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Utopia Retirement System
Investment Consulting Services RFP Questions
A. Background of the consulting firm (2 page maximum)1. Briefly describe your firm’s background, history, and ownership structure, including any parent, affiliated or subsidiary company, and any business partners.
2. Please describe the services your firm provides and give the percentage of revenue derived from investment consulting.
3. Provide an organization chart of your firm and describe the relationship between each component and your consulting group.
4. Within the past three years, have there been any significant developments in your organization such as changes in ownership, restructuring, or personnel reorganizations? Do you anticipate future significant changes in your organization?
5. Please give the address of your corporate office and indicate which office(s) will service URS.
6. Describe any services of your organization that may not be offered by other consultants.
B. Consultants (1 page maximum):1. How many investment consultants does your firm have?
2. Discuss the ways you manage growth, including any limits to the client/consultant ratio.
C. Standards of conduct (1 page maximum):1. Does your firm have a written code of conduct or a set of standards for professional behavior? If so, how are they monitored and enforced?
2. Has your firm adopted AIMR’s Code and Standards? If so, how is employee compliance monitored?
3. How are consultants’ recommendations to clients reviewed and monitored by your organization? Does your firm adhere to a level of consistency in consultant recommendations?
4. Within the last five years, has your organization or an officer or principal been involved in litigation or other legal proceedings relating to your investment consulting assignments? If so, please provide an explanation and indicate the current status or disposition.
5. Has your firm ever been censured by any regulatory body? If so, please describe the situation.
D. Conflicts of Interest (3 page maximum):1. Based on the list of investment managers currently managing assets for URS, please disclose any business your firm, affiliates, or parent company does with any of investment managers.
2. Are there any potential conflict of interest issues your firm would have in servicing URS? If so, describe them.
3. How does your firm identify and manage conflicts of interest?
4. What is your firm’s policy on soft dollar payments? What percentage of your clients has soft dollar arrangements with your firm?
5. Does your firm hold or sponsor money manager or client conferences? Please describe all conferences your firm has held or sponsored in the past two years. Please note if any members of the URS Board or staff have been in attendance.
6. Have you or anyone in your firm provided any gifts, travel and room expenses, entertainment or meals to any URS Board member or staff during the past 12 months? If yes, please describe the amount of expenses and what it was for.
7. List and describe any professional relationship you have with the URS plan sponsor or legislative oversight bodies during the past three years.
8. Are there any circumstances under which your firm or any individual in your firm receives compensation, finder’s fees or any other benefit from investment managers or third parties? If yes, please describe in detail.
E. Consulting team (2 page maximum):
2. Please describe the role of each consultant for this assignment.
3. Please describe your team’s experience with similar work performed for other public retirement systems, corporate pension funds or similar institutional investors.
4. State whether the individuals assigned to the work have any responsibilities other than providing consulting services, and if so, specify such responsibilities.
5. Describe your firm’s backup procedures in the event that key personnel in this assignment should leave the firm.
F. Asset Allocation (3 page maximum):1. Is your firm capable of performing asset/liability modeling studies?
2. Discuss the theory and methodology of the asset allocation models your firm employs. How do you develop asset class assumptions?
3. Describe your policy for changes to a pension system’s asset allocation with changes in the market environment.
4. Explain your firm’s position/approach regarding internal investment management versus external management.
5. Describe your firm’s capabilities and experience in advising and assisting internal investment managers and staff.
6. Explain your firm’s position/approach on the use of active versus passive management in the major asset classes. 7. Describe your capabilities and experience in the area of real estate and alternative investments. List the factors you would consider in recommending real estate and alternative investment options. Describe the elements of a due diligence process for assessing the merits of real estate and alternative investments.
8. Describe your methodology for identifying and evaluating new investment opportunities.
NAPPA Notes: Some pension funds want specific information about real estate and alternative investment asset classes when looking for a general investment consultant. Others issue separate RFPs for consultants in those specialty areas.
G. Investment policies (2 page maximum):1. Describe your approach to the analysis of applicable legal parameters/restrictions under which URS must operate.
2. Describe your approach to the development of an investment policy statement.
3. Detail your process for the development of asset class structures.
4. Describe your capabilities in the development of appropriate shareholder responsibility and proxy voting policies and procedures in consultation with the URS Board, staff and counsel.
5. Describe your process for maintaining a continuous review of investment policies.
H. Investment manager database (2 page maximum):1. Does your firm maintain an in-house database of investment managers? If not, from what vendor do you purchase the database? How many managers/products are contained in the database?
2. Do you charge direct or indirect fees for investment managers to be included in your firm’s database? If so, describe the fees.
3. If you have an in-house database, do you sell it to third parties? How do you receive compensation for selling it?
4. Describe any advantages that you perceive your database has over your competitors.
5. Describe your methodology and criteria for classification of managers by investment style, size, etc. How do you monitor consistency of style?
6. How often are managers in your database reviewed? Under what circumstances are managers added to your database? Deleted?
7. Describe how your firm gathers, verifies, updates, and maintains the data collected on managers for the database. Do you use surveys or meetings with managers?
8. If you meet with managers, how often do you do that? What is the nature of those visits? I. Investment manager searches (1 page maximum):
1. Describe your firm’s process for evaluation and selection of investment managers.
2. Describe your experience in selecting investment managers.
J. Custodian bank database (2 page maximum):1. Does your firm maintain an in-house database of custodian banks? If not, from what vendor do you purchase the database? How many banks/products are contained in the database?
2. Do you charge direct or indirect fees for custodian banks to be included in your firm’s database? If so, describe the fees.
3. If you have an in-house database, do you sell it to third parties? How do you receive compensation for selling it?
4. Describe any advantages that you perceive your custodian bank database has over your competitors.
5. How often are custodian banks in your database reviewed? Under what circumstances are banks added to your database? Deleted?
K. Custodian banks searches (1 page maximum):1. What are your criteria for selecting a custodian?
2. Describe your experience in conducting analyses of custodians.
L. Performance Evaluation (2 page maximum)1. Do you have the capability of using rates of return calculated by the URS custodian bank in your performance evaluation reports?
2. Can your firm provide custom/style benchmarks and universes? Are the returns in your universe actual client returns or composite returns as reported by managers?
3. What amount of input may the client have in the content and format of an investment performance evaluation report?
4. Discuss the portfolio analytics your firm is capable of providing. Do you have international analytics capabilities?
5. Describe your capabilities in the production/interpretation of trading cost studies.
6. Describe your capabilities in the production/interpretation of securities lending.
7. Describe your capabilities in the development of risk/return characteristics of the asset mix as a whole and of each asset category and manager style.
8. What asset classes are tracked in your performance measuring system? How many managers are included within each asset category? How many years of performance data are on the system for each asset class?
9. What factors do you consider to be critical in reporting performance? Do you have the ability to customize reports for your clients?
10. How are performance benchmarks for the total fund, different asset classes and investment manager styles chosen and constructed?
11. Do you use style benchmarks in your performance measurement process? What are the sources of the underlying data and how are these benchmarks calculated and maintained?
12. Do you reconcile your calculated performance with investment managers’ and custodians’ reports? If yes, please describe.
M. Reporting (1 page maximum):1. What period of time is required to prepare reports after the end of each quarter?
2. Give a brief overview of the hardware and software systems used in the production of performance reports.
N. Research (1 page maximum):1. Describe the internal structure and organization of your research department. If no separate department exists, describe how this function is performed.
2. Describe the manner in which external resources and sources of information are used in the research process. How does your firm integrate internal and external research?
3. Describe the type, subject matter and frequency of research provided to clients.
4. Describe your ability to provide customized computer-based analytical tools to your clients. Please describe features.
5. Describe your firm’s process for monitoring industry and market trends affecting investment funds.
O. Trustee Education (1 page maximum):Does your firm offer training of plan fiduciaries as it relates to their investment responsibilities? If so, describe the type of training available and the qualifications of the individuals assigned to conduct the training. P. References:Please provide three references who are clients for whom work similar to that requested in this RFP has been performed.
Q. Previous clients:Please list public sector clients who have terminated your consulting relationship during the past three years and their reasons for doing so. Please include their names, titles and telephone numbers.
R. Insurance and liability:1. What limitation on liability, if any, do you impose through your contract?
2. Please describe the levels of coverage for errors and omissions insurance and any fiduciary or professional liability insurance your firm carries. Is the coverage on a per client basis, or is the dollar figure applied to the firm as a whole? List the insurance carriers.
3. Describe your disaster recovery plan and facilities.
S. Subcontracting:1. If your firm uses the services of a subcontractor, please identify the subcontractor and describe the skills and qualifications of the subcontractor and its individual employees. 2. Describe what portions of the project will be assigned to the subcontractor. 3. Identify the cost associated with the portions of the project assigned to the subcontractor. 4. Describe the inclusive periods and percentage of time the subcontractor will devote to the project. 5. Describe the contractual arrangement contemplated with each subcontractor and describe generally the control/delegation of responsibilities anticipated in that arrangement.
T. Fees:1. Please provide a proposal regarding the fees to be paid to your firm for the services identified in the Scope of Services. The proposal should provide fees based upon a bundled fee for all services identified as well as an unbundled fee for each discrete service identified in the Scope of Services. 2. Identify the period of time the proposed fees will remain in effect. 3. Describe whether the firm has previously performed investment consulting services under the proposed fee arrangement and, if so, its experience. 4. Has the firm provided investment consulting services under alternative fee arrangements? If so, please describe. 5. Does your firm’s proposed fee arrangement consist of any incentive or contingent payments? If so, please describe the manner of calculation in detail.
Appendices
Appendix A. Biographies Please include biographies for all consultants listed in your proposal. Indicate what year each consultant joined your firm and describe his or her position, current responsibilities, areas of expertise, experience, education, professional designations and memberships, and relevant publications and presentations.
Appendix B. Form ADV Part I and II Please attach your firm’s current Form ADV Part I and II.
Appendix C. Annual Financial Report Please attach your firm’s current Annual Financial Report.
Appendix D. Sample Contract or Agreement
Please attach a sample contract or agreement your firm uses for investment consulting services.
Other Information 1. Please describe areas or processes, not included in the scope of this engagement that your firm may examine in order to provide more complete and thorough services. 2. Provide any additional information that you believe to be relevant to the RFP and your capability to provide the services requested.
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