funds | | |
|Real Assets – commodities, timberland, |Individual funds or | | |
|infrastructure, etc. |managers | | |
| |Fund-of funds | | |
|Synthetic Strategies – TAA, currency overlay, alpha transport, | | |
|managed futures, etc. | | |
|Other (specify): | | |
|Total Manager Searches | | |
44. Is there a specific unit or group within the firm dedicated (i.e. spends 100% of its time on) to manager research, including both public market (traditional) assets and private market (alternative non-traditional) investments? If so, how many staff persons are in this unit or group?
45. Using the table below, indicate the number of research staff dedicated to each of the following asset classes:
|Asset Classes |# of Research Staff |
|Public markets (equity and fixed income) | |
|Real Estate | |
|Private Equity | |
|Infrastructure | |
|Hedge Funds | |
|Other alternative asset classes | |
46. Using the following tables, provide information on the databases that the firm uses for manager research for both traditional and alternative assets. Enter the information or an ‘X’ as required in the appropriate cell or cells in each of the tables below.
a) Type of database – whether it is internal/proprietary, purchased or licensed from a third party, or part of a consultants’ network or cooperative;
|Name of Database |Type of Database |
| |Internal/ |Third Party |Network or |
| |Proprietary | |Cooperative |
| | | | |
| | | | |
| | | | |
b) Type of information in the database – investment performance, manager profiles, portfolio holdings or product characteristics, or other (meeting notes, news items, recent changes, etc.);
|Name of Database |Type of Information |
| |Investment |Manager Profiles |Portfolio Holdings |Meeting Notes, News,|
| |Performance | |or Characteristics |etc. |
| | | | | |
| | | | | |
| | | | | |
c) The number of investment managers, funds, portfolios and/or products/strategies covered by the database;
|Name of Database |Number of Managers, Funds, etc |
| |Investment Managers |Funds/ Partnerships |Products/ Portfolios|
| | | | |
| | | | |
| | | | |
d) Briefly explain how information is entered and updated, by whom, whether the information is verified and how any discrepancies are resolved.
47. (a) Using the table below, indicate how many formal meetings the firm held with investment managers (or general partners) for both calendar year 2011 and 2012. The information should be broken down by type/location of meeting as shown in the table.
|Meetings with Investment Managers |# of Meetings in 2011 |# of Meetings in 2012 |
|On-Site at the Investment Manager’s Premises | | |
|In the Consulting firm’s Offices | | |
|By Conference Call (lasting at least ½ hour) | | |
(b) Using the table below, indicate how many different investment management organizations the firm met with over these two periods?
| |2011 |2012 |
|Number of different investment management organizations. | | |
Performance Evaluation and Compliance
48. (a) Are there any asset classes, market segments, or investment styles or strategies – e.g., private markets, hedge funds or real assets – for which the firm CANNOT provide benchmarks to measure performance?
(b) What types of customized benchmarks – such as blended indices, normal portfolios, etc. – can the firm provide for specialized investment strategies?
49. Using the table below, indicate:
a) What performance measurement databases or systems the firm uses to measure the performance of the Fund and individual asset classes, investment managers and portfolios against peer groups?
b) How many pension funds are covered in those databases? How many of them are public funds?
c) How many investment managers and portfolios/products are included?
|Name of Database |Number of Pension Funds, Managers, etc |
| |Pension Funds |Public Funds |Investment Managers |Portfolios or |
| | | | |Products |
| | | | | |
| | | | | |
| | | | | |
50. For each database listed above, indicate where the data comes from, how it is verified, who calculates the investment returns, and how any errors or discrepancies are resolved.
51. (a) Does the firm provide its clients with access to its proprietary as well as third-party performance analytics, tools, and software?
(b) Regarding third-party analytics, tools, and software, are there any constraints or limitations in third-party licensing agreements and contracts that would prevent it from doing so?
52. Does the firm provide performance attribution analysis at the total fund level as well as for individual asset classes or portfolios?
|Performance Attribution |Yes/No |
|Total Fund | |
|Domestic Equities | |
|International and/or Global Equities | |
|Domestic Fixed Income | |
|International and/or Global Fixed Income | |
|Other (specify): | |
53. How does the firm monitor or track the investment style of portfolios? What style analysis systems or models does it use?
|Style Analysis Model |Returns or |Asset Classes (Yes/No) |
| |Holdings-Based | |
| | |Domestic |Global Equities|Fixed Income |Other (specify)|
| | |Equities | | | |
| | | | | | |
54. Indicate whether the firm monitors or tracks the compliance of the client’s portfolios with each of the following, briefly explaining the process and scope of such activities:
a) Investment policies and guidelines of the fund;
b) Manager mandates, agreements or contracts;
c) Laws and regulations.
55. How does the firm measure portfolio risk at the total fund, asset class, and individual manager level? What proprietary tools does it utilize in this regard?
56. Does the firm provide an investment performance, risk management, and compliance dashboard application for staff and Board use on iPad, web, or PC, and is it customizable for other pertinent metrics or news (such as white papers or manager alerts)?
Research and Education
57. (a) Using the table below, indicate how many research studies (reports and/or white papers) the firm has produced over the last three years ending December 30, 2012 for each of the following broad topics.
|Research Reports / White Papers (Last 3 Years) |Number of Studies |
|Asset Allocation | |
|Asset/Liability Management | |
|Equity Markets & Strategies | |
|Fixed Income Markets & Strategies | |
|Alternative Investments – Private Equity, Hedge Funds, etc. | |
|Real Assets – Real Estate, Infrastructure, Commodities, etc. | |
|Risk Management | |
|Investment Management or Portfolio Structure | |
|Performance Measurement | |
|Economic Policy | |
|Other (specify): | |
(b) Using the table provided below, indicate other types of publications that are made available to clients, if any, and the frequency with which these publications are produced.
|Other Publications |Frequency of Publication |
|Economic or Capital Market Outlook | |
|Newsletters | |
|Client Memos | |
|Other (please specify): | |
58. How does the firm provide education services to board trustees and staff?
|Delivery of Education to Trustees/Staff |Yes/No |
|Regular Board Meetings and Retreats | |
|Half to One-Day Seminars/Workshops at Client Offices | |
|Annual Client Conference | |
|Internet (Webinars) | |
|Other (specify): | |
59. Briefly explain what is distinctive about your delivery of education to clients.
60. On average, what percentage of total revenue did the firm spend on investment research technology (e.g., research software, databases, and subscriptions, etc.) over the past three year period, ending December 30, 2012? Do not include in this amount any expenditure on basic office hardware, software, or maintenance.
Litigation and Insurance
61. Has the firm, or any officer, principal, or employee of the firm or an affiliated company, ever been investigated and/or charged by the Securities and Exchange Commission, the U.S. Department of Labor, or any other regulatory authority for violation of applicable laws? If so, explain.
62. Has the firm, or any officer, principal, or employee of the firm, ever been involved in any business litigation or other legal proceeding? If so, explain and indicate the current status of the litigation.
63. Does the firm, or any officer, principal, or employee of the firm, have any lawsuits pending against it concerning the delivery of investment consulting or related services for any client? If yes, explain.
64. Using the table below, indicate the level of insurance coverage the firm has for professional liability or errors and omissions insurance and for general commercial insurance?
|Type of Insurance Coverage |Name of Carrier |Aggregate Coverage |Coverage per Claim |Deductible |
|Professional Liability or Errors & | | | | |
|Omissions (E&O) | | | | |
|General Commercial Insurance | | | | |
Performance
65. Provide the following information on investment performance for the 5-year period ending December 30, 2012 of your general investment consulting, full-service retainer pension plan clients (public and corporate) which are similar in size to the VCERA (i.e. $1-$10 billion). This asks for the simple un-weighted average performance, gross of fees, for all of these pension client funds as a group, not the performance of each individual fund.
|Plans |5 years |
| |to Dec 31/12 |
|Number of general investment, full-service, pension plan clients (public | |
|and corporate) | |
|Total assets represented above | |
|Average total fund return (gross of fees) | |
|Average asset mix policy return | |
|Average excess return (total fund - asset mix policy) | |
|Average volatility (standard deviation) of total fund return | |
Discretionary Consulting Questions
Note: There is no need to respond to the following questions if the firm’s proposal is to provide general investment (non-discretionary) consulting services only.
History and Overview
66. When did the firm begin offering discretionary consulting services?
67. Is there a different ownership and/or organizational structure for your firm’s discretionary consulting services? If so, describe the structure.
68. What percentage of total firm revenue was represented by discretionary consulting services over each of the past three calendar years?
|Year |Percentage of total firm revenue represented by discretionary consulting |
| |services |
|2010 | |
|2011 | |
|2012 | |
Client Base and Scope of Services
69. Complete the following table by indicating the number and types of clients that the firm currently serves in a discretionary consulting capacity:
|Plans |Under $500M |$500M to under $1B |$1B to 10B |Greater than $10B |
|Public pension plans | | | | |
|Corporate pension plans | | | | |
|Taft-Hartley Plans | | | | |
|Foundations/endowments | | | | |
|Other | | | | |
70. (a) VCERA does not currently have dedicated investment staff. VCERA also recognizes that there are various ways to allocate investment discretion within a discretionary consulting arrangement. Describe how your firm would propose to allocate discretion vis-à-vis VCERA by completing the following table. Note: In Section III, Part F: Fee Proposal, the firm shall provide a fee quote for the discretionary arrangement it has proposed below. If VCERA elects to engage a discretionary consultant, it may seek to negotiate the proposed allocation of discretion with the selected firm, which may have an impact on the fees involved.
|Type of Discretion |Discretion retained by |Discretion given to the |
| |VCERA |Consultant |
|Approve asset allocation policy | | |
|Approve investment strategy and portfolio structure | | |
|Make tactical changes to asset allocation and/or rebalancing | | |
|Select managers in public markets | | |
|Select manager in private markets/alternatives | | |
|Legal review and execution of investment manager contracts | | |
|Execute portfolio rebalancing | | |
|Carry out day-to-day administration of the investment function | | |
(b) Elaborate or expand upon the above table as necessary to describe the scope of discretionary consulting services the firm is proposing.
71. What constraints, if any, do the firm’s clients typically impose on the firm’s discretion with respect to asset allocation, portfolio structure, or manager selection? Provide details.
72. If any of the firm’s discretionary consulting relationships have ended in the past three years, please provide details in the following table:
|Reasons for Termination |Number of Cases |Value of Assets |
|Firm Dismissed Outright | | |
|Contract Rebid – firm Not Retained | | |
|Firm Asked Not to Bid | | |
|Firm Resigned Client Relationship | | |
|Plan Merger or Consolidation | | |
|Fund Management Outsourced | | |
|Other (specify): | | |
|Total Terminations/Resignations | | |
Staffing
73. Using the table below, indicate:
a) the number of consultants, analysts, support staff and other staff who are fully dedicated to the discretionary consulting business (i.e. they do not service general investment consulting clients), and
b) the number of staff that are only partially dedicated to the discretionary consulting business (i.e. they do service general investment consulting clients).
|Staff dedicated to discretionary consulting business |# of Fully Dedicated Staff | # of Partially Dedicated Staff |
|Consultants | | |
|Analysts | | |
|Support/ Clerical Staff | | |
|Other (Specify) | | |
|Total Staff | | |
74. Do the firm’s employee compensation practices and levels differ between the discretionary consulting business and the general investment consulting business? If so, explain.
75. If the firm was retained by VCERA to provide discretionary consulting services, would the consulting team assigned to VCERA’s account differ from the one described in Question 28 above? If so, explain the differences and provide comparable information about any new team members.
Independence and Insurance
76. What conflicts of interest exist with respect to the discretionary consulting services? How does the firm manage or eliminate such conflicts?
77. Does the firm monitor whether its investment managers have soft dollar arrangements with its brokers, and if so, what those soft dollars are used for?
78. Does the firm offer its discretionary clients: (indicate all that apply)
a) proprietary investment funds
b) fund-of-funds
c) individual third-party investment managers
79. Please describe how investment managers are compensated in the discretionary consulting arrangements. How much transparency do the firm’s clients have with respect to fees paid to investment managers? Are these fees included in the firm’s fees, or paid by VCERA?
80. How does your firm ensure that all clients, both discretionary and general investment consulting (non-discretionary), are treated equitably and even-handedly with respect to issues such as access to investment opportunities (e.g. ideas and strategies)?
81. Do you have separate additional insurance coverage for your discretionary consulting practice, beyond that indicated in Question 64 above? If so, please provide details.
Performance
82. Using the table below, provide information on investment performance for the 3-year and 5-year periods ending December 30, 2012 of the firm’s discretionary consulting pension fund clients (public and corporate) which are similar in size to VCERA (i.e. $1-$10 billion). Note that this asks for the simple un-weighted average performance, gross of fees, for all of these public pension client funds as a group, not the performance of each individual fund.
|Plans |3 years |5 years |
| |to Dec 31/12* |to Dec 31/12** |
|Number of Discretionary Consulting Pension Fund Clients (Public and | | |
|Corporate) | | |
|Total assets represented above | | |
|Average Total Fund Return (gross of fees) | | |
|Average Asset Mix Policy Return | | |
|Average Excess Return (Total Fund - Asset Mix Policy) | | |
|Average Volatility (Standard Deviation) of Total Fund Return | | |
* Only include data for those clients that the firm has advised for at least 3 years.
** Only include data for those clients that the firm has advised for at least 5 years.
Part C: Philosophy and Approach to Consulting
Questions #1 to #9 must be completed by those firms proposing to provide general investment consulting services OR discretionary consulting services, OR both.
All questions shall be responded to in the order that they are listed. Indicate the question number and restate the question prior to providing your response. Be clear and succinct in the response. Ensure that each response is specific to the question asked.
1. What is the overall philosophy of the firm regarding an investment consultant's relationship with the board of trustees, staff, and investment managers?
2. State as clearly as possible the firm’s investment philosophy. Are there any fundamental beliefs about capital markets which underpin the firm’s investment advice to its pension plan clients? What are the critical issues to consider in establishing the investment policy for a public pension plan?
3. Summarize, in one page or less, the firm’s investment consulting capabilities and expertise. What are the firm’s major strengths and limitations? Does the firm provide any services which are not provided by other investment consultants? Why should the retirement system engage the firm as its investment consultant?
4. What does the firm consider the unique attributes of: (a) the firm’s asset allocation methodology, and (b) the firm’s investment manager search process? How do these distinguish the firm from other investment consulting organizations?
5. Please summarize the firm’s capabilities and expertise in real estate and alternative investment asset classes, and its due diligence process for manager searches in these classes.
6. Describe the plans for managing the future growth of the firm, including limitations, if any, on the number of clients that the firm intends to accept.
7. If the firm or any affiliate provides services other than investment consulting, please explain briefly what policies or procedures the firm has established to avoid or mitigate any potential conflicts of interest that could arise in providing advice to its pension plan clients.
8. Explain how the consulting team assigned to this account would function, including lead consultant, back-up, quality control and support services.
9. How would the firm suggest that VCERA measure and evaluate the firm’s performance as an investment consultant?
Discretionary Consulting Services
Note: The proposing firm need not respond to the following questions if the firm is proposing to provide general investment (non-discretionary) consulting services only.
10. Describe the firm’s basic philosophy or approach in providing discretionary consulting services.
11. What does the firm believe distinguishes its discretionary consulting services from those of competitors?
Part D: Additional Materials & Documents
In addition to the information requested in this RFP, submit a copy of the following additional materials and documents. Such materials and documents may be placed in one or more appendices to the proposal:
1. An organization chart of the firm, parent and all subsidiary and affiliated companies.
2. Biographies of the firm’s professional staff to be assigned to this account.
3. A list of the firm’s current full service institutional clients, including the year they retained the firm, plan size and type.
4. The latest Annual Report or Statement of Financial Condition.
5. The most recently filed SEC Form ADV, Parts I and II.
6. A copy of the firm’s policies and procedures related to Conflict of Interest.
7. A sample of the firm’s Quarterly Performance Report, both in executive summary form and in full detail.
8. A sample of the firm’s due diligence reports on investment managers.
9. A sample Investment Policy Statement the firm has developed for a pension plan client.
10. Three sample research reports on different investment topics.
11. A sample presentation on investment education provided to a pension plan client.
12. The firm’s standard marketing brochure that describes the firm’s products and services.
13. Any other information the firm feels would be necessary to gain a complete understanding of the firm and the services it provides.
PART E: References
Provide three references for which the proposed lead consultant serves as either a lead consultant or support consultant. References should reflect the type of consulting service that the firm is proposing to provide (i.e., general investment consulting services OR discretionary consulting services, OR both).
Each reference must be an institutional investor (e.g., public retirement plan, corporate pension plan, investment board, endowment fund etc.). For each reference provide the following details:
a) Name of institution
b) Institution’s approximate assets under management
c) Type of relationship (i.e., general investment consulting or discretionary consulting)
d) Name and title of contact person
e) Address of contact person
f) Phone number of contact person
g) e-mail address of contact person
PART F: Fee Proposal
This Fee Proposal contains three sections, to be completed as follows:
|Firm’s proposal is for: |Complete sections: |
|General investment consulting only |I and III |
|Discretionary consulting only |II and III |
|Both types of consulting services |I, II and III |
Note: The Board reserves the right, at its sole discretion, to enter into either a general investment consulting OR a discretionary consulting relationship at the completion of this search process.
I) General Investment Consulting Services
The proposed fees shall be guaranteed for the duration of the Contract which shall be a period of five (5) years from the effective date of the Contract. The services listed in Section I of the RFP under “Nature and Scope of Services - General Investment Consulting Services” should form the basis for the proposed fees in the table in Section A, below. The method of payment will be set forth in a master service agreement, to be entered into with the selected firm. Once the consultant is selected, the fee may be negotiated further depending on the variance from the other proposals. In no case will the negotiated fee be higher than the fee contained in this Proposal.
All-Inclusive, Flat Fees
1. Using the table below, specify the all-inclusive flat fee for the delivery of services listed in Section I of this RFP for each year of the five-year contract period, as well as the total fees for the period.
|Year |Fees |
|Year 1 | |
|Year 2 | |
|Year 3 | |
|Year 4 | |
|Year 5 | |
|Total Fees (Year 1 to 5) | |
Exclusions and Additional Services:
2. Please confirm whether the firm can and will provide all of the services listed in Section I of the RFP under “Nature and Scope of Services - General Investment Consulting Services” for an all-inclusive flat fee. If not, specify any services from that list that the firm cannot or will not provide. Note: The exclusion of any services listed in section I of the RFP may disqualify the proposing firm from the search process, such disqualification to be at the sole discretion of VCERA.
3. List any additional services (i.e., not listed in Section I of this RFP) that the firm would provide and which would be included in the all-inclusive flat-fee set out above.
4. Indicate any other products or services that may be of interest to VCERA, but which are not included in the all-inclusive flat fee. Provide details on associated costs.
5. Please provide any additional information that may assist us in more clearly understanding your fee proposal for general investment consulting services.
II) Discretionary Consulting Services
1. As noted earlier in this RFP, the Board is also considering a discretionary consulting relationship. If the firm wishes to be considered for such a relationship, it must complete the table below, specifying the all-inclusive fees (dollars or percentage based) for the delivery of discretionary consulting services for each year of the five-year contract period, as well as the total fees for the period. Note: The proposing firm must base its fee proposal on the allocation of discretion it proposed in its response to question 70.
|Year |Fees |
|Year 1 | |
|Year 2 | |
|Year 3 | |
|Year 4 | |
|Year 5 | |
|Total Fees (Year 1 to 5) | |
2. Please indicate whether the provision of services under a discretionary consulting relationship excludes or modifies any services listed in Section I of the RFP under “Nature and Scope of Services: General Investment Consulting”.
3. List any additional services (i.e., not listed in Section I of this RFP) that the firm would provide and which would be included in the all-inclusive fee set out above.
4. Indicate any other products or services that may be of interest to VCERA, but which are not included in the all-inclusive fee. Provide details on associated costs.
5. Please provide any additional information that may assist us in more clearly understanding your fee proposal for discretionary consulting services.
(III) Signature of individual with authority to bind the firm:
_________________________________________ ________________________
Name of firm Date
I have the authority to bind the corporation/partnership/firm:
__________________________________________ ________________________
Signature Title
APPENDIX 1
MANDATORY PROVISIONS FOR
INVESTMENT CONSULTANT SERVICES CONTRACT
1. Attendance at Meetings. Consultant shall meet with the Board monthly, excluding August, at the time and place designated by the Board for its Business Board meeting, and once annually for its full-day Investment Retreat. Consultant agrees that Consultant shall include twelve (12) on-site visits to Ventura, California for the purpose of attending these meetings per calendar year over the term of this Agreement as requested by the Board or VCERA Retirement Administrator as part of its standard service and shall not receive any additional compensation therefor. If required to make more than twelve (12) on-site visits per calendar year over the term of this Agreement, Consultant shall be entitled to additional compensation on a time and expense basis, not to exceed __________ per on-site visit. Consultant shall not be entitled to additional compensation for meetings held by conference call, regardless of number.
2. Indemnification. Consultant agrees to indemnify, defend, and save harmless VCERA, its elected and appointed officials, its Board, its officers, agents and employees, and each of them, from and against any and all actions, claims, costs, demands, liabilities, losses, damages and expenses of any kind or character (including costs of defense, plus reasonable accounting and attorneys’ fees) for injuries to persons, or damage to property, proximately caused by the negligence of Consultant or Consultant’s officers, agents or employees. Consultant further agrees to indemnify, defend and hold harmless VCERA, its elected and appointed officials, its Board, its officers, agents and employees, and each of them, from and against any and all actions, claims, costs, demands, liabilities, losses, damages and expenses of any kind or character (including costs of defense, plus reasonable accounting and attorneys’ fees) arising out of or in any way connected with any bad faith, violation of applicable law, negligent errors or omissions, willful misconduct, or material breach of this Agreement by Consultant or Consultant’s officers, agents or employees in the provision of services under this Agreement or any failure to perform in accordance with the standard required of a fiduciary as provided herein.
3. Standard of Care. Consultant hereby represents and warrants to, and agrees with, the Client that the Manager is an “investment manager,” a manager of public investments, and a “fiduciary,” under the applicable law of the State of California, including without limitation the County Employees Retirement Law of 1937 (Cal. Gov’t Code §§31450 et seq.), the Political Reform Act (Cal. Gov’t Code §§ 87100 et seq., 87200 et seq.) and regulations promulgated thereunder and Article XVI, sec. 17 of the California Constitution (collectively, “California Law”), with respect to the Account.
Consultant will conduct itself in accordance with the applicable standards under California Law, that it will provide services under this Agreement in a skillful and competent manner in accordance with the acceptable industry standards for professional investment consultants and shall perform all duties hereunder in accordance with the fiduciary standard required of VCERA’s Board members, as provided in Government Code Section 31595.
4. Insurance. At Consultant’s sole cost and expense, Consultant shall obtain, and keep in force at all times during this Agreement, the following policies of insurance:
A. Workers’ Compensation Insurance. Consultant shall submit written proof that Consultant is insured against liability for workers’ compensation in accordance with the provisions of Section 3700 of the California Labor Code.
B. Commercial General Liability Insurance, including, but not limited to, Contractual Liability Insurance (specifically concerning the indemnity provisions of this Agreement), Personal Injury (including bodily injury and death), and Property Damage for liability arising out of Consultant’s performance of work under this Agreement. Such insurance coverage shall have minimum limits for bodily injury and property damage liability of One Million Dollars ($1,000,000) each occurrence and Five Million Dollars ($5,000,000) in aggregate, and a deductible of not greater than ______________.
C. Automobile Liability Insurance against claims of Personal Injury (including bodily injury and death) and Property Damage covering all owned, leased, hired and non-owned vehicles used in the performance of services pursuant to this Agreement with minimum limits for Bodily Injury and Property Damage liability of One Million Dollars ($1,000,000) per occurrence and Five Million Dollars ($5,000,000) in aggregate, and a deductible of not greater than ______________. Such insurance shall be provided by a business or commercial vehicle policy.
D. Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in connection with, the performance of all required services under this Agreement, with limits of not less than Ten Million Dollars ($10,000,000) in aggregate and a deductible of not greater than ______________.
If any of the insurance coverages required under this Agreement are written on a claims-made basis, the insurance policy shall provide an extended reporting period of not less than (i) four (4) years following the completion of all work performed by Consultant specified in this Agreement or (ii) the period of time during which any applicable statute of limitations remains unexpired, whichever is later.
All insurance shall be issued by a company or companies listed in the current “Best’s Key Rating Guide” publication with a minimum of an “A / VII” rating with a “stable” or better outlook. Unless otherwise specified elsewhere in this section, all insurance coverages required to be maintained by Consultant shall be maintained until the completion of all of Consultant’s obligations under this Agreement, and shall contain a provision expressly stating that the scope of coverage or limits provided thereunder shall not be reduced, modified, or canceled without thirty (30) days prior written notice to VCERA. Failure by Consultant to maintain all such insurance in effect at times required by this Agreement shall be a material breach of this Agreement by Consultant. VCERA, at its sole option, may terminate this Agreement and obtain damages from Consultant resulting from such breach. Alternatively, VCERA may purchase such required insurance coverage, and without further notice to Consultant, VCERA shall deduct from sums due to Consultant any premiums and associated costs advanced or paid by VCERA for such insurance. If sums due Consultant pursuant to this Agreement are insufficient to reimburse VCERA for the premiums and any associated costs, Consultant agrees to reimburse VCERA for the premiums and pay for all costs associated with the purchase of such insurance.
Insurance coverages in the minimum amounts set forth herein shall not be construed to relieve Consultant for any liability, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall it preclude VCERA from taking such other actions as are available to it under any other provision of this Agreement or otherwise in law.
5.. Interpretation. For purposes of construction and interpretation this Agreement shall be deemed to have been mutually drafted by the parties hereto and shall not be construed against any one party. In the event that there are any inconsistencies or ambiguities between the terms of this Agreement and the incorporated documents, the following precedence shall be used to interpret this Agreement’s requirements:
1) Applicable state laws.
2) Terms and conditions of this Agreement, including any exhibits.
3) VCERA’s Request for Proposal.
4) Consultant’s response to VCERA’s Request for Proposal, dated ______________.
5) Any other provisions, terms or materials incorporated herein by reference or otherwise incorporated herein.
6. Representations and Warranties. Consultant makes the following representations and warranties, which are agreed to be material to and form a part of the inducement for this Agreement, and shall immediately notify VCERA in writing in the event that any of the representations and warranties contained herein cease to be true:
(1) Consultant has the expertise, support staff and facilities necessary to provide the services described in this Agreement;
(2) Consultant provides full service investment consulting services to clients with aggregate assets totaling at least $5 billion;
(3) Consultant has been in business at least three (3) years as of December 31, 2012
(4) The Primary Consultant has a minimum of seven (7) years experience providing investment consulting services to public and/or private pension plans, the last three years of which have been with Consultant, and possesses the skills of a seasoned investment consultant with at least 7 years of actual investment consulting experience. Therefore, over and above, and in addition to, Consultant’s fiduciary obligations as provided for under this Agreement, the Primary Consultant shall at all times exercise at least that degree of care and competence as would a seasoned investment consulting professional with at least 7 years of actual investment consulting experience;
(5) Consultant has at least three (3) public pension fund clients, one of which has assets in excess of one (1) billion U.S. dollars as of December 31, 2012;
(6) Consultant is registered as an investment advisor under the Investment Advisers Act of 1940 and shall maintain such registration at all times during the term of this Agreement;
(7) Consultant has completed, obtained and performed all registrations, filings, approvals, authorizations, consents or examinations required by any government or governmental authority, including the State of California, for acts contemplated under this Agreement;
(8) Consultant does not have any actual or potential interests adverse to VCERA nor does Consultant represent a person or firm with an interest adverse to VCERA with reference to the subject of this Agreement; and
(9) Consultant shall diligently provide all required services in a timely and professional manner in accordance with the terms and conditions stated in this Agreement.
(10) Soft Dollar Arrangements. Consultant confirms and covenants that there will not be any “soft dollar and directed brokerage arrangements” as defined in California Gov’t Code §6930(b) in connection with this Agreement and its services hereunder.
7. Conflicts of Interest. Consultant has read and is aware of the provisions of Section 1090 et seq. and Section 87100 et seq. of the Government Code relating to conflict of interest of public officers and employees. Consultant agrees that it is unaware of any financial or economic interest of any public officer or employee of VCERA relating to this Agreement. It is further understood and agreed that if such a financial interest does exist at the inception of this Agreement, VCERA may terminate this Agreement upon one day written notice to Consultant. Consultant and its officers, agents and employees shall comply with the requirements of Government Code Section 87100 et seq. during the term of this Agreement and understands, acknowledges and agrees that Consultant’s staff providing services pursuant to this Agreement are required to file and shall timely file annual statements of economic interest pursuant to state law and VCERA’s Conflict of Interest policy.
Consultant agrees that all of its directors, officers, employees and agents who provide services with respect to VCERA shall comply with applicable federal, state and VCERA Conflict of Interest and Placement Agent Disclosure requirements. Consultant represents and warrants that it has received and read a copy of VCERA’s Placement Agent Policy adopted as of December 20, 2010 (the “Policy”) and that it and all of its directors, officers, employees and agents who provide services with respect to VCERA are in full compliance with such Policy. Furthermore, such parties shall comply with the Policy as it may be amended from time to time. Consultant acknowledges and agrees that it is an “External Manager” as such term is defined in the Policy. Consultant shall immediately notify VCERA in writing of any violation of the Policy or VCERA’s Conflict of Interest policy.
Consultant shall not directly or indirectly receive any benefit from recommendations or advice made to VCERA and shall immediately disclose in writing to VCERA any investment or economic interest of Consultant that may be enhanced by the recommendations made to VCERA.
8. Applicable Law. This Agreement, in its interpretation and services performed hereunder, shall be governed by the laws of the County of Ventura and the State of California.
9. Venue. If either party to this Agreement initiates any legal or equitable action to enforce the terms of this Agreement, to determine the rights, obligations and/or duties of the parties under this Agreement, or which relates to this Agreement in any manner, VCERA and Consultant agree that the proper venue for any such action shall be the Superior Court of the State of California, in and for the County of Ventura.
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