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Request for Proposal for Real Estate Risk Management ... Document Transcript

  • 1. REQUEST FOR PROPOSAL RFP - TRS INVESTMENT CONSULTANT General Investment Consulting/Advisory Services TEACHERS’ RETIREMENT SYSTEM OF THE CITY OF NEW YORK 55 Water Street New York, NY 10041
  • 2. TRS RFP General Investment Consulting/Advisory Services Table of Contents Section Page I. TIME SCHEDULE .................................................................................................... 1 II. INTRODUCTION...................................................................................................... 2 A. Overview of TRS............................................................................................... 2 B. Scope 3 C. Issuing Office .................................................................................................... 4 D. Ambiguity, Conflict, Discrepancy or Other Error................................................ 4 E. Inquiries/Questions ........................................................................................... 4 F. Proposal Submission ........................................................................................ 5 G. General Provisions Governing Contracts for Consultants, Professional and Technical Services and General Information Provided to Prospective Bidders. 5 III. SERVICES TO BE PROVIDED................................................................................ 5 IV. INFORMATION REQUESTED FROM PROPOSER ................................................ 7 A. Title Page.......................................................................................................... 7 B. Table of Contents (self explanatory) ................................................................. 7 C. Letter of Transmittal .......................................................................................... 7 D. Minimum Qualifications ..................................................................................... 8 E. Background of the Consulting Firm (3 page maximum) .................................... 9 F. Standards of Conduct (1 page maximum) ...................................................... 10 G. Conflicts of Interest (3 page maximum) .......................................................... 11 H. Consulting Team (2 page maximum) ............................................................. 12 I. Asset Allocation (3 page maximum)................................................................ 12 J. Investment Policies (2 page maximum) .......................................................... 13 K. Investment Manager Database (2 page maximum) ........................................ 14 L. Investment Manager Searches (1 page maximum) ........................................ 14 M. Performance Evaluation (1 page maximum) ................................................... 15 N. Reporting (1 page maximum).......................................................................... 16 O. Research (1 page maximum).......................................................................... 16 P. Board and Staff Education (1 page maximum) ............................................... 16 Q. References...................................................................................................... 16 R. Other Information ............................................................................................ 17 S. Insurance and liability ..................................................................................... 17 T. Fees 17 V. NOTIFICATION OF AWARD/TERM OF ENGAGEMENT ...................................... 18 VI. Appendices and Attachments................................................................................. 19 Appendix A. General Provisions Governing Contracts for Consultants, Professional and Technical Services Appendix B. General Information Provided to Prospective Bidders Appendix C. TRS Required Contract Provisions
  • 3. TRS RFP General Investment Consulting/Advisory Services Attachment 1. Notice of Vendor Interest................................................................. 20 Attachment 2. Cost Proposal.................................................................................. 21
  • 4. TRS RFP General Investment Consulting/Advisory Services I. TIME SCHEDULE * E-Mail RFP........................................................ November 2, 2009 Submission of Notice of Vendor Interest & Inquiries/Questions Due from Vendors**........... November 17, 2009 Bidders Conference - Time and Place TBD…… November 30, 2009 All Questions and TRS Responses E-mailed to Prospective Vendors ...................... December 4, 2009 Responses Due from Vendors .......................... December 18, 2009 Review of RFP Responses; Select Semi-finalists December 21, 2009 ........................................................... - January 8, 2010 Staff Interviews with Semi-finalists; On-Site Visits; Selection of Finalists ......................................... January 11 – February 29, 2010 Oral Presentations Before Selection Committee ......................................... March 4, 2010 Contract(s) Awarded ......................................... March 18, 2010 Contract Commencement Date......................... May 1, 2010 * Time Schedule is approximate. TRS may amend the time schedule, at its sole discretion, with advance notice. ** By 5:00 p.m. EST *** To take place at the sole discretion of TRS Page 1
  • 5. TRS RFP General Investment Consulting/Advisory Services II. INTRODUCTION A. Overview of TRS The Teachers Retirement System of the City of New York (“TRS”) was established in 1917 to replace the existing New York City Teachers’ Retirement Fund. Since then, TRS has grown into one of the largest pension systems in the United States, with total assets of $38.3B as of 6/30/09. In addition to our basic Qualified Pension Plan, we administer one of the largest unified Section 403(b) Tax-Deferred Annuity Programs in the country; i.e. the “Passport funds”. TRS membership is available to educators who work for the Department of Education of the City of New York, the City University of New York, or participating New York City Charter Schools. Overall, TRS’ programs serve more than 178,000 in service members, retirees, and beneficiaries. TRS is governed by a 7-member Board of Trustees, which sets policies and oversees operations consistent with applicable laws. The Board includes 3 Teacher members, 2 Mayoral appointees, the Comptroller of the City of New York and the Chancellor of the Department of Education. General administration and responsibility for the proper operation of TRS is delegated to the Executive Director and his staff. The Board is responsible for the investment of the assets of the system which are in either the Pension Fund (approximately $30.1B) or in the “Passport Funds” (approximately $8.2B). By Board delegation, the Comptrollers Office is authorized to invest the assets of the Pension Fund, whereas the Investment Administration Division is authorized to administer the assets in the Passport Funds. As of 6/30/09, TRS’ Pension Fund had total assets of $30.1B. The asset allocation targets, ranges and actual percentages as of that date were as follows: Page 2
  • 6. TRS RFP General Investment Consulting/Advisory Services Asset Allocation Targets and Ranges: Target Range Actual Domestic Equity 43% 38-48% 41% International Equity 16% 14-18% 16% Real Estate Equity Securities 4% 3-5% 3% Real Estate 4% 4% Private Equity 3% 5% Total Equities 70% 65-75% 69% Domestic Fixed Income (Core+5) 20% 17-23% 21% Enhanced Yield 6% 5-7% 6% US TIPS 4% 3-5% 4% Total Fixed Income 30% 31% The Passport Funds consists of 5 separate funds: 1 1) The Diversified Equity Fund which is invested 70% in US equity strategies, 15% in international equity strategies and 15% in “defensive strategies”, including tactical asset allocation strategies and convertible bonds. Assets were 7.7B as of 6/30/09. 2) The Stable Value Fund invests in a combination of “wrapped” portfolios of high quality bonds and other fixed-income investments. Assets were $427MM as of 6/30/09. 3) The International Equity Fund invests primarily in stocks of non-US companies in developed markets. Total assets were $52MM as of 6/30/09. 4) The Inflation Protection Fund utilizes an actively managed mutual fund that seeks exposure to multiple asset classes and markets in order to achieve a real rate of return above inflation over a full market cycle. Total assets were $10MM as of 6/30/09. 5) The Socially Responsive Equity Fund utilizes an actively managed mutual fund that mainly invests in stocks of large and mid-cap US and Non-US companies that meet certain financial and social criteria. Total assets were $8MM as of 6/30/09. B. Scope TRS is seeking the services of qualified professionals in accordance with specifications indicated in this Request for Proposal (RFP) to provide general investment consulting/advisory services as described in section III hereof. TRS reserves the right in its sole discretion to elect to make an award(s) hereunder to one or more responsive 1 Participants may also choose a Fixed Return fund which offers a guaranteed rate of return set by the New York State Legislature. The annual rate is currently 8.25% Page 3
  • 7. TRS RFP General Investment Consulting/Advisory Services and responsible offerers/proposers. The basis for the selection shall be the most practical and economical alternative and shall be in the best interests of TRS. C. Issuing Office This solicitation includes and imposes certain restrictions on communications between TRS and an offerer/proposer during the procurement process. An offerer/proposer is restricted from making contacts from the earliest notice of intent to solicit offers through final award and approval of the procurement contract to other than designated staff specified herein. The Investment Administration Division (“IAD”) of TRS is the Issuing Office for this RFP. TRS is responsible for the evaluation of all responses. Unless otherwise expressly authorized by the Issuing Office, all proposals, specifications, inquiries, formal correspondence and other vendor communications will be directed to the Issuing Office as follows: Marc Katz Director – Investment Administration Division Teachers’ Retirement System of the City of New E-mail: York rfpinvconsult@trs.nyc.ny.us 55 Water Street – 16th floor New York, NY 10041 Attn: Aristea Aftousmis, Sr. Investment Analyst D. Ambiguity, Conflict, Discrepancy or Other Error If a proposing firm discovers any ambiguity, conflict, discrepancy, omission or other error in this RFP, the proposing firm should promptly notify the Issuing Office of such ambiguity, conflict, discrepancy, omission or other error and affirmatively request in writing a clarification or modification of the document. Notice of any clarifications or modifications shall be given to all firms who have been furnished a copy of this RFP. If a proposing firm fails to point out such ambiguity, conflict, discrepancy, omission or other error prior to proposal submission, such issue(s) cannot be raised after proposals have been opened because they could be used to a proposing firm's advantage during the award process and disadvantage other bidders. Consequently, a proposing firm shall assume all risks. If awarded the contract, the proposing firm shall not be entitled to additional compensation or time by reason of the error or its late correction. E. Inquiries/Questions Inquiries/questions regarding these specifications must be submitted in writing to TRS and received by 5 p.m. November 17, 2009. Inquiries/questions will not be accepted beyond this deadline. Inquiries/questions may be mailed or e-mailed and should be clearly identified in the subject line as related to “TRS RFP – Investment Page 4
  • 8. TRS RFP General Investment Consulting/Advisory Services Consultant”. Inquiries/questions must cite for reference purposes the particular page, section and paragraph number, where applicable. TRS will distribute copies of all questions and related answers at the Bidders Conference on November 30, 2009. The source of questions will remain confidential. All questions and answers will constitute an official addendum to and become part of the RFP. F. Proposal Submission To be considered as eligible, the proposing firm must submit a complete response to this RFP in conformance with the format and content requirements set forth herein. A proposal that does not provide all the information requested below may be considered non-responsive and subject to rejection. The proposal must contain sufficient information to assure TRS of its accuracy. You should submit seven (7) PAPER COPIES and one (1) ELECTRONIC COPY of your PROPOSAL to Aristea Aftousmis at the above noted address. Proposals must be enclosed in a sealed package to prevent dissemination of its contents before the deadline for the submission of all proposals. Any shipping container and the exterior of the sealed envelope must be labeled with the notation: “This is a proposal to provide Investment Consulting/Advisory Services for the Teachers’ Retirement System of the City of New York: RFP – Investment Consultant”. ALL SEALED PROPOSALS MUST BE RECEIVED BY TRS BY 5 P.M. DECEMBER 18, 2009. LATE PROPOSALS WILL NOT BE CONSIDERED. G. Standard Clauses for Contracts and General Information Provided to Prospective Bidders See General Provisions governing Contracts for Consultants, Professional and Technical Services, attached as Appendix A, and General Information Provided to Prospective Bidders, attached as Appendix B, and incorporated herein. III. SERVICES TO BE PROVIDED Under the direction of TRS’ Investment Committee, the Consultant will assist TRS by providing a variety of services including: - Advising the Board of Trustees on investment guidelines and policies, including the development of new guidelines and policies and the amendment of existing ones; - Advising on strategic and tactical investment issues; - Advising on performance measurement, attribution, and performance and policy Page 5
  • 9. TRS RFP General Investment Consulting/Advisory Services benchmarks for each asset class and asset manager; - Advising on investment management analysis, including tracking of performance achieved in variance from the investment manager's contractual mandate; - Advising on internal vs. external investment management; - Advising on management structure (active vs. passive, investment style mixes); - Advising on asset allocation; - Comparing TRS’ asset allocation to that of other public pension funds; - Advising on a broad range of asset classes; - Advising on rebalancing policies; - Advising on risk management issues; - Advising on transition management issues and strategies; - Assisting with external manager oversight, including periodic review and interviews of managers as requested by Board and Staff, and investment performance attribution analysis; - Presenting macro economic forecasts and advising on integration with TRS’ strategic plan; - Providing research on special projects as requested; - Providing or assisting in manager searches, selections and terminations; - Performing quarterly performance analysis by portfolio and asset class, with attribution; - Comparing TRS’ investment performance to that of other public pension systems; - Performing educational sessions as requested; - Providing on-site consultation and assistance; - Attending approximately 10 Board investment meetings held in New York, NY. (It is expected that the consultant(s) will attend each meeting.) - Performing asset and liability analysis; - Providing access to any proprietary web-based investment research reports and analytical tools and or software available to other clients; - Assisting in securities lending agent and/or custodian search and selection; and/or - Providing Board educational sessions on Board Governance and other topics as requested. Page 6
  • 10. TRS RFP General Investment Consulting/Advisory Services IV. INFORMATION REQUESTED FROM PROPOSER It will be the proposing firm’s responsibility to provide all required information, including required attachments. No information beyond that specifically requested is required and proposing firms are requested to keep their submissions to the shortest length consistent with making a complete presentation of qualifications. To this end, the proposing firm shall complete and/or submit the following documents as part of his/her sealed proposal package presented in the following format and order. Unless otherwise indicated, a proposal that does not provide all of the information requested below may be rejected. A. Title Page Include the RFP number, subject, name of your firm, address, telephone number, contact person, e-mail address and date. B. Table of Contents (self explanatory) C. Letter of Transmittal The transmittal letter shall be considered an integral part of the proposal package, and shall be signed by the individual(s) who is (are) authorized to bind the proposing entity contractually. This cover letter must indicate the signer is authorized and must indicate the title or position the signatory holds in the proposing firm. An unsigned proposal shall be rejected. The transmittal letter shall also contain the following: 1. A statement to the effect that the proposal is a firm and irrevocable offer good for at least one year; 2. A statement indicating the proposer’s understanding of the work to be performed and expressing the proposer’s willingness to perform the services as described in this request for proposal; 3. A statement as to the availability of staff and other required resources for performing all services as described in this request for proposal. 4. A statement that the proposing firm agrees to all the terms and conditions and provisions of this RFP, any exceptions to be specifically stated; and 5. An acknowledgement that you have reviewed and are willing to adhere to the General Provisions Governing Contracts for Consultants, Professional and Technical Services (Appendix A), and TRS General Information Provided to Prospective Bidders (Appendix B). Page 7
  • 11. TRS RFP General Investment Consulting/Advisory Services D. Minimum Qualifications In a separate statement immediately following the cover letter, please indicate that you have met the following minimum qualifications: 1. The investment consulting firm must be a registered investment advisor under the Investment Company Act of 1940. Please attach as an appendix to your proposal your firm’s current Form ADV Part 1 and II. 2. The investment consulting firm must have been in business for a minimum of five years providing services similar to those for which the consulting firm wishes to be considered. To be eligible to provide a particular service, the investment consulting firm must have experience providing similar services to at least three other entities; at least one of these entities must have at least $10 billion in assets. 3. The individual assigned to TRS as lead consultant must have a minimum of seven years professional experience in the investment consulting field. 4. The investment consulting firm must be able to maintain a satisfactory data processing interface with TRS' custodian banks by tape, disk, on-line connection or other electronic means at the firm's expense. 5. The investment consulting firm must agree to be a fiduciary to the plan as that term is defined in Appendix C. 6. The investment consulting firm must agree to disclose all conflicts of interest, all sources of revenue and all affiliations. 7. The investment consulting firm must carry adequate fiduciary liability insurance, errors & omissions insurance, and fidelity bond insurance. Policy limits for fiduciary liability insurance must be disclosed and the adequacy of coverage discussed in the proposal. 8. The investment consulting firm must not be in bankruptcy, conservatorship, receivership, or in the possession of a regulatory agency. 9. Any legal and/or regulatory inquiries and/or sanctions against the firm or any individuals employed by the firm must be disclosed. 10. The investment firm must have a robust investment manager database. Page 8
  • 12. TRS RFP General Investment Consulting/Advisory Services E. Background of the Consulting Firm 1. Briefly describe your firm’s background, history, and ownership structure, including any parent, affiliated or subsidiary company, and any business partners or joint ventures. Describe any planned or anticipated changes in ownership as well as any planned or anticipated changes in your lines of business. 2. Identify the organization’s main office, address and phone number and the location of any other offices; indicate which office will service TRS. 3. Provide an organization chart of your firm and describe the relationship between each component and your consulting group. The chart must include the positions and functions of all professionals in your organization. 4. Describe the total staff of the firm and designate support staff, analysts and professionals. 5. Identify the key personnel in your firm and their roles within the organization including a summary of years with the firm and prior experience. 6. Identify those professionals who will work directly on this account. For each professional, provide a biographical sketch including title, functional responsibility at the firm and for this assignment, experience (particularly as it relates to the services to be performed under this RFP) and academic background. Describe the current responsibilities of each professional, including number of accounts/funds that are being managed, client responsibilities, etc. Include as an attachment to this section of your proposal 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. 7. Describe how your professionals are compensated and any initiatives used to enhance the likelihood that these individuals will continue employment with the firm. 8. Indicate the turnover of professional staff since January, 2005 by identify the total number of professionals that have joined and left the firm in each of the past 5 years. Provide the names, titles and time with firm of all senior management and key professionals that have joined or left the firm since January, 2005. Page 9
  • 13. TRS RFP General Investment Consulting/Advisory Services 9. Provide levels of coverage for fidelity bonds, errors and omissions coverage, and other fiduciary coverage that your firm carries; include the name and address of the coverage provider. 10. Provide details on the financial condition of the firm (include debt/equity and debt/total assets, and other pertinent ratios). 11. Describe the services your firm provides, including affiliates. What percentage of total revenues is derived from investment consulting for your total organization, including affiliates? 12. Describe any services of your organization that may not be offered by other consultants. 13. Provide a listing of current and former clients. Include the size of the client organization, the type of organization (e.g., public, Taft-Hartley, corporate, endowment, foundation, etc.) and the number of years services were provided by your firm to each. 14. Has your firm been terminated by a client or terminated a client relationship in the past five years? If yes, identify the previous client(s) and explain the reason for the termination. 15. Discuss the ways you manage growth, including any limits to the client/consultant ratio. 16. Attach a sample contract or agreement your firm uses for investment terms and conditions for consulting services. F. Standards of Conduct 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 the CFA Institute’s Code of Ethics and Standards of Professional Conduct? 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 actual or threatened litigation, administrative or regulatory, or similar investigation proceedings relating to your investment consulting assignments? If so, provide an explanation and indicate the current status or disposition. Under Page 10
  • 14. TRS RFP General Investment Consulting/Advisory Services disposition, include any censures or reprimands received from regulatory bodies. 5. Has your firm ever been required to pay damages or penalties or trade or relinquish something of value under any of its existing or past contracts as it relates to services similar to those contemplated by this RFP? If so, describe the situation. G. Conflicts of Interest (3 page maximum) 1. Based on the list of investment managers currently managing assets for TRS, disclose any business your firm, affiliates, or parent company does with any of TRS' investment managers. A list of these managers is available in the Annual report and is available on our website, www.trs.nyc.ny.us. 2. Are there any potential conflict of interest issues your firm would have in servicing TRS? 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? Do your investment consulting clients have soft dollar arrangements with your firm? If so, indicate what percentage of your clients have them? 5. Does your firm hold or sponsor money manager or client conferences? If so, describe all conferences your firm has held or sponsored in the past 24 months. Please note if any TRS Board or staff members have been in attendance, and what fees have been or would be charged for Board and staff members to attend such conferences. 6. Has your firm, or anyone in your firm, provided any gifts, travel and room expenses, entertainment or meals to any TRS Board member or staff during the past 24 months? If yes, describe the expenses and their purpose. 7. List and describe any professional relationship you have had with TRS or its 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, describe in detail. Page 11
  • 15. TRS RFP General Investment Consulting/Advisory Services H. Consulting Team (2 page maximum) 1. Provide contact information for each consultant that will be assigned to TRS in a grid similar to this. Business E-Mail Name Address Phone Business Fax Address 2. Describe the role of each consultant for this assignment. 3. 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 or become incapacitated. 6. Describe your firm's preferences for client communications. For example, does your firm prefer to have all client communications flow through one contact person? I. Asset Allocation 1. Discuss the theory and methodology of the asset allocation models your firm employs. What are the advantages and disadvantages of your model? How do you develop asset class assumptions? Has your model been revised in the last 5 years? If so, what was the change? 2. Describe your policy for recommending changes to a pension system’s asset allocation in response to changes in the market environment. 3. Explain your firm’s position/approach regarding internal investment management versus external management.. 4. Describe how your firm manages its advisory role to the Board with its supportive role with staff. 5. Explain your firm’s position/approach on the use of active versus passive management in the major asset classes. Page 12
  • 16. TRS RFP General Investment Consulting/Advisory Services 6. Describe your firm's capabilities and experience in illiquid investments such as 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 risk control and performance characteristics of such investments. 7. Describe your firm's capabilities and experience in the area of derivatives. List the factors you would consider in recommending derivative options. Describe elements of a due diligence process for assessing the risk control and performance characteristics of such investments. 8. Describe your firm's methodology for identifying and evaluating new investment opportunities 9. What distinguishes your firm in the investment consultant industry? 10. Please note any significant contributions your firm has made in developing and defining “best practices” in the pension fund investment consulting field. 11. Describe your firm’s capability to perform asset/liability modeling studies. J. Investment Policies 1. Describe your approach to the analysis of applicable legal parameters/restrictions under which TRS must operate. 1 Describe your approach to the development of an investment policy statement. 2 Detail your process for the development of asset class structures, investment objectives, and risk control policies (e.g., derivatives, securities lending, etc.). 3 Describe your process for maintaining a continuous review of investment policies. Page 13
  • 17. TRS RFP General Investment Consulting/Advisory Services K. 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? Do you utilize both? How many managers/products are contained in the database(s) that you use? 2. For firms that have an in-house database, do you charge investment managers direct or indirect fees to be included in your firm’s database? If so, describe the fees. 3. For firms that have an in-house database, do you sell it to third parties? How do you receive compensation for selling it? 4. For firms that have an in-house database, describe any advantages that you perceive your in-house database has over your competitors. 5. For firms that have an in-house database, describe your methodology and criteria for classification of managers by investment style, size, etc. How do you monitor consistency of style? 6. For firms that have an in-house database, how often are managers in your database reviewed? Under what circumstances are managers added to your database? Deleted? 7. For firms that have an in-house database, 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. For firms that have an in-house database, how often do you meet with managers that are included in your database? What is the nature of those visits? L. 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. 3. Describe how your firm's process for evaluation and selection of investment manager adds value beyond the mere provision of raw data. Page 14
  • 18. TRS RFP General Investment Consulting/Advisory Services M. Performance Evaluation (1 page maximum) 1. Do you have the capability to produce performance reports for investment managers? 2. Can your firm provide custom benchmarks, including investment style benchmarks and universe rankings? Are the returns in your universe rankings actual client returns or composite returns as reported by managers? 3. What amount of input does the client have in the content and format of an investment performance 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 reporting. 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 investment 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. 13. Describe your firm’s performance attribution process and reports. Page 15
  • 19. TRS RFP General Investment Consulting/Advisory Services N. Reporting (1 page maximum) 1. What period of time is required to prepare reports after the end of each month? 2. Give a brief overview of the hardware and software systems used in the production of performance reports. O. 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 subject matter and frequency of research provided to clients, and the media customarily used to distribute such research to clients. 4. Describe your ability to provide customized computer-based analytical tools to your clients. Describe specific features. 5. Describe your firm’s process for monitoring industry and market trends affecting investment funds. P. Board and Staff Education (1 page maximum) Does your firm offer training of plan fiduciaries and staff 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. Q. References Provide three references who are clients for whom work similar to that requested in this RFP has been performed. Page 16
  • 20. TRS RFP General Investment Consulting/Advisory Services R. Other Information 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. Provide any additional information that you believe to be relevant to the RFP and your capability to provide the services requested. Do not include any promotional or display material to supplement your proposal. S. Insurance and liability 1. What limitation on liability, if any, do you impose through your contract? 2. 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. T. Fees 1. Provide a proposal including Attachment 2 hereof 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. Please make note of any required services which you are unable or unwilling to provide within your proposed bundled fee. 2. Proposed fees will be in effect for the first 3 year contract period. 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, describe the manner of calculation in detail. The actual fee structure and levels may be subject to negotiation. Page 17
  • 21. TRS RFP General Investment Consulting/Advisory Services V. NOTIFICATION OF AWARD/TERM OF ENGAGEMENT The successful proposer(s) will be selected and notified of an award on or about March 18, 2009. Each proposal will be evaluated by an evaluation and selection committee based on Best Value. The proposal(s) best able to provide the services requested in Section III hereof and that optimize(s) quality, cost, and efficiency among the responsible and responsive bidders shall be selected. The contract may be awarded to a single firm or split among two or more firms. The evaluation of qualifications will include, but not be limited to, such factors as: Industry and client reference checks 15%* Depth and quality of database 15% Experience and qualifications of the staff assigned 15% Experience of the firm 15% Understanding and commitment to the work to be performed 15% Independence of consulting operations 10% Team Stability 10% Fee 5% * The above percentages serve as guidelines in the evaluation process and are subject to change. The evaluation and selection committee reserves the right to narrow the number of prospective candidates that can satisfactorily provide the required services to two or more “semi-finalists”. The semi-finalists will undergo further evaluations which may include oral presentations, interviews, site visits, and/or demonstrations before the evaluation and selection committee. Selected semi-finalists may also be required, at the sole discretion of TRS, to make oral presentations before the TRS Board. The contract will commence on or about May 1, 2010, for a period of three years. It may thereafter be renewed for 2 additional 3 year periods at TRS’ sole discretion. TRS has the right to terminate the contract without cause within sixty (60) days written notice, and is otherwise subject to the stipulations of Appendix A. Notwithstanding anything herein to the contrary, in the event the TRS terminates the contract prior to completion by the Contractor, the Contractor shall be entitled only to be reimbursed for those services already actually performed. IF, IN OUR OPINION, NO ENTITY CAN SUBSTANTIALLY MEET ALL OF OUR CRITERIA, THEN TRS RESERVES THE RIGHT TO WITHDRAW THE RFP AND NOT MAKE AN AWARD. HOWEVER, IT IS EXPRESSLY UNDERSTOOD THAT EVEN AFTER SELECTION OF A SUCCESSFUL PROPOSER, IF ANY, TRS SHALL HAVE NO OBLIGATION OR LIABILITY WHATSOEVER UNLESS TRS ENTERS INTO A Page 18
  • 22. TRS RFP General Investment Consulting/Advisory Services WRITTEN CONTRACT IN FORM AND SUBSTANCE SATISFACTORY TO TRS. TRS MAY FOR ANY REASON WHATSOEVER DECLINE TO NEGOTIATE AND/OR EXECUTE SUCH CONTRACT. THE CONTRACT SHALL, AMONG OTHER PROVISIONS, INCORPORATE THIS RFP AND THE SUCCESSFUL PROPOSER’S PROPOSAL. VI. APPENDICES AND ATTACHMENTS Any Conflicts between the RFP and the various documents attached hereto as appendices and attachments shall be resolved in the following order of precedence: Appendix A. General Provisions Governing Contracts for Consultants, Professional and Technical Services (Separate File) Appendix B. General Information Provided to Prospective Bidders (Separate File) Appendix C. TRS Required Contract Provisions (Separate File) Attachment 1. Notice of Vendor Interest Attachment 2. Cost Proposal Page 19
  • 23. ATTACHMENT 1 TEACHERS RETIREMENT SYSTEM OF THE CITY OF NEW YORK General Investment Consulting Services Request for Proposal NOTICE OF VENDOR INTEREST Please check one My firm IS interested in submitting a bid for this project. My firm IS NOT interested in submitting a bid for this project for the following reason(s): Firm Name: Address: Contact Person (Please Print): Signature: Tel #: FAX #: E-mail Address: Marc Katz Director – Investment Administration Division Teachers' Retirement System of the City of New Please return this form, 7 hard copies York 55 Water Street and 1 electronic copy of the RFP by New York, NY 10041 December 18, 2009 to: Attn: Aristea Aftousmis, Sr. Investment Analyst OR E-mail to: rfpinvconsult@trs.nyc.ny.us Page 20
  • 24. ATTACHMENT 2 TEACHERS RETIREMENT SYSTEM OF THE CITY OF NEW YORK General Investment Consulting Services Request for Proposal (RFP #_______) COST PROPOSAL Required Services Advising the Board of Trustees on investment guidelines and policies, including the development of new guidelines and policies and the amendment of existing ones Advising on strategic and tactical investment issues Advising on performance measurement, attribution, and performance and policy benchmarks for each asset class and asset manager Advising on investment management analysis, including tracking of performance achieved in variance from the investment manager's contractual mandate Advising on investment operations (internal vs. external management) Advising on management structure (active vs. passive, investment style mixes) Advising on asset allocation Comparing TRS’ asset allocation to that of other public pension funds Advising on a broad range of asset classes Advising on alternative investment vehicles Advising on rebalancing policies Advising on risk management issues Advising on transition management issues and strategies Manager oversight, including periodic review and interviews of managers as requested by Board and Staff, and investment performance attribution analysis Presenting economic forecasts and advising on integration with TRS’ tactical plan Providing research on special projects Providing or assisting in manager searches, selections and terminations Performing quarterly performance analysis by portfolio and asset class, with attribution Comparing TRS’ investment performance to that of other public pension systems Page 21
  • 25. ATTACHMENT 2 TEACHERS RETIREMENT SYSTEM OF THE CITY OF NEW YORK General Investment Consulting Services Request for Proposal (RFP #_______) COST PROPOSAL Performing educational sessions Providing on-site consultation and assistance Providing objective and creative input, subject to its fiduciary responsibilities Attending approximately 10 board meetings per year held in New York, NY. Performing asset and liability analysis Providing access to any proprietary web-based investment research reports and analytical tools and or software available to other clients Assisting in securities lending agent and/or custodian search and selection Performing trading cost analysis Page 22