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 recommended for governments in selecting investment professionals for pension funds?
Exercise appropriate due diligence.
Who should appoint a pension investment consultant or review committee?
The chief executive, responsible public official, or the governing board.
What is crucial in the procurement process of sourcing investment professionals?
Using a competitive, merit-based procurement process.
What ethical considerations should be complied with during procurement and contract?
Adherence to ethics laws, rules, and regulations, disclosure of conflicts of interest, and adherence to professional codes of ethics.
What should the financial overview include when selecting investment professionals?
Firm’s financial statements, assets under management, and information on workforce diversity and turnover.
What aspects should be included in the investment overview for evaluation?
Investment philosophy, performance against benchmarks, and confirmation of willingness to act as an ERISA fiduciary.
What should the operational and compliance overview contain?
Transition and implementation plan, system of risk management, and back office and client service protocols.
What are some of the contractual considerations after selecting an investment professional?
Identification of management personnel, certification to adhere to the investment policy, and reporting requirements.
What does performance monitoring involve for pension boards?
Periodic due diligence review of compliance with investment policy, independent audits, and compliance with investment guidelines.
What defines an investment manager according to ERISA?
A person or organization that makes investments in portfolios of securities on behalf of clients, in accordance with the investment objectives and parameters defined by these clients.
