Organization - City of Burlington, Vermont



1371600-38036500Response To:57150017208500Employee’s Retirement SystemRequest for ProposalForInvestment Advisory ServicesGYL Financial Synergies, LLC65 Memorial Road, Suite 530West Hartford, CT 06107October 8, 2020Table of Contents TOC \o "1-3" \h \z \u anization PAGEREF _Toc53061174 \h 3B.Potential Conflicts of Interest PAGEREF _Toc53061175 \h 6C.Legal Fiduciary Status, Investment Advisory Status, and Litigation PAGEREF _Toc53061176 \h 8D.Insurance PAGEREF _Toc53061177 \h 9E.Staffing and Facilities PAGEREF _Toc53061178 \h 9F.Clients PAGEREF _Toc53061179 \h 13G.Services PAGEREF _Toc53061180 \h 151.General PAGEREF _Toc53061181 \h 152.Investment Policy Development & Portfolio Design PAGEREF _Toc53061182 \h 173.Manager Selection PAGEREF _Toc53061183 \h 244.Performance Measurement and Evaluation PAGEREF _Toc53061184 \h 325.Risk Control PAGEREF _Toc53061185 \h 376.Transition Management PAGEREF _Toc53061186 \h puter and Technical Capabilities PAGEREF _Toc53061187 \h 42H.Fees PAGEREF _Toc53061188 \h 46I.Miscellaneous PAGEREF _Toc53061189 \h 48AppendixInstitutional Team BiographyForm ADV Part II A & BInsurance DocumentsRepresentative Client ListSample Performance ReportSample Micro Investment Policy Statement (Equity & Fixed Income)Sample Pension Investment Policy StatementOrganizationName of firm.GYL Financial Synergies, LLC.Name of address, and telephone number(s) of key contact. Michael J. Lepore, CIMA?Managing Director of Institutional Client ServicesGYL Financial Synergies, LLC65 Memorial Rd, Suite 530West Hartford, CT 06107Telephone: (860) 523-3003Fax: (860) 206-7413 E-mail: mlepore@Claire F. McDonald, CIMA?Managing Director and Senior Institutional Consultant GYL Financial Synergies, LLC65 Memorial Rd, Suite 530West Hartford, CT 06107Telephone: (860) 523-7402Fax: (860) 206-7413 E-mail: cmcdonald@Ownership structure of firm.GYL Financial Synergies, LLC (“GYL”) operates as a fully independent Registered Investment Advisor (“RIA”) and is a wholly-owned subsidiary of Focus Operating, LLC (“Focus Operating”), which is a wholly-owned subsidiary of Focus Financial Partners, LLC (“Focus”).Based in West Hartford, Connecticut GYL maintains a national practice that specializes in providing comprehensive consulting services to institutional clients including but not limited to municipalities, healthcare, foundations/endowments, insurance-based funds, corporations, and Taft-Hartley plans. Our mission is to provide our clients with professional, independent, objective, and unbiased advice. In the 1990s, the principal advisors, Gerald Goldberg, Jonathon Yolles, Michael Lepore, and Claire McDonald (collectively the “Principals”) originally worked at Prudential Securities, Inc. In 2003 Prudential Securities entered into a joint venture with Wachovia Bank and created Wachovia Securities. The team continued to work together and provide investment advisory services to clients after Wells Fargo Bank acquired Wachovia Securities and absorbed it into what is now known as Wells Fargo Advisors. In 2014, the Principals formed Goldberg, Yolles & Lepore, LLC, headquartered in West Hartford, CT, and changed the nature of their relationship with Wells Fargo to that of independent contractors operating with the Wells Fargo Advisors Financial Network (“FiNet”). In the final step as part of its evolution to full independence, on August 1, 2016, Goldberg, Yolles & Lepore LLC disaffiliated with FiNet and created GYL Financial Synergies, LLC, a fully independent Registered Investment Adviser, held to fiduciary standards. In conjunction with the move to full independence, GYL became part of the Focus network.Team structure and brief biographies of individuals to be assigned.GYL consists of 37 members and its main office is located in West Hartford, Connecticut with additional offices in Westport, Connecticut and Kensington, Maryland. Of the 37 members, 6 are Principals of the firm. Two of the Principals, Michael Lepore and Claire McDonald, would be the primary contacts for the City of Burlington.The overall breakdown of personnel is as follows:6 Partners/Advisors8 Senior Wealth Advisors2 Wealth Advisors1 Director of Investment Research2 Research Analysts1 Director Performance Reporting1 Senior Performance Analyst2 Directors of Client Services6 Senior Client Associates2 Client Associates1 Chief Compliance Officer & Operations Manager1 Chief Financial Officer1 Director of HR and Operational Development1 HR Assistant 1 Marketing Specialist1 Receptionist/Administrative AssistantPlease see Appendix I for our institutional team biographies.Business focus/client base.What is the primary business focus of your firm? Is your firm affiliated with any organization(s), specifically a brokerage firm? If yes, please describe the relationship in full. The sole business focus of GYL is investment consulting services. We derive 100% of our revenue through consulting services. GYL operates as a fully independent RIA and is a wholly-owned subsidiary of Focus Operating, which is a wholly-owned subsidiary of Focus. We are not affiliated with any brokerage firms.What is your firm’s targeted market in terms of plan size? Our targeted market in terms of plan size ranges from $10 - $500 million for institutional clients. How many pension consulting clients do you currently have? What is the average plan size of your clientele?GYL current consults to 26 defined benefit plans and 7 OPEB plans. Our average client size is approximately $127 million, and our average plan size is approximately $71 million. What is the client turnover (gains and losses) of your firm over the last three years?GYL has lost three clients in the past three years, Spectrum Brands, Inc., Delaware Valley Insurance Trusts, and Vedanta Society of Providence. Regarding Spectrum Brands, Inc., GYL consulted to both the 401k plan ($350 million) and the Defined Benefit Plan ($70 million). In early 2018 Spectrum Brands underwent a divestiture of one of their main product groups as well as a merger with a separate corporation. As a result of these changes, Spectrum consolidated plans with its new parent company, concluding a successful relationship with GYL that spanned 15 years. Below please find contact details for Spectrum Brands as a reference. Mr. Kurt SuckowChairman, Retirement CommitteeSpectrum Brands(608) 278-6659The Delaware Valley Trusts were clients of GYL for approximately 17 years. During our tenure, GYL enjoyed a successful relationship in which we assisted the Trusts in managing their risk profile while effectively growing surplus. Notwithstanding, following a change in executive leadership, the new team has decided to pursue a different approach to managing its investments. GYL continues to maintain a professional relationship with several Trust constituents and professional service providers.Below please find contact details for The Delaware Valley Trusts as a reference. Mr. Robert PellegrinoDelaware Valley Trusts Executive CommitteeTownship Manager, Northampton Township, PA(215) 357-6800 x201How many full-time staff is employed by your team and firm?We currently have 37 employees across the firm. Our institutional team has 10 members. When did your organization begin providing investment advisory services? GYL has provided investment advisory services since the origination of our practice, dating back to our first institutional consulting arrangement in 1996.Is providing investment advisory services currently one of your organization’s principal lines of business? Yes, investment advisory and consulting services are GYL’s primary line of business. What percentage of your organization’s revenues in the last fiscal year was attributable to the investment advisory practice? 100% of GYL’s revenue in the last fiscal year was attributable to investment advisory services. Is your organization registered with the Securities Exchange Commission (SEC) as an investment advisor under the Investment Advisors Act of 1940?Yes, GYL Financial Synergies, LLC is an SEC Registered Investment Advisor firm under the Investment Advisors Act of 1940 (CRD# 284758/ SEC# 801-108230).Please provide a copy of your organization’s Form ADV Part II A&B.Please see Appendix II for a copy of our Form ADV and ADV Part II A&B. Potential Conflicts of InterestDoes your organization provide trust, investment management or securities brokerage services (including commission recapture)? If so, please identify and explain all such services provided:No, GYL’s investment advisory services are our sole line of business.What percentage of your 2019 revenue was attributable to such trust, investment management or securities brokerage services?None. Does your organization provide any other services or engage in any other lines of business aside from investment advisory, trust, investment management, commission recapture, soft-dollar or securities brokerage services? If so, please describe such services in detail, noting the percentage of your firm’s 2019 revenue that was attributable to such services. No, GYL does not provide any other services or engage in any other lines of business. Our firm does not receive soft dollars. We hold ourselves to the highest fiduciary standard and view soft dollars as a potential conflict of interest. If any part of your organization provides brokerage services, soft-dollar services, directed brokerage, discount brokerage, or commission recapture programs (collectively, “brokerage related services”):What percentage of your organization’s 2019 revenue was received in soft dollars?None. Our firm does not receive soft dollars. We hold ourselves to the highest fiduciary standard and view soft dollars as a potential conflict of interest. What percentage of your organization’s 2019 revenue was attributable to (or compensation for) brokerage-related services)?None. There was zero revenue in 2019 that was attributable to brokerage-related services. Does your organization offer or sell services or products to investment managers? If so, identify these in detail and name every manager who purchased any such services or products (with hard or soft dollars) over the last two fiscal years.GYL does not offer or sell services or products to investment managers. Analysis and selection of managers is focused on eliminating any conflict of interest. Therefore, without exception, research on managers is available to and for the exclusive benefit of our clients. Research is neither available for, nor sold to any organization such as money managers. Please confirm that your organization will not accept any commissions or other remuneration from any service providers in exchange for placing business with that organization.GYL receives no compensation other than that directed by its clients. GYL will not accept any commission or other remuneration from any service providers in exchange for placing business with that organization.Does your organization solicit or accept fees for placing or helping to place money managers? If so, please explain.GYL does not solicit or accept fees for placing or helping to place money managers.Does your organization charge to include any investment managers in your database or any search? If so, please explain.GYL does not charge to include any investment managers in our database or in a search. No fee is collected from the manager to be included in the database by GYL. No compensation is received by GYL from any manager to include them in the manager search process for a client.Does your organization have any clients or associations that could present a conflict of interest and possibly compromise the objectivity of its advice to the City of Burlington? If so, please explain.No, GYL is not aware of any clients or associations that could present a conflict of interest or compromise objectivity of its advice to the City of Burlington.Does your organization receive any products or services from any investment managers? If so, identify each service and the amount of compensation paid, if any. No, GYL does not receive any products or services from any investment managers. Legal Fiduciary Status, Investment Advisory Status, and LitigationDoes your organization consider itself to be a fiduciary in its role as investment advisor? Will your organization contractually agree to accept fiduciary responsibility with respect to its investment advisory services?Yes. GYL accepts fiduciary responsibility for the investment advice that it provides in its capacity as a registered investment advisor. GYL operates as either a 3(38) fiduciary or a 3(21) fiduciary depending on the scope of services. We acknowledge that we are a fiduciary as defined in Section 3(21) of ERISA, including the associated duties and obligations imposed on a fiduciary under ERISA, for the investment consulting and/or advisory services for which we directly or indirectly are compensated. In addition, as a 3(38) fiduciary we further acknowledge we are an investment manager to the Plans as defined under ERISA 3(38).Does your organization serve as an independent fiduciary to any client subject to court supervision or a U.S. Department of Labor judgement or decree? If so, please identify them.No, GYL does not serve as an independent fiduciary to any client subject to court supervision or a U.S. Department of Labor judgment or decree.Has your organization, or a principal, employee, or agent of your organization, ever been investigated or charged by the SEC, the U.S. Departments of Justice or Labor, the Internal Revenue Service, or any other federal, state, or local regulatory agency for any purported or actual violation of applicable law? If yes, please explain and provide date(s) of the violation(s). No, neither GYL nor any of its personnel have ever been subject to any SEC, FINRA, or any other regulatory censure or litigation. Please refer to for our most current ADV and litigation information.Over the past five years, has your organization or any principal, employee or agent been named or threatened to be named as a party in any private or governmental litigation, arbitration or other dispute resolution proceedings; been a target in any governmental or professional investigation; or settled any actual or threatened claim? If so, please provide details including a copy of all relevant complaints and communications, a list of all parties, and the results or status of such proceeding(s), investigation(s) or settlement(s). All filings, or otherwise, must be disclosed. No, neither our organization nor any principal, employee nor agent has been named or threatened to be named as a party in any private or governmental litigation, arbitration or other dispute resolution proceedings; been a target in any governmental or professional investigation; or settled any actual or threatened claim. InsuranceDoes your organization carry a fidelity bond and/or fiduciary liability, professional liability or any other insurance that would be beneficial to the Plan? If so, please describe the insurer, the type of insurance coverage, the beneficiary of such coverage, the limits of such coverage and the deductible amount under such coverage. Please also attach a copy of each such policy or an applicable certificate of insurance. GYL carries a wide array of insurance including Fidelity Bond, ERISA Bond, Fiduciary Liability, Errors and Omissions and additional bond coverage such as Employment Practices Liability and Property / GL / Umbrella Insurance. Please see Appendix III for additional details pertaining to our proof of insurance for GYL.Is your organization currently aware of any claims that have been made, are being made or may be made with respect to such policies? If so, please describe. No, GYL is not aware of any claims that have been made, are being made or may be made with respect to our insurance policies.Has your organization ever assisted a client in reducing its fiduciary liability insurance premiums? If so, please explain how, and to what extent your organization has done this (and provide references), and whether and how your organization would assist the Plan in reducing its premiums. While GYL does not currently offer this service, we assist our clients in the adoption of good governance and fiduciarily sound process. As a result, this may enhance their ability to be able to manage the expense associated with their fiduciary liability insurance premium.Staffing and FacilitiesHow is your organization structured to service your accounts?GYL prides itself on a high touch client centric approach to client relationships. While we are accessible by phone and email, we also look forward to in-person interaction with the City of Burlington on a regular basis. We typically convene with institutional clients on a quarterly basis to review performance reports and any other relevant information that may pertain to the client such as asset allocation studies, manager searches, etc. We make every reasonable effort to accommodate the client’s preferred dates and times to hold quarterly and other meetings. Our support staff which is made up of performance analysts and client associates will be available to assist with any of the day to day operations pertaining to your specific Plan and subaccounts.How many of your staff are investment consultants?Of the 37 team members, 16 are investment consultants/advisors of which 6 are principals of the firm. What is the average number of accounts handled per investment advisor?GYL is committed to providing the appropriate level of human capital and infrastructure for each client relationship. At present the average number of institutional clients per consultant is 9.Describe the qualifications and expertise of your organization’s professional staff (both local and national), including their years of service and experience in the public pension sector. Our team collectively has over 250 years of experience in the financial industry and is uniquely qualified to serve as investment advisors to the City of Burlington. Gerald Goldberg, Michael Lepore and Claire McDonald hold the Certified Investment Management Analyst? (“CIMA?”) designation issued through the University of Pennsylvania’s Wharton School. In addition, Gerald Goldberg holds the Juris Doctor degree from George Washington University. Gerald Goldberg has over 25 years of experience in the public pension sector, Michael Lepore has over 20 years of experience in the public pension sector, and Claire McDonald has over 30 years of experience in the public pension sector. From experience, we know that the only way to make practical recommendations for solving clients’ investing issues is through an intensive in-depth analysis of their current fiscal situation and needs. Once we understand our clients unique situation, we will deliver a customized bottom-up investment plan that leverages the expertise of senior professionals including Certified Investment Management professionals, Certified Private Wealth Advisor professionals, Accredited Investment Fiduciary Analyst professionals, and Certified Public Accountant professionals.1Investments and Wealth Institute formerly Investment Management Consultants Association (IMCA?) is the owner of the certification marks “CIMA?,” and “Certified Investment Management Analyst?.” Use of CIMA? or Certified Investment Management Analyst? signifies that the user has successfully completed IMCA’s initial and ongoing credentialing requirements for investment management consultants.Please list the name and location of the primary individuals who will be responsible for the City of Burlington’s Plan, and provide detailed biographies of such persons, including their tenure with your organization. How many Plans similar to Burlington’s do these primary individuals service? Please list the number of clients that are assigned to these individuals.Michael Lepore and Claire McDonald would serve as the primary contacts for the City of Burlington relationship and currently consult to 18 municipal Defined Benefit plans similar to the Town of Burlington. GYL utilizes a team approach to our consulting services. All client relationships are serviced by at least two consultants so as to provide continuity in the case of unforeseen events. Both Michael Lepore and Claire McDonald consult to or work with all of our institutional clients in one capacity or another. In addition, please see Appendix I for a copy of our Institutional Team Biography. Mr. Lepore’s and Ms. McDonald’s biographies are as follows:Michael J. Lepore, CIMA? - Managing Director of Institutional Client ServicesMichael is the Managing Director of Institutional Client Services, specializing in asset management analysis and investment manager selection for institutional clients. He also provides consulting services to municipalities, self-insurance funds, corporations and non-profit organizations and select high net worth private clients in areas that include investment policy, asset allocation and investment management selection and oversight. Michael has been advising Connecticut municipal clients since 1999. Michael graduated from the University of Rochester with a degree in Economics as well as a Certificate in Management and Finance. He also studied at the London School of Economics and did graduate work at the University of Connecticut. Michael holds the Certified Investment Management Analyst? certification, administered by Investments and Wealth Institute and taught in conjunction with The Wharton School, University of Pennsylvania. He is Series 65 registered and is insurance and variable annuity licensed. Michael is currently serving as a board member and previously as President of the Intensive Education Academy in West Hartford, a K – 12 school for children with autism and other special needs. Claire F. McDonald, CIMA? - Managing Director and Senior Institutional ConsultantAs Managing Director and Senior Institutional Consultant, Claire specializes in asset management analysis and investment manager selection for institutional clients. She also provides consulting services to municipalities, self-insurance funds, corporations and non-profit organizations in areas that include investment policy, asset allocation and investment management selection and oversight. Claire joined GYL Financial Synergies in 2014, having worked with the team at Wells Fargo Advisors and its predecessor in the private client group since 1991. Prior to Wells Fargo, she spent six years with the International Performance Evaluation Department of the World Markets Company in Edinburgh, Scotland, where she focused on the Dutch Pension market. Claire is also a member of the International Foundation of Employee Benefit Plans and has over 30 years of experience in providing a full range of consulting services to institutional clients. ? Claire holds the Certified Investment Management Analyst? certification, administered by the Investments & Wealth Institute? (formerly known as Investment Management Consultants Association?) and taught in conjunction with The Wharton School at the University of Pennsylvania.How many consultants have left your organization during the past two years? Include their reasons for leaving. Please describe the measures your organization takes to assure continuity of service when a team member leaves your organization.No consultants have left our organization during the past two years. Other than two individuals who have left for normal retirement (one in 2008 and one in 2016), no consultants have ever left GYL. GYL has in place standard operating procedures that are accessible to all team members. In addition, cross training has been completed among all members of the organization to assure continuity of service. All client relationships are serviced by at least 2 consultants so as to provide continuity in the case of unforeseen events.Please provide a full disclosure of whether any of your organization’s professional staff has ever been suspended or disbarred from performing investment advisory services or other professional services, has been subject to any disciplinary actions, or has committed any criminal offenses evidencing fraud, dishonesty or breach of trust. No members of GYL have ever been suspended or disbarred from performing investment advisory services or other professional services, have been subject to any disciplinary actions, or have committed any criminal offenses evidencing fraud, dishonest, or breach of trust.Please describe the location(s) and capabilities of your organization’s computer/data processing staff. Is the entire staff in-house? Does your organization outsource any of these services? Please describe the security of these resources. In addition to the main office located in West Hartford, CT; GYL also has an office in Westport, CT, and a satellite office in Kensington, MD. Additionally one member of the team is located in Richmond, VA. Our firm outsources its computer / data processing support through CMIT solutions located in Hartford, CT. Our network is backed up daily and recovery procedures are in place in the event they are required. We utilize Fidelity Wealth Central through our primary custodial network which is currently offered through Fidelity Investments. In addition, GYL has entered into an agreement with Envestnet Asset Management, Inc., an unaffiliated SEC Registered Investment Adviser, that provides investment management and investment advisory services. This provides GYL with access to Envestnet’s investment consultancy team and Portfolio Management Consultants (“PMC”). As a result of this relationship, GYL’s clients have access to in excess of 1,200 Separately Managed Account offerings that have been pre-screened and pre-vetted by Envestnet.GYL has also entered into separate vendor agreements with Investment Metrics and Morningstar Direct. Investment Metrics is a web-based, securities-based reporting system. The philosophy behind this system is to have data available daily on the securities level in order to prepare the most accurate and timely report possible. Morningstar Direct contains information on over 27,000 investment products covering the growth, value and core investment styles in large, mid, small, and micro-cap domestic equity, developed and developing international managers, real estate, fixed income and alternative investments.GYL has also entered into a separate vendor agreement with Capital Market Consultants, Inc., for capital market and economic research.Regarding security of our systems, GYL utilizes Preparis a third-party leader in business continuity and cybersecurity, who are retained to conduct our cybersecurity risk assessments. To further address cybersecurity risks, GYL leverages a combination of internal and external expertise and resources. Certain information technology tasks and operational support have been delegated to representatives of GYL’s outsourced information technology provider, CMIT Solutions (“CMIT”). Specifically, CMIT is contracted to monitor and maintain the systems environment including workstations, servers, and backup systems. Notwithstanding, the utilization of external resources, GYL recognizes that as the registered investment adviser, it has the overall responsibility for the information security function at GYL. The officers of GYL coordinate when necessary with our outsourced IT vendor, CMIT, to be apprised of current information security risks and controls. GYL may maintain documentation of cybersecurity strategy meetings. While we do not mandate the specific format of such documentation, it may include the dates of such meetings, agendas, action items, minutes, and other supporting documentation.ClientsPlease provide a representative list of your organization’s investment advisory clients of similar size. Please see Appendix IV for a copy of our representative client list.Please list your organization’s government public Pension system clients and the portfolio size for each. Client NameStateTotal Pension AUMCharles County Public SchoolsMD$120,000,000City of GrotonCT$86,000,000City of MiddletownCT$470,000,000Northampton TownshipPA$40,000,000Town of BranfordCT$27,000,000Town of BristolRI$18,000,000Town of CoventryRI$47,000,000Town of MadisonCT$41,000,000Town of North ProvidenceRI$45,000,000Town of SuffieldCT$36,000,000Total?$930,000,000Please complete the following table:Size of Plan Assets# of Plans*Total Pension Assets*Under $100M67$1,470,000,000$100M to $200M3$352,000,000$200M to $300M3767,000,000Over $300M6$2,910,000,000Total79$5,509,000,000*Comprises all of our institutional clients that we consult which include a variety of plan types including, but not limited to, pension plans, OPEB plans, defined contribution plans, endowments and foundations and insurance-based funds.Please list the number of clients that have terminated your organization’s services during the past three years, including the reasons of termination.Please see our response to question 5d above within Section A.For reference purposes, provide the name, address, telephone number and contact person for four current clients (three must be government public Pension system clients) for whom your organization provides comprehensive investment advisory services. Mr. Carl ErlacherCity of Middletown, CTFinance Director245 DeKoven DriveMiddletown, CT 06450Phone: (860) 638-4880(Pension Plan, OPEB Trust & 457 Plan)Services Provided: Investment advisory services including Risk Posture Assessments, Asset Allocation studies, Investment Policy Statement development and review, manager search selection and monitoring, attendance at quarterly meetings, custody of assets for the Pension Plan and OPEB Trust and transaction services.Date services provided: June 1999 to PresentMr. Robert PellegrinoTownship ManagerNorthampton Township55 Township RoadRichboro, PA 18954Phone: (215) 357-6800 x201(Police Pension and Non-uniformed Pension Plans)Services Provided: Investment advisory services including Risk Posture Assessments, Asset Allocation studies, Investment Policy Statement development and review, manager search selection and monitoring, attendance at quarterly meetings, custody of assets for both Pension Plans. Date services provided: December 2011 to PresentMr. Steven JamesDeputy Executive DirectorMaryland Association of Boards of Education621 Ridgely Ave, Ste 300Annapolis, MD 21401Phone: (443) 603-0397(Group Insurance Pool, OPEB Trust, Workers Compensation Pool)Services Provided: Investment advisory services including Risk Posture Assessments, Asset Allocation studies, Investment Policy Statement development and review, manager search selection and monitoring, attendance at quarterly meetings, custody of assets for the OPEB Trust and transaction services. Date services provided: December 1999 to PresentDr. Kimberly HillCharles County Public Schools5980 Radio Station RoadLa Plata, MD 20646Phone: (301) 932-6610(Pension Plan and 403(b) Plan)Services provided: Investment advisory services including Risk Posture Assessments, Asset Allocation studies, Investment Policy Statement development and review, manager search selection and monitoring, attendance at quarterly meetings, custody of assets for the Pension Plan and transaction services. Date Services provided: December 2003 to PresentServicesGeneral Please indicate which of the services listed below your organization intends to provide to the Plan (Please indicate yes or no):Attend or teleconference regularly scheduled Board meetings (generally monthly). In person quarterly meetings at a minimum;Yes.Advise the Board during these meetings on the investment impact of plan amendments that may be considered;Yes.Provide oversight of all investment aspects of the Board’s operations;Yes.Review and develop an investment policy statement and provide an analysis on the reasonableness of investment assumptions;Yes.Advise the Board on the prudence and relative financial impact of various investments;Yes.Review, develop, and periodically rebalance asset allocation;Yes. Recommend hiring, retention, and termination of investment managers, mutual funds, and other investment products;Yes. Prepare and present quarterly performance evaluations, including a review and report of all investment transactions by all investment managers in a five-year investment performance history of the Plan (if source date is available);Yes. Review and comment upon investment management agreements prepared by the Plan’s counsel;Yes. Develop and monitor adherence to individualized investment guidelines, risk controls, proxy voting, and adherence to proxy voting policies;Yes. Monitor custody bank and assist in retention and replacement, as appropriate;Yes. Supervise, monitor, and verify transfer of assets in the event of change of investment manager;Yes.Provide assistance required by audits or examinations conducted by governmental agencies;Yes. Assist in reducing fiduciary liability insurance premiums and address special investment and other issues as they arise. As part of the services that we provide to clients, we assist in their adoption of good governance and a fiduciarily sound process. As a result, this enhances their ability to be able to manage the expense associated with their fiduciary liability insurance premium. We often will assist clients with a variety of special/ad-hoc investment related issues as they arise; however, reducing fiduciary liability insurance premiums is not a service we routinely provide.Investment Policy Development & Portfolio DesignDescribe briefly the processes and tools your organization uses to help clients develop investment policies and objectives.We believe the Investment Policy Statement is the single most important step in investment success for clients because it is the blueprint for the entire investment program; establishing the infrastructure for all investment related activities. Although the Plans are not subject to ERISA, we believe it is best practice to follow the more stringent ERISA standards. A written Investment Policy Statement supports the prudent person rule and the ERISA requirement for procedural prudence by clearly tying together spending and funding policies with investment management strategy. Board ConsensusGYL begins each of their consulting assignments helping Board members develop or review the City of Burlington’s investment policies, objectives and guidelines. This process starts with reviewing the Plan’s mission statement with the Board. The mission statement is the basis for all decisions made relative to the long-term activities of the Plans. The Board is then polled using our proprietary risk assessment questionnaire. This process helps us, and the Board, understand their attitudes on the long-term economic climate, the Plan’s income needs, desired asset allocation and degree of diversification, perceived risk tolerances, policy constraints, and other pertinent investment considerations. From the consensus opinion, an overall risk tolerance is developed for the Plans.Policy constraints The policy constraints agreed to in the development of a consensus will play an integral role in the creation of investment policy and the implementation of an investment strategy. We will evaluate constraints such as limitations or exclusions of particular securities, asset classes, investment styles, or particular investment vehicles (i.e. short selling).ObjectivesThe next step we do as consultants in evaluating the Plan’s investment policy is to assess its investment objectives. What are the Plan’s needs for liquidity, growth of assets, income, and preservation of capital? We will balance these needs and develop an investment strategy that will maximize the probability of achieving these needs within the time horizons of the Plans.How does your organization identify and understand the Plan’s financial and investment objectives?GYL utilizes a proprietary questionnaire to survey both plan professionals (e.g. Finance Director) and decision makers (i.e. Board members) to develop an understanding of the Plan’s ability to assume risk as well as its willingness to assume risk. We work with the client to develop the Investment Policy Statement to define investment goals and allowable risk levels, guidelines delineating allowable investments and prohibited transactions, benchmarks for evaluating performance, and service expectations for investment consultants and other service providers. Policy limitations are critical because they help us understand if there are particular securities or sectors (i.e. “sin” stocks) or investment strategies with which Board members, as fiduciaries, are uncomfortable. GYL works closely with our clients’ professionals and pension actuaries to understand the liabilities, funding status, funding abilities and tolerance for risk (both market and fund volatility). The written Investment Policy Statement is an important tool providing the client with realistic targets for future investment performance and a means for judging the quality of the results. For many clients, the Board may change over the years. The Investment Policy Statement remains a constant and may serve as a valuable training tool for newly appointed Board members. In addition, this document provides the investment manager with a clear understanding of the Plan’s goals, objectives and guidelines. This information enables the manager to invest the assets in such a manner that they can fulfill his co-fiduciary responsibilities to the Plans. Key Components of the Investment Policy StatementStates the role of the fiduciaries and professionals in the investment process.States the responsibilities of the investment manager in the investment process.Clearly states the investment objectives of the plans.Specifies acceptable asset classes.Defines asset allocation policy.Delineates the risk tolerance of the plans (liquidity, quality).Provides a clear method to review progress.Outlines the time horizon for achieving goals.Reviewing the Investment Policy Statement on a regular basis with the Client is the best approach to monitoring adherence. We are dedicated to the development and annual review of the statement due to its importance to investment activities.In addition, comment on your organization’s process for recommending modifications to investment guidelines. The Investment Policy Statement will outline acceptable ranges of allocation to various asset classes. If the Plan’s asset mix falls outside of these ranges for any given asset class, then the Plan should be rebalanced. We will also recommend modifications in the asset allocation when one of the factors on which the original asset allocation was based changes.However, in reviewing Plan asset allocation and performance, investment policy and allocation guidelines should always be considered. Additionally, GYL recommends that the Plan give their investment manager enough leeway to make short-term or tactical changes in the asset allocation to take advantage of market conditions. However, over the full market cycle, the Plan’s actual asset allocation should reflect the long-term asset allocation policy of the Plan. There have been recent studies to suggest that setting percentage interval rebalancing thresholds can be useful in maintaining performance consistent with the long-term goals and objectives of the Plan. Describe your firm’s philosophy and approach to using alternative investments, including:How you differentiate between traditional and alternative investments. Alternative investments are investments other than traditional long-only investments such as stocks and bonds. They carry specific investor qualifications which can include high income and net worth requirements as well as relatively high investment minimums. They are often complex investment vehicles which generally have higher costs and potentially higher risks and on a stand-alone basis may be more volatile than other types of investments. Depending on the investment vehicle, alternative investments often have liquidity restrictions which may impact a Plan’s ability to access the investment funds. Other risks may apply as well, depending on the specific investment product.Explain why you would use alternatives, i.e., risk reduction, alpha, non-correlated assets, etc.? Why would you not use them?Considerations in recommending different alternative investments include, but are not limited to, the following:Greater potential for diversificationHistorically low or non-correlation to traditional investmentsThe potential to seek to minimize market cycle peaks and troughsExposure to a broader range of investment opportunities Greater potential for improved risk-adjusted returnsDepending on the need for cash, it would not be appropriate to use alternative investments if the Plans have significant liquidity needs. Alternative investments are typically less-liquid options that allow for differing risk profiles, correlations and potential for improved returns. Historically, alternatives have been structured as limited partnerships which impose limits on the access to the investments, though numerous strategies are available in 1940 Act registered vehicles.Alternative investments you currently utilize.Depending on the unique needs of a particular client, GYL has utilized hedge funds, managed futures, real estate, commodities, exchange funds, venture capital/private equity, direct investments, and institutional money market funds. In addition, GYL offers the capability to provide private equity and hedge fund investments available through CAIS. The CAIS platform consists of alternative investments, including: hedge funds, alternative mutual funds, ’40 Act interval RICs, private debt and private equity investments across a wide range of strategies. Mercer, a global leader in investment consulting, conducts both manager research and operational due diligence as well as ongoing performance monitoring for CAIS. Typical percentage of alternative investments, including hedge funds. As each client has their own unique goals and objectives, we can’t provide a typical allocation. So while a precise answer to this question is not possible without undertaking a thorough risk posture analysis, GYL’s typical municipal pension client has a 0% to 15% allocation to broadly defined alternatives, mostly in the form of liquid vehicles such as REITs, MLPs, and registered products. Delivery structure(s) in use (i.e., mutual funds, ETFs, separate accounts, CITs, limited partnerships, MLPs, etc.)Depending on the asset class we believe that plan size determines whether a separately managed account manager would be utilized vs. a mutual fund or ETF. In the Alternative Investment space, we are currently using mutual funds, ETFs, and SMAs for our institutional clients. Mutual funds have the added advantage of greater transparency and liquidity vs. the traditional limited partnership structure.Describe your philosophy and approach to using factor weighted (Smart Beta) funds?As a threshold issue, smart beta strategies offer the potential to add value by choosing, weighting, and rebalancing the holdings into an index based upon certain criteria. These criteria are typically different than those used to create market cap weighted indices. We have utilized some of these strategies and have an open mind to including them in our toolbox of options available to a client as part of the investment implementation. Similar to other investment modalities, factor-based funds do not offer the proverbial silver bullet, though in some ways provide a hybrid or in-between approach to active and passive investing Describe your firm’s philosophy and approach to development of asset allocation strategies, including:Methodology and approach used for asset allocation modeling, including linkage to asset/liability modeling and funding?Studies have shown that asset allocation is the principal determinant of a long-term investment return. Asset allocation modeling evaluates a wide variety of asset classes and style combinations to best achieve a client’s investment goals. The modeling process analyzes different risk parameters with a client’s investment goals in mind, ultimately forming the basis for a well-conceived risk control plan. In accordance with the investment policy, the client’s asset allocation should exhibit a return/risk profile that would meet current spending and distribution needs while minimizing exposure to market volatility.To conduct an Asset Allocation Study, we will use the Investment Policy Statement in conjunction with our analytical tools such as Morningstar Direct to determine the most appropriate asset mix for the given risk tolerance. We will monitor Plan progress and investment environment changes and opportunities and may suggest modifications that have historically added value while minimizing risk.We can provide valuable assistance in making asset allocation decisions designed to meet the Plan’s objectives. This includes evaluating the preferred long-term asset allocation target and allocation constraints such as minimum and maximum exposure to certain asset classes.Strategic Asset AllocationGYL will prepare a strategic Asset Allocation Study that will analyze various mixes of desired asset classes. An asset allocation model is used to generate “efficient portfolios” of varying risk levels. (An efficient portfolio is one that provides the highest rate of return for the degree of risk taken). The first step in the asset allocation modeling process is to determine which asset classes (maximum and minimum exposure to each) are appropriate for investment in the Plans, given their risk and return characteristics and restrictions established in the investment policy. For each asset class included in the study GYL will create an expectation of investment performance. Because the goal of strategic asset allocation is to create a long-term asset allocation policy for the Plans, the expectations of investment performance should reflect a long-term investment horizon. Therefore, the estimates of return and risk should be less sensitive to short-term market conditions, and actually normalize the performance relationship between each set of asset classes. Although the process is flexible enough to include different inputs, Morningstar Direct Allocation Advisor employs a second-generation feature in its optimization formulas called Re-sampling that reduces estimation error in asset allocation solutions. Re-sampling adds value over traditional mean variance optimization by incorporating Monte Carlo methodology and stochastic modeling to construct an adjusted efficient frontier. Asset allocation mixes along the adjusted frontier or the Re-sampled Efficient Frontier provide improved risk / return characteristics. Next, given the inputs of return risk and correlation combined with asset class constraints, we will develop a presentation that will compare several efficient asset allocation mixes to the current Plans allocation. The presentation will evaluate the asset mixes in terms of expected return and expected risk necessary to achieve the expected returns. A series of screens will then be applied that identifies those asset mixes that meet certain return criteria. Examples of return criteria may be a minimum expected return or the probability of achieving the target return over the Plan’s investment horizon. Then mixes outside the risk tolerance may be eliminated. The result will be an objective evaluation of various asset mixes, and a focus on the mix or mixes of asset classes that can be expected to meet your objectives and constraints.For an asset/liability study we would outsource the service to an actuary who will then calculate the projected liabilities of the Plans.Application of major variables (i.e., risk tolerance, return, correlation, skewness, kurtosis, etc.)The Capital Market Assumptions that are input into our Morningstar Direct asset allocation software include the correlation, risk and return of each asset class. Our Capital Market Assumptions are obtained from an independent third party, Capital Market Consultants, Inc. and are updated annually. In addition, Morningstar Direct employs a second-generation feature in its optimization formulas called Re-sampling that reduces estimation error in asset allocation solutions. Re-sampling adds value over traditional mean variance optimization by incorporating Monte Carlo methodology and stochastic modeling to construct an adjusted efficient frontier. Asset allocation mixes along the adjusted frontier or the Re-sampled Efficient Frontier provide improved risk / return characteristics. The other benefit associated with Morningstar Direct’s approach to asset allocations is that it provides practitioners with not only the ability to project log normal returns but to also model skewness and asymmetrical returns.GYL Financial Synergies begins by establishing a linkage between a client’s risk posture and the portfolio structuring process. This is done by simultaneously evaluating components of risk capacity and the Board’s willingness to accept risk through surveys directed to Board members and other key decision makers. The Risk Posture Assessment process helps establish consensus among key decision makers while providing important documentation for future reference. The outcome of the Risk Posture Assessment process is a defined equity range from which we begin the portfolio structuring process. The process focuses on isolating an equity range because the equity allocation in general is the key driver of portfolio expected return and volatility. Working within pre-established risk parameters, efficient portfolios are evaluated, and an optimal mix of assets is determined with our client’s needs in mind. Lastly, we recognize that in crafting the ultimate solution for our clients, the science of portfolio optimization should be combined with intuition and common sense.How frequently and under what circumstances do you believe asset allocation should be changed?The lead consultants will regularly review asset allocation to ensure the best performance for the Plan. Unless otherwise specified by the client, we recommend an annual review and update of the strategic asset allocation study. Set forth below is a non-exhaustive list of potential catalysts to prepare an updated asset allocation study:1)A significant change in a plan’s underlying demographics;2)A significant change in a plan’s benefit formulas;3)A significant change in the client’s ability or willingness to accept risk in the investment portfolio; and/or 4)A change in the underlying capital market assumptions.Does your firm employ a tactical allocation strategy? If yes, describe the parameters and the decision-making process. Our philosophy emphasizes the establishment of a long-term strategic asset allocation developed with a clear understanding of the Plan’s risk capacity and the Board’s risk preferences. Once the Plan’s strategic allocation is established, we further develop, with the Board’s input, tactical bands for each asset class above and below the strategic allocation. Tactical bands frame the degree to which assets may vary overtime and ensure that while the Plan’s may take advantage of shorter-term trends in the marketplace, the long-term risk-return characteristics of the Plan remain aligned with the Plan’s risk profile and objectives. GYL has extensive experience in managing this process and has historically been able to add value via asset allocation. In reviewing the Plan’s asset allocation and performance, investment policy and allocation guidelines should always be considered. Additionally, GYL recommends that the client give their investment managers enough leeway to make short-term or tactical changes in the asset allocation to take advantage of market conditions. However, over the full market cycle, the Plan’s actual asset allocation should reflect the long-term asset allocation policy of the Plan. There have been recent studies to suggest that setting percentage interval rebalancing thresholds can be useful in maintaining performance consistent with the long-term goals and objectives of the Plans.Investment policy will outline acceptable ranges of allocation to various asset classes. If the Plan’s asset mix falls outside of these ranges for any given asset class, then the Plans should be rebalanced. We will also recommend modifications in the asset allocation when one of the factors on which the original asset allocation was based, changes. Our involvement in preparing guidelines for investment managers is based primarily on the Investment Policy Statement. As discussed above, we feel the Investment Policy Statement is a crucial step in outlining the client’s goals and objectives and will be provided to each manager.Does your firm use alternative asset allocation methodology beyond Markowitz? Please explain. Yes and no. Dr. Harry Markowitz and Modern Portfolio Theory continue to factor prominently in our recommendations. With that being said, our firm utilizes Morningstar Direct for Asset Allocation Studies. Morningstar Direct employs a second-generation feature in its optimization formulas called Re-sampling that reduces estimation error in asset allocation solutions. Re-sampling adds value over traditional mean variance optimization by incorporating Monte Carlo methodology and stochastic modeling to construct an adjusted efficient frontier. In addition to the foregoing, and as discussed below, depending upon what the Client’s goals and objectives, we also construct liability driven portfolios. Through the utilization of liability framework, funded ratio volatility can be more effectively managed. As with everything, this comes at a price. Lower funded ratio volatility is often accompanied with lower expected returns.Does your firm utilize liability driven methodology? Please explain. Prior to conducting the Asset Allocation Study, we prepare a Risk Posture Assessment wherein we review the client’s ability and willingness to assume risk. Through this process we are also able to assess whether the client is amenable to pursuing a liability matching immunization process or whether more traditional mean variance asset allocation optimization would be appropriate. We strongly agree with the idea that the mission of the Pension Plan (i.e. to meet obligations to participants in a timely manner without incurring excessive cost or volatility) should shape the key measures of success for the investment program. We understand the limitations of traditional measures of success which have separated assets and liabilities and tended to be benchmark centric in focus. For those clients who want to embrace an LDI approach to investing, we employ a dynamic de-risking strategy with pension clients whereby we establish the objective of the Plan Sponsor in terms of funded status over a specific time horizon and manage to that objective using a glide path methodology. The glide path represents a series of pre-set asset allocations and associated triggers. As changes in funded status and/or other key plan governance measures occur the Plans allocation is altered in a way consistent with the particular objectives of the Plan Sponsor. The rule set for applying the triggers is embedded in the Investment Policy Statement and progress is tracked each quarter (or as otherwise dictated by the Board). GYL has over 15 years of experience utilizing liability driven investing and has several municipal clients that have implemented liability driven strategies.Manager SelectionBriefly describe the process and methodology of choosing an investment manager and fund from initial screening through the development of your recommendation. The investment manager search process for a specific client begins only after the investment policy has been established. Our consulting process reviews and analyzes the strategic investment plan that has been established to determine the allocation among the various asset classes and investment styles within each asset class.In conducting an investment manager search, we encourage our clients to participate actively in the development of the qualifications and constraints that investment managers must meet in order to become genuine candidates. True investment manager research entails a particular type of analysis that is common at only a few firms. Unlike security analysis that attempts to predict the future behavior of stocks, bonds and their hybrids, this kind of research attempts to identify investment managers that are compatible with a client’s needs and objectives. It is fairly common to find investment manager research that only provides quantitative information on investment managers. The true test of value-added research rests with the degree of analysis performed on the qualitative issues such as personnel, investment process, investment disciplines, implementation of the process and the business structure of the management firm. Consequently, GYL takes great pride in the depth and breadth of our analysis of investment managers that are suitable for our clients. BeliefsWe believe that past performance does not predict future investment success.We believe that it is important to distinguish between fund returns and performance. Returns are defined as absolute numbers. Performance represents risk adjusted excess returns measured against an appropriate benchmark. These returns must be evaluated over multiple time segments to avoid the possibility of time-period bias.We believe the quality of the investment managers personnel, process, and organization is the best predictor of future success.We believe our opinions should not be interpreted as short-term performance forecasts.GoalsUnbiased opinions: Our paramount goal is to provide an unbiased justification of our opinions about an investment manager’s ability to add value for our clients.Due Diligence: The ongoing evaluation of investment managers in our database remains a primary focus of our process.Differentiate Investment Managers: A primary goal is to articulate the differences between investment managers. Even investment managers within the same style will have investment characteristics that are different from each other or the benchmark that they are measured against.Separate coincidence from skill: Understanding the sources of performance is a critical function of research. Outperformance in a given quarter may be a coincidence that the investment manager was in the right place at the right time. By the same token, being in the wrong place at the wrong time is not necessarily due to a lack of skill.Our Tools for Research Collective experience - Our research analysts have a deep and varied knowledge of the industry contributing to our understanding of the investment process. Attribution Analysis – Morningstar Direct research uses a holdings-based, factor analysis to compare the fund’s economic sectors, capitalization ranges, and various style characteristics to the appropriate benchmark. This helps us to determine what the fund’s performance can be attributed to and if it is consistent with the investment manager’s investment philosophy.Investment Manager Interviews – A critical component of our investment manager research effort are the interviews we conduct with the investment managers. These are usually on site or via conference call and include in depth conversations with key-personnel in the investment management firm. Investment managers regularly visit our headquarters and also have conference calls with our analysts. We will also investigate known or suspected issues with an investment manager and attend meetings with investment managers as often as the situation rmational Update – All investment managers that we review are expected to inform us immediately of any material change in their personnel, philosophy, disciplines, implementation of their process or business structure, plus any legal or regulatory issues. In any event this notification should not extend beyond our quarterly update. Failure of an investment manager to adhere to this policy subjects them to immediate termination from any program at GYL.Our mission is to evaluate, recommend and monitor a wide variety of registered investment managers capable of meeting our clients’ diverse investment needs. This includes providing multiple investment manager alternatives in a variety of asset classes and investment styles. GYL is staffed with a seasoned group of research professionals whose goal is to fulfill the mission of the Investment Committee and to ensure the investment managers offered are sound, competitive and worthy of our clients’ attention.The “Recommended” and “Allowable” investment managers that are available to our clients have successfully passed through GYL’s research process. While we cannot predict the future success of any investment manager, we can guarantee that the “Recommended” and “Allowable” investment managers available to our clients have passed through our rigorous screening process detailed below. 165735010541000Step #1 - Universe Screening: Entails screening the broad universe of available investment managers. Our databases and screening tools help us condense this universe. The initial screening is as follows:Sort by asset class (i.e. large-cap, mid-cap, small-cap, developed, international, etc.)Sort by investment style (i.e. growth, value, core, growth-at-a-reasonable price, etc.)Screen for consistently strong performance (trailing period and rolling period results versus benchmark and comparable universe)Screen for strong risk-adjusted performance (trailing period and rolling period results versus benchmark and comparable universe)Our database contains information on over 2,000 investment advisory firms and over 27,000 investment products covering the growth, value and core investment styles in large, mid, small, and microcap domestic equity, developed and developing international investment managers, real estate, fixed income and alternative investments.GYL evaluates approximately 1,200 investment manager strategies for our single contract relationships offered through Envestnet and approximately 15,000 investment manager strategies for our dual contract relationships.Equity Styles – Three characteristics tend to explain most of the movement in the prices of common stocks. These are value (factors such as low P/E, low price/book, etc.), growth (factors such as high historical or expected growth of EPS, etc.) and size (market capitalization). In order to achieve a proper diversification, the aggregate portfolio should reflect all of these characteristics.Step #2 - Meeting the Minimum Criteria: Once GYL has identified attractive investment managers based on our initial screening process; we make sure these candidates meet our minimum criteria which include, but are not limited to:Acceptable level of assets under management (typically $1 billion by firm and at least $500 million in product) Acceptable level of accounts under management Acceptable level of investment manager tenure and turnoverCredible track record length (typically at least five years)Strong client service capabilityStep #3 - Quantitative Analysis: If an investment manager passes our initial screening process and meets our minimum criteria, they are subjected to a more stringent benchmark relative quantitative analysis. This analysis includes, but is not limited to:Absolute performanceRisk and upside/downside exposure Risk-adjusted performanceStyle analysis and consistencyBased on an intensive review of the information, GYL determines the investment manager’s style and the most appropriate benchmarks for comparisons. GYL evaluates an investment manager’s performance (absolute and risk-adjusted) based on the following:Index Comparisons – GYL research identifies the most appropriate index benchmarks for each investment manager. Universe Comparisons – Similar to index comparisons, we measure an investment manager’s performance relative to their specific peer universe.Rolling Periods Analysis - Evaluating an investment manager’s performance on a fixed time period (e.g. one, three, or five year) is often misleading. For example, if an investment manager’s three-year annualized return is favorable due to particularly strong period of quarterly returns, it may mask tremendous swings in the investment manager’s returns. Due to the shortcomings of fixed time period analysis, GYL evaluates performance over a variety of different periods, including rolling periods that allow an investor to identify trends in an investment manager’s performance. Step #4 - Qualitative Analysis: Quantitative analysis is only useful if you know what is behind the numbers. In keeping with this philosophy, GYL concentrates their efforts evaluating the infrastructure and investment processes behind an investment manager’s results. GYL evaluates such things as, but not limited to:Investment philosophy & process (stability) Professional staff continuityPortfolio administration & operationsAttribution analysis (contributing factors to performance) Step #5 - The GYL Investment Committee: To complement the first four steps, GYL provides an additional layer of due diligence and analysis in the form of the GYL Investment Committee. The analysts conducting detailed research on a particular investment manager present their recommendation to the GYL Investment Committee. The Investment Committee discusses the recommendation, probing and challenging as necessary to arrive at a final Investment Committee conclusion. A majority vote of the voting members is needed for an investment manager to become available to our clients.After the investment manager(s) are hired, GYL will use the same research process to update its evaluation at least annually. This ongoing evaluation process enables GYL to identify any changes that could impact either the risk or return posture of the investment strategy.Step #6 - Ongoing Research: GYL performs ongoing research of investment managers. If we feel that the firm is materially weaker due to events such as the loss of key personnel, investment discipline deviation, and/or weak long-term performance, then the Investment Committee may decide to remove the investment manager from the firm’s internal investment manager roster. When entrusting the management of client assets to an investment manager, it is important to know that as Investment Consultants we strongly value continuity of people, investment philosophy and the decision-making process. Our Investment Committee meets with investment managers annually. Conference calls take place on a regular basis. Investment manager due diligence:Basic firm informationStaffing and professional turnoverProduct descriptionsInvestment philosophy and processRisk management, portfolio transparency, and portfolio monitoringClient service and reportingInvestment performanceOur databases include information on an investment manager’s headquarters and contact information; current assets and client information; ownership information, whether it is employee, private, parent or publicly owned; the number of members in investment management and research and their relative experience; a firm background narrative; a product summary; client turnover; portfolio characteristics; investment strategy; management turnover and portfolio construction methodology.Indicate the source of information for investment manager candidates, CITs, funds, ETFs, etc. Our recommended lists of managers and mutual funds are proprietary and are generated from data available through the Morningstar Direct and Envestnet databases.Does your organization conduct on-site due diligence meetings? Please explain. How often do you visit with managers or representatives of the funds used in your portfolios?Our research committee conducts due diligence meetings at our headquarters at least annually. Conference calls are done on regular basis. In 2019 GYL conducted approximately 150 manager meetings, both in person and by conference call. In addition, we leverage the resources and research of outside firms such as Envestnet and the due diligence that its investment group, PMC, undertakes in vetting Separately Managed Account investment options on its platform.Does your organization classify equity managers and funds by style? If yes, please indicate the style categories your organization uses and what process it uses to determine the manager’s/ fund’s style?Our firm utilizes returns-based analysis that regress the performance histories of managers and benchmarks to establish “best fit” style identity based upon the related movements of returns. Confirming this process, holdings-based software provides insight into a manager’s style tendencies over time as we evaluate actual Plan characteristics. In addition to these processes, we track model asset allocation mixes on each of the manager styles that we recommend using Envestnet and Morningstar Direct. A team of performance analysts is responsible for identifying discrepancies among “like” managed accounts. Lastly, our research team maintains regular contact with investment managers and analyzes model style allocations against investment managers’ published performance composites.Our proprietary lists include growth, value and core investment styles in large, mid, small, and micro-cap domestic equities, developed and developing international managers, real estate, fixed income and alternative investments.Large Cap GrowthSMID Growth All Cap GrowthLarge Cap Value SMID Value All Cap ValueLarge Cap Core SMID Core All Cap CoreMid Cap Growth Small Cap Growth Foreign EquityMid Cap Value Small Cap Value Taxable Fixed IncomeMid Cap Core Small Cap Core Tax-exempt Fixed IncomeMLPsConvertibles Enhanced Fixed IncomeREITs Alternatives Fixed Income Styles – Three characteristics tend to explain most of the movement in the prices of fixed income securities. These are maturity/duration, quality and sector. Fixed income styles included (among others):Taxable Fixed income (Government and Corporate)Tax-exempt Fixed IncomeEnhanced Fixed incomeConvertiblesHow does your organization verify the validity of limited partnership and separate account managers’ performance records?Our Research team devotes significant time evaluating the investment managers’ credibility. We employ a disciplined research process to qualify managers as “recommended” within our managed account programs in our due diligence process. In addition, our team of performance analysts is responsible for identifying discrepancies among our managed accounts. Typically, we will reach out to the managers and compare to statements, as well as our performance databases.Please see our response to section 4 below for further discussion on our performance reporting process.What is your position relative to active and passive investing?An objective, unbiased consulting process must begin with an investment neutral stance. Once the client’s need for return, risk and expense control have been determined and analyzed the consultant can best determine how much, if any, of the Plans should be indexed. While index funds may have some advantages in certain asset classes most of our consulting clients use a combination of active and passive management for their respective investment mandates. Active management allows for more control over the Plans, where seasoned managers make informed decisions based on experience, judgment, and prevailing market trends. In contrast, passive (indexing) management, performance is dictated by indexes, lacks control, and prevents the use of defensive tactics that can be used in the event of a downturn in the market. With that being said, passive investment does provide cost effective beta exposure to certain asset classes. Conceptually, the active versus passive question can be summed up as follows:Do you believe active management can add value to a portfolio?Do you believe your consultant can assist you in identifying active strategies that can add value?What is your active risk budget, knowing that any active strategy will experience periods of underperformance?While we have clients that employ 100% active and 100% passive strategies, we have found that in most cases, a combination of passive and active strategies within a client’s investment lineup provides the opportunity for excess performance and/or risk mitigation while controlling cost and tracking error. If we are fortunate enough to be engaged by the City of Burlington, we would explain the benefits of each modality and develop a custom solution that strikes an appropriate balance between the risk, return and cost associated with implementation.Do you use multiple funds or managers for larger sleeves such as Large Growth, Core, or Value?In general, we tend to utilize one manager per asset class, partly due to the fact that the allocation is not usually large enough to merit more than one. The exception would be within the fixed income asset class which normally has a significantly larger portion of the assets. For portfolios of similar size as the City of Burlington’s pension plan, what types of investment vehicles (as shown below) would you use, and what percentage:CITs: 0 – 100%Mutual Funds: 0 – 100%ETFs: 0 – 100%Individual bonds: 0% (other than as part of an SMA)Individual stocks: 0% (other than as part of an SMA)Limited Partnerships: 0 –10%Separately Managed Accounts (SMA): 0 – 100%Other (explain): 0%Performance Measurement and EvaluationDescribe your organization’s approach to monitoring and evaluating portfolio performance, risk, investment style, and individual investment managers for your clients. Please discuss how you benchmark the managers or funds. All of the efforts of a good consulting process are meaningless if clients are provided with inadequate records and poor communication of results. Our performance reports ensure that client investments are managed in accordance with stated goals and guidelines. Our quarterly performance monitor includes all information necessary for us to fulfill our responsibilities as a fiduciary and to provide the other fiduciaries with a report that is presented in a logical and concise format.Our firm uses Investment Metrics for performance reporting and evaluation. This system produces high-quality performance reports for plan level, asset class segments, and asset class composites. We typically use benchmarks that are common to the industry such as the Russell, Barclays, and MSCI indices. We will review the index noted either in the fund prospectus or selected as the benchmark by the investment manager and in those cases where it does not appear to be suitable or the portfolio is index agnostic, we will conduct a review based on holdings and historic data to select the most appropriate benchmark. Using the most appropriate index is vital when calculating the various risk adjusted returns such as beta, alpha, information ratio, R2 etc.For total plan evaluation, we establish “blended” custom benchmarks for institutional clients, which incorporate the target weighting of assets represented in the Plans. Morningstar Direct and Investment Metrics have capabilities that facilitate blended customized benchmarks, while ensuring historical data accuracy. For clients who wish to utilize Vanguard index products, secondary benchmarks employed by the index provider are also utilized (e.g. CRSP, FTSE data). We also can employ other indices as requested by the client. Index data is updated monthly. Client report structures are determined and customized based on individual needs and expectations.How often does your firm review an investment manager’s performance?GYL reviews investment managers’ performance on a quarterly basis.Explain what would cause you to place a fund or manager on Watch?If a manager is persistently underperforming their benchmark, they will be placed on a watch list. A manager may also be placed on a watch list for reasons unrelated to performance including, but not limited to, significant personnel changes, investment strategy changes, or organizational changes. Managers on the GYL watch list will be closely monitored, and regular conference calls or meetings are conducted. Information is reviewed with the client at each quarterly meeting going forward until the manager is either removed from the watch list or replaced by a new manager. In depth discussions are conducted with clients at their quarterly meetings and the discussions are documented. From time to time, managers underperform their benchmarks. When this happens, we carefully examine the root cause of the poor performance to determine whether style characteristics, security selection, or general market trends have caused the problem. Should we notice a period of unexplained poor performance, we will contact the manager. Going forward, we closely monitor the manager’s performance as well as the firm’s ownership structure and professional turnover to ensure that performance rebounds relative to the benchmark. If we feel the manager has not corrected any controllable issues contributing to poor performance, we will formally recommend that the manager be reviewed and possibly replaced. If we feel that the firm is materially weaker due to events such as the loss of key personnel, investment discipline, deviation, and/or weak long-term performance, or adverse legal or regulatory issues then the Research Committee may decide to remove the manager from the firm’s internal manager roster. Briefly describe your organization’s reporting system and the components of your performance reports. Please explain the extent to which these performance reports can be customized to meet a particular client’s needs.GYL utilizes a web-based, securities-based reporting system from Investment Metrics, an outside vendor. The philosophy behind this system is to have data available daily on the securities level in order to prepare the most accurate and timely report possible. The performance report is prepared quarterly and provides both time and dollar weighted rates of return that are net of fees for the Plans and each manager. We create custom benchmarks for the Plans which are used to measure your progress towards your investment objectives. While we focus on long-term results, we offer both short and long-term performance analysis. Performance measurement enables fiduciaries to assess the success of their Plan in absolute and relative terms. It examines rates of return for their manager and the individual investment managers, their risk incurred (as indicated by volatility and sensitivity to the market) and the overall Plan performance relative to the goals set by the Board and as stated in the Investment Policy Statement.Conceptually, our performance report is designed to answer five key questions which we believe are essential in the determination of acceptable manager performance:Did the investment results meet your objectives?How much risk did your manager take in achieving results?Did the manager add real value to your plan?How did other managed funds perform during the same period?What market conditions existed during the review period?Our performance report provides answers to each of these questions by providing:Overall Plan and manager performance (time-weighted and money-weighted returns for the total Plan and all segments),The factors contributing to the growth in Plan assets, including a detailed record of cash flows, capital appreciation and investment income,Shifts in the manager and the total Plan asset allocation and their impact upon performance relative to the long-term asset allocation policy,Investment performance versus the goals of the Plans, selected market indices and other managed funds.The risk assumed by the Plans and its investments to achieve the investment performance. (Beta, Standard Deviation, Relative Standard Deviation, Alpha, R-squared, Incremental Return, Risk Premium),The Plans’ and managers’ investment results over various market cycles, andThe investments’ market timing and security selection decisions and their impact on the Plans’ performance.This system produces high-quality performance reports for plan level, asset class segments, and asset class composites. The report offers:Accurate time-weighted and dollar-weighted rates of return for different time periodsRisk on an absolute and market-relative basisCurrent and historical asset class and sub-asset class allocationsBenchmark and peer group comparisons of performance and riskThe performance effects of investment managers’ asset class and security selection decisionsClient report structures are determined and customized based on their individual needs and expectations.Please see Appendix V for a Sample Pension Plan Performance Report.Describe the types of analysis and investment performance comparisons included in a typical performance evaluation report. To what extent does your organization provide analysis of year-to-year changes? How does your organization monitor and report performance data that is typically delayed, i.e., LPs.? Are there any performance adjustments that you use to compensation? What is your organization’s typical turnaround time for the preparation of such analysis? Our quarterly reports are highly customizable. In addition to basic reporting metrics, we encourage our clients to take an active role in identifying the illustrations and metrics they see value in including in the quarterly reports. At a minimum, our quarterly reports include the following:Capital Markets Review – Provides an overview of the economy and the capital market environment for the preceding quarter as well as year-to-date, and annual period information.Executive Performance Summary – Includes Plan level performance compared to custom and absolute benchmarks as well as manager level performance compared to style specific benchmarks across all applicable time periods.Asset Allocation Summary – Illustrates comparison of the target policy allocation and the actual Plan allocation at the current quarter end date.Manager Level Performance Attribution and Analysis – Includes Plan characteristics data as well as holdings-based industry, sector, and security concentration analysis. We produce performance evaluation reports internally on a quarterly basis. Reports are available within thirty days of the end of the quarter, depending on custodial statement availability.For clients that may have delayed valuation, we will typically use the most current value at the time of running the report with disclosures and footnotes discussing the reasons for any lag. Depending on the benchmark we can also create a duplicate that will lag to the proper, corresponding time period for reports. Are rates of return routinely presented on a net of fee basis?Our reports are presented on both net and gross of fee performance. Databases:Please describe the databases your firm uses.Morningstar DirectMorningstar Direct is utilized for manager selection, research and asset allocation analysis. Morningstar Direct contains information on over 27,000 investment products covering the growth, value and core investment styles in large, mid, small, and micro-cap domestic equity, developed and developing international managers, real estate, fixed income and alternative investments.Morningstar Direct Allocation Advisor employs a second-generation feature in its optimization formulas called Re-sampling that conclusively reduces estimation error in asset allocation solutions. Re-sampling adds value over traditional mean variance optimization by incorporating Monte Carlo methodology and stochastic modeling to construct an adjusted efficient frontier. Asset allocation mixes along the adjusted frontier or the Re-sampled Efficient Frontier provide improved risk / return characteristics. Investment MetricsThe Investment Metrics system is a web-based data-aggregation, performance measurement and reporting application. The system is designed to calculate performance based on various data sources and allows us to monitor investment manager holdings and transactions on a daily basis. By having access to this data, we are able to ascertain whether the investment managers are in compliance with their specific guidelines and objectives.CAISGYL offers the capability to provide private equity and hedge fund investments available through CAIS. The CAIS platform consists of alternative investments that include hedge funds, alternative mutual funds, ’40 Act interval Registered Investment Companies (“RICs”) and private equity funds across a wide range of strategies. Mercer, a global leader in investment consulting conducts both manager research and operational due diligence as well as ongoing performance monitoring for CAIS. MercerInsgiht?MercerInsight? is a sophisticated yet simple-to-use cloud-based platform for institutional investors and investment managers to gain access to insights and analytics on more than 6,700 managers and 35,000 strategies. This powerful platform provides GYL with global, comprehensive coverage of the products available to institutional investors and the ability to view a wide range of information, from quantitative analysis on performance and holdings data to the ratings and recommendations from Mercer’s global manager research boutiques (composed of more than 140 full-time staff). EnvestnetEnvestnet provides investment management and investment advisory services. This provides GYL with access to Envestnet’s investment consultancy team, Portfolio Management Consultants (“PMC”). As a result of the relationship with Envestnet, GYL’s clientele have access to in excess of 1200 Separately Managed Account offerings that have been pre-screened and pre-vetted by Envestnet. Envestnet is used for reporting, billing and separate account manager selection. Is the database proprietary to your firm or purchased?Our databases are purchased through third-party providers. If purchased, how many do you use and for what purposes?We currently have access to five investment databases. Please see question 1 above for details pertaining to each database/software provider. How many investment managers are in your database(s)?Morningstar Direct contains information on over 27,000 investment products covering the growth, value and core investment styles in large, mid, small, and micro-cap domestic equity, developed and developing international managers, real estate, fixed income and alternative investments.MercerInsight? has access to insights and analytics on more than 6,700 managers and 35,000 strategies.Envestnet evaluates approximately 1,200 investment manager strategies for our single contract relationships.If you maintain your own proprietary database, how does your firm gather, verify and analyze the data collected on managers for the database(s)? Include name of any external sources.The Investment Metrics, MercerInsight?, and Morningstar Direct software systems that are used in our manager search process and performance reporting have been obtained through an outside vendor.Our recommended lists of managers and mutual funds are proprietary and are generated from data available through Morningstar Direct.Our Research team devotes significant time evaluating the investment managers’ credibility. We employ a disciplined research process to qualify managers as "recommended" within our managed account programs in our due diligence process.All of the investment related recommendations of our in-house, dedicated research team are proprietary. While we incorporate outside data into our process, GYL votes on all final research recommendations. The Committee discusses the recommendation, probing and challenging as necessary to arrive at a final Committee conclusion. The Committee then decides where the investment manager should be placed.Describe your screening process and capabilities.Please see our response to question A within the Manager Selection section. How many managers are actively monitored?Envestnet evaluates approximately 1,200 investment manager strategies for our single contract relationships. Morningstar Direct evaluates over 27,000 open end funds and over 15,000 Separate Accounts. MercerInsight? has access to insights and analytics on more than 6,700 managers and 35,000 strategies. Of the funds and separate accounts available through Envestnet and Morningstar Direct, GYL actively monitors approximately 47 separate account strategies available through Envestnet for our institutional client single contract relationships, 15 investment manager strategies that we currently utilize for our institutional client dual contract relationships and approximately 500 mutual funds. Risk ControlDoes your organization assist clients in developing individualized, written investment manager guidelines? If so, attach a sample of such guidelines for a domestic equity manager and for a domestic fixed income manager. Our involvement in preparing guidelines for investment managers is based primarily on the Investment Policy Statement. As discussed previously, we feel the Investment Policy Statement is a crucial step in outlining the client’s goals and objectives and will be provided to each manager. The Consultant will factor in spending policies and expected gift receipts in the planning and development of the Investment Policy Statement, asset allocation, and Plan monitoring processes.The Investment Policy Statement will outline acceptable ranges of allocation to various asset classes. If the Plans’ asset mix falls outside of these ranges for any given asset class, then the Plans should be rebalanced. We will also recommend modifications in the asset allocation when one of the factors on which the original asset allocation was based, changes.Depending on the unique needs of a client, we will develop micro-Investment Policy Statement documents tailored to a specific asset class. Please see Appendix VI for a sample micro-Investment Policy Statement.Please explain how your organization measures and analyzes relevant financial characteristics regarding each manager’s account and funds, and the entire fund portfolio in order to detect and control risk. Risk management comes in many forms and is critical in developing the asset allocation strategy. Risk tolerance levels are defined in the Investment Policy Statement and serve as a guide in determining the appropriate risk level and asset allocation. Once the strategic allocation is set and the asset classes have been identified, then diversification within those asset classes can be used to aid in the overall reduction of plan allocation risk. We try to define risk in terms that are meaningful to the client. This, of course, means that risk takes on many forms. Examples include:Failure to outperform inflationFailure to meeting spending policy needsNegative returns equal to X%Failure to outperform a benchmarkWe calculate risk using standard statistical measurements such as the following:Standard deviation (including upside and downside deviation)BetaAlphaInformation RatioDownside and Upside market capture ratiosSharpe RatioComparison against absolute return benchmarksIn addition to conducting due-diligence and qualitative analysis on investment managers, GYL utilizes several different types of software with quantitative analytical capabilities. For example, we utilize the software services of Morningstar Direct and Investment Metrics to help assist us with our risk analysis and performance reporting process.We believe that an asset/liability modeling study is a very useful tool for creating the nexus between how an investment pool invests its assets and what it is attempting to accomplish. We believe it is best practice to have the asset/liability modeling prepared by the actuary currently engaged by the investment pools and to have the asset allocation modeling prepared by the investment consultant. Therefore, we would be prepared to work closely with your current actuary and/or other qualified parties who would prepare the asset/liability study. How do you manage for extreme left-tail risk? Do you consider Value at Risk (VaR) or Conditional Value at Risk (CVaR)? If we assume that, to investors, the true definition of risk is the risk of a large loss, then it would follow that the appropriate measure of risk should be left tail risk rather than generic volatility. In evaluating tail risk of a mix of assets, we believe the metric used must be relevant and measure the appropriate kind of risk investors are seeking to avoid. In our view, Conditional Value-at-Risk best serves that purpose. As part of our asset allocation modeling process, we provide our clients with VaR statistics. How do you define risk for a defined benefit plan? How do you help sponsors mitigate that risk?The ultimate goal of any defined benefit plan is to make benefit payments to plan participants and beneficiaries. Therefore, we believe the best definition of risk in this context is the risk that the Plans’ are unable to meet their obligations. In our experience, the best way to mitigate this risk is through a multi-pronged approach at the core of which is educating plan fiduciaries with:A thorough understanding of plan financials, liabilities, fund requirements, and risk preference.A thorough understanding of the asset allocation, expected return, and expected volatility including an appreciation for left-tale risk.An understanding that volatility is a fact of life and successful investing often involves making uncomfortable decisions at uncomfortable times.An awareness of the benefits of developing, implementing, and maintaining a cohesive investment strategy, particularly in time of market dislocation.The Investment Policy Statement is a key tool to assist in mitigating risk. As a written record of policies, objectives, responsibilities and expectations for a pension, the Investment Policy Statement serves as a valuable guide for fiduciaries especially during times of board turnover, political pressure, and market volatility. Several of the key components to effectively manage fiduciary responsibility are:Investment Committee understands role and responsibilities, meets regularly, and maintains documents and minutes pertaining to investment decisions.Investment Committee considers the needs of all participants when making decisions regarding investment options.Investment Committee has prepared an Investment Policy Statement and decisions regarding investment options.Investment Committee follows consistent due diligence process in selecting each investment.Investment Committee periodically reviews each investment option and all fees and expenses. Meeting one’s fiduciary responsibility hinges on following a diligent, consistent, well-articulated and documented process. As part of our consulting services, GYL provides all its clients with a proprietary Governance Calendar that includes specific actions and topics we review with the Board at regular scheduled meetings. In sum, fulfilling one’s fiduciary duty is a process not an outcome. One of GYL’s key roles is to assist its clients in managing their fiduciary responsibilities so that they do not become fiduciary liabilities.What do you consider the critical success factors for a de-risking strategy?We view preparation, understanding, and consistency of execution as critical to success of a de-risking strategy. For plan fiduciaries, de-risking possesses many appeals. However, the strategy often breaks down as the costs and complexity become apparent. At its core, de-risking leads to a reduced allocation to return-seeking assets and consequent reduction in long-term return expectations. This, in turn, necessitates consistent, increased funding requirements for all but the best-funded plans. With proper preparation, understanding and discipline, de-risking can be a valuable tool to manage funding volatility. However, when budget constraints, political pressures, or a change in investor psychology in response to the markets causes a breakdown in execution, de-risking strategies can result in lower return experiences without the concurrent advantage of minimizing funding volatility.Describe the optimization or risk management techniques used in the portfolio construction process. Detail strategies employed to prevent excessive volatility. Our risk posture assessment process begins with a thorough understanding of a client’s ability to assume risk combined with its willingness to assume risk. Once that understanding has been achieved, we will have a better understanding of whether a given client will pursue a liability-driven or return-driven portfolio optimization. The Morningstar Direct portfolio optimization software we employ utilizes re-sampling technology to normalize portfolio expected returns. This process is more fully explained in question 2f of Section G on page 20. How does your approach differ for plans that are closed versus active?Our recommendations are tailored to a specific client’s unique circumstances. The recommendations made to a closed versus active plan could be similar or very different depending upon several factors including the following: 1) what are the demographics of the underlying population covered by the applicable plans; and 2) what is the client’s goals with respect to the plans? For example, if a plan is a closed plan however still has a very young demographic, the allocation may be substantially similar to that of an active plan. Another example of how our recommendations would be tailored is based upon if a client is interested in being in the pension plan business or not. If a client wants to transfer the risk and liability associated with maintaining a pension plan to a third party (i.e. insurance company), it would likely make sense for the client to consider embracing an LDI approach and to embrace a de-risking glide path. Whereas if the client is interested in maintaining the pension plan for an indefinite period of time, this is often a less attractive alternative.How do you propose meeting periodic cash flow needs?There are several different approaches to meeting a client’s cash flow needs, each of which has advantages and disadvantages. Generally speaking, a sufficient liquidity reserve is maintained for the client’s specific needs. This is contemplated as part of the asset allocation modelling process. Depending on whether a client is embracing a traditional total return or liability driven approach to investing would also impact our recommendations relating to cash flow planning. While some clients express a preference for netting out their contributions to the pension plan, we believe other approaches are preferable. Depending upon the target allocation embraced, we recommend structuring the fixed income portfolio to generate at least a portion of the current cash flow necessary to cover benefit payments made to pensioners.Transition ManagementIn light of the five LPs in the current Plan, describe how you would transition the assets to your recommended portfolio and custodian?As mentioned previously, as an independent RIA, GYL is agnostic to a client’s selection of custodian and investment vehicles. GYL currently works with a number of client custodians, including but not limited to, Fidelity, Bank of America, Wilmington Trust, State Street, Prudential, People’s United Bank, First Hawaiian Bank and others.GYL has extensive experience working with plans that utilize multiple investment vehicles (including LP structured funds) and multiple custodians. As part of our initial review, GYL would analyze current investments, custody and cost structure. We are often able to achieve economies of scaled using our preferred custodian, Fidelity. Our clients who utilize Fidelity for these services incur no additional cost for custody and equity trading.Though transitioning and reallocating a large number of positions may be a daunting prospect, the mechanics of it are straightforward. The key component to a successful transition is the development of a well-defined workflow prior to undertaking any asset movement. A comprehensive plan outlining the structure and timing of asset transfers allows our team to implement and verify portfolio transitions in an efficient and accurate manner.What extra costs would be involved? There would be no additional costs in the transition of assets other than transaction fees and expense ratios from investment managers. Computer and Technical CapabilitiesDescribe the software and hardware that will be used to support the proposed work plan. Morningstar DirectMorningstar Direct is utilized for manager selection, research and asset allocation analysis. Morningstar Direct contains information on over 27,000 investment products covering the growth, value and core investment styles in large, mid, small, and micro-cap domestic equity, developed and developing international managers, real estate, fixed income and alternative investments.Morningstar Direct Allocation Advisor employs a second-generation feature in its optimization formulas called Re-sampling that conclusively reduces estimation error in asset allocation solutions. Re-sampling adds value over traditional mean variance optimization by incorporating Monte Carlo methodology and stochastic modeling to construct an adjusted efficient frontier. Asset allocation mixes along the adjusted frontier or the Re-sampled Efficient Frontier provide improved risk / return characteristics. Investment MetricsThe Investment Metrics system is a web-based data-aggregation, performance measurement and reporting application. The system is designed to calculate performance based on various data sources and allows us to monitor investment manager holdings and transactions on a daily basis. By having access to this data, we are able to ascertain whether the investment managers are in compliance with their specific guidelines and objectives.CAISGYL offers the capability to provide private equity and hedge fund investments available through CAIS. The CAIS platform consists of alternative investments that include hedge funds, alternative mutual funds, ’40 Act interval Registered Investment Companies (“RICs”) and private equity funds across a wide range of strategies. Mercer, a global leader in investment consulting, conducts both manager research and operational due diligence as well as ongoing performance monitoring for CAIS. MercerInsgiht?MercerInsight? is a sophisticated yet simple-to-use cloud-based platform for institutional investors and investment managers to gain access to insights and analytics on more than 6,700 managers and 35,000 strategies. This powerful platform provides GYL with global, comprehensive coverage of the products available to institutional investors and the ability to view a wide range of information, from quantitative analysis on performance and holdings data to the ratings and recommendations from Mercer’s global manager research boutiques (composed of more than 140 full-time staff). EnvestnetEnvestnet provides investment management and investment advisory services. This provides GYL with access to Envestnet’s investment consultancy team, Portfolio Management Consultants (“PMC”). As a result of the relationship with Envestnet, GYL’s clientele have access to in excess of 1200 Separately Managed Account offerings that have been pre-screened and pre-vetted by Envestnet. Envestnet is used for reporting, billing and separate account manager selection. Fidelity WealthscapeWe utilize Fidelity Wealthscape through our primary custodial network which is currently Fidelity Investments. Our hardware consists of Dell servers, and desktop and laptop computers. The equipment is up-to-date and competently runs all of the necessary applications required in the daily operation of all business for the firm.Describe your catastrophic data recovery plans. How often do you test your recovery system?GYL is committed to service excellence. Through this dedication to service, value is created for our clients. A strong and viable business continuity planning program is a key component of GYL strong commitment to service. Many companies limit the scope of their business continuity planning efforts to what is commonly referred to as disaster recovery. Disaster recovery entails proactively developing arrangements and procedures that enable an organization to respond to significant non-routine or catastrophic events in a manner that will allow critical business functions to continue without interruption or essential change. GYL has assumed a leadership role in the financial services industry by broadening the scope to include addressing operational risk. CMIT is our firm’s technology vendor and is a primary component in the GYL business continuity corporate governance structure. In addition to traditional recovery efforts, GYL and CMIT collectively develop the policies and procedures used to identify and mitigate the risks that can result in loss from inadequate or failed internal processes, people or systems.Describe your maintenance and backup procedures including daily backups, retention timetable and off-site backup storage approach. Where are your off-site backup facilities located? Is the backup data saved on disc or in the cloud?GYL is committed to providing excellent customer service and our business continuity program is an integral component in maintaining this commitment. GYL has created and maintains business continuity documentation for each of its various business and technology operational areas. GYL and CMIT work together identifying the critical processes and associated system applications. CMIT and GYL routinely examine the business continuity plan, and when necessary, update their respective plan. In addition, GYL policy requires all business continuity plans undergo an annual update. Business continuity plans address the resumption of business unit processes in addition to application and operational processing functions. Plans typically include procedures concerning: Notification of essential staff, vendors, clients, customers, anization of recovery effortsRelocation of operating functionsPriority of work to be performed Protection and back-up of essential records and dataLists of essential resources needed by the business unitInterrelationships of critical functionsRestoration of records and filesEssential resources for recovery/back-up processingIn order to maintain the readiness of the contingency plans GYL has the following requirements: Validate the contingency plan at least annually. In addition to maintaining on-site and off-site copies of plans, all plans are stored in a central electronic repository maintained by the Principals of the firm.Plans for all GYL functions are reviewed during, or as part of, internal and external audits.The business continuity plan for CMIT is examined periodically, and where appropriate, tested to ensure their recovery capabilities and to mitigate risk to GYL in event GYL experiences a business interruption. Responsibility for this evaluation is assigned to CMIT and guidelines are provided for evaluations. Compliance with this requirement is verified during audits. Technology Recovery Services Methodology:GYL provides for internal recovery of its data center. To ensure the necessary mainframe hardware capacity, the development system has been placed at one data center, while technology recovery testing facilities are located at the other data center.CMIT continually monitors computer hardware requirements of the critical applications to determine their processor and data storage requirements.Steps are taken to mitigate the impact of threats to major processing centers through a backup system or other protective measures. Restoration of the operating system and operating environment is tested annually. In spite of the preventative measures, if a disaster should occur, plans are in place to restore processing as quickly as possible.Basic computer processing can be restored in alternate sites. Network services between branches in Maryland and Virginia and the data center can be restored utilizing automated rerouting technology and alternate routing of major private communications lines.A common approach and methodology have been implemented for the recovery of the GYL data center.GYL’s strategy for the recovery of critical, non-mainframe processing is similar to the mainframe strategy for the data centers. GYL’s strategy is to maintain sufficient equipment at a different location to enable critical processing to be restored in a minimal amount of time. In some cases, data on the alternate server is maintained in an up-to-date, or nearly up-to-date status to facilitate a speedy recovery.GYL has implemented a program for maintaining and updating the documentation of all application recovery plans. Completeness of plans is verified during regular audits and tested during application recovery exercises. An annual internal review of application recovery plans exists to further ensure completeness of application recovery planning.Describe how any database(s) can be accessed by the Burlington Employees’ Retirement System Board staff. GYL provides up-to-date, detailed information about your accounts, the latest news and research reports, commentaries on current market and economic events, calculators and much more – available for viewing 24 hours a day, 7 days a week through a Fidelity Investments logon. Some of the information and account services available to you are:Real-time account information for accountsThe ability to download account information to Quicken?, Microsoft? Money, or Microsoft? Excel.Review any combination of your accounts with our Plan Allocation Report. It provides real-time balances, and asset-allocation pie chart and details of all your holdings compared to their market value the previous day – all in once consolidated report.Enroll your accounts for free delivery of statements, trade confirmations, tax documents and/or shareholder communications. You can stop paper delivery and view, download, or print your electronic documents through Access Online.GYL also provides clients access to a secure electronic vault where clients can store relevant plan information. Performance reports, meeting minutes, investment manager searches and investment policy statements are some of the documents our clients regularly store in their secure vault.FeesPlease outline your fee structure for this plan. Please indicate all your services you propose to provide and their associated fees. Specifically, detail in terms of your retainer, manager searches, performance monitoring on a monthly basis and other functions. GYL will accept fiduciary responsibility for the investment advice that it provides in its capacity as a consultant.For the convenience of the City of Burlington, we offer comprehensive pricing for investment manager and consulting services. GYL Financial Synergies, LLC proposed fee schedule for our institutional consulting services is as follows:Assets Under ManagementGYL Financial Synergies’ FeeFirst $100,000,0000.08% (8 basis points)Next $50,000,0000.04% (4 basis points)Next $50,000,0000.03% (3 basis points)Next $50,000,0000.02% (2 basis points)Our annual fees include the following:Performing a Risk Posture AssessmentPerforming an annual Asset Allocation StudyReview and update of the Investment Policy StatementsSelection and Monitoring of Managers/Asset AllocationQuarterly Performance EvaluationAttendance at Quarterly Board (and monthly as required) Fiduciary educationFee Analysis Custody at Fidelity Investments (optional)The fee for investment advisory services does not included transaction costs and does not take into account any manager fees or expense ratios for separately managed account managers, ETFs, and mutual funds. Additionally, fixed income trades (i.e. individual bonds) would not be included. The above-mentioned fees may be subject to change due to high velocity or high turnover strategies. Please indicate the number of years for which your organization would be willing to guarantee its fees. Our services offered and the fee(s) associated with those services are firm as quoted for 5 years from the date of this proposal.Please list any anticipated miscellaneous expenses and disbursements for which your organization will charge or seek reimbursement and unit costs of such expenses (if applicable). Our fees are comprehensive in nature. There are no additional charges to the Plan related to investment consulting services contemplated in the response to this RFP (i.e. travel and out-of-pocket expenses). Disclose your portfolio management philosophy as it relates to negotiating/establishing fee arrangements with money managers. Disclose your review/evaluation process to determine reasonableness of each investment manager fee. Disclose your process for periodic review and recommendation of service fee reductions or consolidation.Cost is a major determinant in the success of an investment program and GYL includes a comprehensive cost analysis as part of its search and selection process. GYL has extensive experience negotiating investment management fees on behalf of clients. As such, we review costs regularly and proactively seek to obtain cost efficiencies. As it relates to registered products (e.g. mutual funds, ETFs), it is GYL’s policy to use lowest cost share class available for a given fund. GYL receives no revenue from any of the investment vehicles it utilizes for its clients. Regarding separately managed accounts, clients with assets custodied at Fidelity have the option of accessing managers through our relationship with Envestnet or by contracting directly with the investment manager. The decision often is one of size and economics. Pre-negotiated fees are available for approximately 1,200 strategies through the Envestnet platform. Particularly for asset classes with smaller mandates, this is often the most cost-effective solution. However, should a mandate be of sufficient size it may be advantageous to enter a contract directly with an investment manager. What are the anticipated fund, limited partnerships, separate account, CITs, ETFs, etc., fees and expenses? GYL is extremely sensitive to portfolio management costs. As part of the initial review and recommendation, GYL will provide the Board with a thorough cost analysis of both current and proposed portfolio expenses. We will work with the Board to enable the decision makers to understand the difference in cost between various investment vehicles (e.g., mutual fund, separate account, ETF, etc.). At the same time, we will empower them to appreciate the difference between cost and value.What are the estimated fees and expenses charged by your Custodian/Trustee?Custody at Fidelity for the City of Burlington Pension Plan is included in GYL’s investment management fee. Should the Pension Plan wish to custody assets at a firm other than Fidelity, it would be subject to a separate agreement and fee arrangement with the chosen custodian. Similarly, should the Pension Plans wish to engage a corporate trustee, it would be subject to a separate agreement with the trustee. While we do occasionally see municipal defined benefit plans engage a corporate trustee, the majority of our clients do not. Should the City of Burlington wish to utilize a corporate trustee, GYL will assist in identifying an appropriate firm as part of our standard consulting fee.Do you intended to charge for special projects or ad hoc work? If so, how would these services be defined and billed? Would there be a discount from the standard fees or special projects?Our fees are comprehensive in nature. There are no additional charges to the Plan related to special projects provided they are occasional and reasonable in scope. If hired, will your firm receive any other form of compensation from working with this account that has not yet be revealed? If yes, what is the form of compensation?No, GYL does not accept any payments other than those directed by its clients.Describe in detail any mutual fund revenue sharing (recapture), 12b-1 fees, finder’s fees, directed brokerage commissions (separate accounts), collective trust rebates, and any other revenues or fee rebates. Full transparency and disclosure of expenses, fees, revenue sharing, etc. is an absolute and nonnegotiable requirement. GYL is in full compliance with this requirement. GYL does not permit fee or revenue sharing, and in an investment consultant role, we do not accept 12b-1s, finder’s fees, directed brokerage, or other fees not directed by our clients. 100% of our company’s total revenues are generated from hard dollar or asset-based investment consulting fees as specified in our Institutional Consulting Agreement.MiscellaneousPlease provide a confirmation of your organization’s willingness and availability to commence work immediately upon selection and to devote sufficient resources to perform any and all services in a timely and efficient manner.GYL confirms that we are willing and able to commence work immediately upon selection and are able to devote sufficient resources to perform all services that are contemplated in this Request for Proposal in a timely and efficient manner.A certification that all information contained in the proposal is complete and accurate, signed by a person authorized to negotiate on behalf of and contractually bind your organization. Any misrepresentation in the proposal could result in the termination of the contract at any time and potential liability. GYL certifies that all information contained herein is complete and accurate. The signor is authorized to negotiate on behalf of and contractually bind GYL Financial Synergies, LLC. Any other information you feel will be beneficial to support your proposal. As a third-party consultant, our services satisfy the principle of objectivity, which has become increasingly important to those acting in a fiduciary capacity. We believe that the role of an Investment Consultant is to manager our clients’ investment decisions. We assist our clients in fulfilling their fiduciary responsibilities through the implementation of prudent investment consulting processes which include determining investment objectives and goals, setting strategic asset allocation guidelines, producing manager search analysis as well as overseeing the selection process, and providing ongoing investment performance measurement analysis. GYL Financial Synergies’ size is an advantage. We are large enough to be industry leaders, yet small enough to be nimble in a complex and volatile market. The institutional group meets weekly to review and communicate client action items and workflow. At the core of the culture of our firm is the concept of synergy. Working together as a team and in close collaboration with our clients, we are able to proactively meet our clients’ needs.Our extensive experience consulting to retirement asset pools has earned us a reputation as subject-matter experts. Principles of GYL have participated as guest speakers and on panels of experts for organizations such as the Connecticut Public Pension Forum, The Rhode Island GFOA, the Maryland GFOA, and numerous civic and professional gatherings. Additionally, GYL believes in giving back to the community and is an active supporter of numerous charitable organizations including title sponsor for the March of Dimes Run for Babies, The Intensive Education Academy for special needs children, the Miracle League, and the Hebrew High School of New England. We believe this is the “GYL Advantage” that sets us apart in our industry: The GYL AdvantageExtensive consulting expertise over several market cyclesUnbiased and experienced institutional consulting teamBroad access to investment vehiclesSkills to offer meaningful assistance with fiduciary oversightCommitment to client serviceUnique delivery model for consulting services ................
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