BEST PRACTICES: Selecting Third-Party Investment Professionals for Pension Fund Assets Flashcards
Governments should exercise appropriate due diligence in their selection of investment professionals.
What is GFOA’s recommendation for governments in selecting investment professionals?
Exercise appropriate due diligence in their selection of investment professionals.
Who should appoint a pension investment consultant or review committee for the search process?
The chief executive, responsible public official, or the governing board.
What type of procurement process is recommended for selecting investment professionals?
A competitive, merit-based procurement process.
What ethical considerations should be complied with during the investment professional selection process?
Adherence to ethics laws, rules, and regulations, disclosure of conflicts of interest, and adherence to professional codes of ethics.
What are some sources for sourcing candidates for investment professionals?
Consultants’ databases, industry reports, marketing materials, references from other plans, and governmental entity resources.
What financial overview considerations should be included in the evaluation criteria?
Firm’s financial statements, assets under management, public pension assets under management, and any past or pending litigation.
What should the investment management agreement include?
Account management personnel fiduciary responsibilities, adherence to investment policy, and immediate notification requirements of any significant changes.
How often should compliance with investment policy and performance be reviewed?
Periodically, but at least annually, through due diligence reviews, independent audits, and compliance checks.
What should the operational and compliance overview include?
Transition plan, risk management, disaster recovery plan, trading process and costs, and management fees.
Why is it crucial to involve a pension investment consultant or review committee in the selection process?
To ensure a comprehensive and diligent search process, leveraging expertise in evaluating qualifications and suitability of investment professionals.
