MINUTES
HULL CONTRIBUTORY RETIREMENT BOARD MEETING
October 21, 2004
A special meeting of the Hull Contributory Retirement Board, duly posted to be held in the Selectmen's Meeting Room, Town Hall, Hull, MA on the above date was called to order at 9:05 a.m. Present were Leonard Colten, Chairperson, Members Donald Brooker, Chris McCabe, Ann MacNaughton and James Yacobucci, and Retirement Administrator Marcia Bohinc.
The meeting was called to order for the sole purpose of reviewing the responses to the Request for Proposal for an Investment Consultant, and to determine which firm, if any, to invite to present to the Board.
The respondents were:
- Dahab Associates, Inc., Richard Dahab
- DHK Financial Advisors, Tim Dempsey
- Rockland Trust, Peter Hebert
- Segal Advisors, Kevin Leonard
- Wachovia Securities, James Tallen
- Wainwright Investment Counsel, Michael Dwyer
Each Board member presented a summary of one firm's response and made a recommendation for extending an invitation to present to the Board. The following is an outline of those presentations.
Dahab Associates, Inc. - Donald Brooker
- Independent firm located in Dedham, MA (Headquartered in NY)
- Founded in 1986, one owner, four consultants with a total staff of ten
- Provides only investment consulting services
- Fees for consulting services only, investment management fees would be additional
- 57 total clients, four Massachusetts clients, servicing MA clients since 1987
- Largest client - $1.22B, smallest client - $4M
- Approach - Create a model for different asset allocations, recreate manager performance and provide a comprehensive review of policy and guidelines
-Time frame -
* Investment Policy: 2 weeks
* Asset Allocation: 2 weeks
* Investment Manager selection: 6 - 8 weeks
- Fee Derivations - Clients only
- Sample Reports - Provided - very easy to understand/read
- Overall impression - Dahab responded to the RFP as requested and outlined the services to provide; has a history with MA clients, however has a very small presence in MA. There is concern that Dahab would have sufficient staff to service Hull along with other clients
- Fee - $25,000 consulting only
- Recommend for presentation/further discussion - Yes
DHK Financial Advisors - Chris McCabe
- Independent firm located in Portsmouth, NH
- Founded in 1993, with two partners/consultants and a total staff of five
- Provides only investment consulting services
- Fees for consulting services only, investment management fees would be additional
- 32 total clients, no Massachusetts clients
- Largest client - $125M, smallest client not provided
- Approach - Simplicity over complexity; mirror PRIT asset allocation for investment strategy
- Time frame - Investment in PRIT like assets completed in a few weeks
- Fee Derivations - Clients only
- Sample Reports - Provided however were difficult to understand/read
- Other - DHK did not comment on an Investment Policy; proposed an asset allocation the same as PRIT; Proposes full solution (consulting and investment management) for approximately same fee as PRIT
- Overall - Credit was given to DHK for the honest approach of "not recreating the wheel"; they did not respond to the RFP in the format requested
- Fee - $20,000 consulting only, $72,000 with investments
- Recommend for presentation/further discussion - No
Rockland Trust - Ann MacNaughton
- Bank subsidiary of Independent Bank Corporation, headquartered in Hanover, MA
- Subsidiary founded in 1985, publicly traded on NASDAQ, symbol INDB
- Full banking, investment management and custody services
- Fees include investment management, no separate consulting services
- No Massachusetts pension clients, however do manage MA stabilization funds and defined contributions assets
- Did not provide client or staffing information
- Approach - Bundled product using Rockland's core US Equity and Fixed investments and select outside funds for other asset classes
- Time frame - Not provided
- Fee Derivations - Many products due to diverse financial services
- Sample Reports - Provided however were difficult to understand/read
- Other - Rockland does not provide stand alone consulting services; their approach is asset driven
- Overall - Although Rockland is a long-standing provider in the community, they have no experience with public pension clients. There is concern over Hull being the first "trial" client; the need of the Board is consulting before investment management; did not respond to the RFP in the format requested
- Fee - No consulting only, $90,000 with investments
- Recommend for presentation/further discussion - No
Segal Advisors - Jim Yacobucci
- Independent firm located in Boston, MA
- Founded in 1969, employee owned through The Segal Group
- Total staff of 40 with an average of 15 clients per consultant
- Provides investment advisory and analysis services
- Fees for consulting services only, investment management fees would be additional
- 210 total clients, 24 Massachusetts clients, servicing MA clients since 1994
- Largest client - $5.5B, smallest client - $2.1M
- Approach - Interview with Board and staff to understand the system and situation, review parameters and components, conduct a separate study and comparison for development of an Investment Policy and Asset Allocation
- Time frame -
* Investment Policy: 60 days
* Asset Allocation: 90 days
* Investment Manager selection: 60 - 90 days
- Fee Derivations - Clients only
- Sample Reports - Provided - very easy to understand/read
- Other - Staff includes actuaries; Segal is involved at MACRS and is present at every conference
- Overall - Segal directly responded to the RFP as requested, has the most experience with MA clients, however the lead consultant is the consultant to all the MA clients; question with the size and needs of Hull, will there be sufficient resources for our needs
- Fee - $30,000 consulting only
- Recommend for presentation/further discussion - Yes
Wachovia Securities - Lenny Colten
- Many firm affiliations, including merger of parent Wachovia Securities and Prudential Financial
- Founded in 1879, with investment services in 1976, publicly traded on NYSE, symbol WB
- Investment consulting, management and custody services
- Total staff of 113 with local and home office support; unclear on the number of clients per consultant based on the 'group' approach
- Fees bundled with investment management, however can provide separate consulting services with investment management fees additional
- 305 total clients, 40 public, no Massachusetts clients
- Largest client - $246M, smallest client - $4.5M
- Approach - Review the funding, current investment strategy, cash flow and future and historical trends to develop an investment policy, prepare asset liability study, asset manager search
- Time frame -
* Investment Policy: 45 days
* Investment Manager selection: 120 days
- Fee Derivations - Many products due to diverse financial services
- Sample Reports - Provided - easy to understand/read
- Other - Performance reports available by manager; will conduct an Asset/Liability Study for an additional fee (outsourced)
- Overall - Wachovia may be too big of an organization for Hull's needs, especially without the specific Massachusetts experience
- Fee - $27,000 consulting only, $104,000 with investments
- Recommend for presentation/further discussion - No
Wainwright Investment Counsel - Marcia Bohinc
- Independent firm located in Boston, MA
- Founded in 1999 from Wainwright & Co., which was founded in 1994
- The majority of the company is employee owned (57%), the remainder through passive investors
- Key staff of 10 with an average of 10 clients per consultant
- Provides investment consulting, however is also a broker/dealer piece (WFS) for private clients
- Fees for consulting services only, investment management fees would be additional
- 522 total clients, 16 public, 11 Massachusetts clients, servicing MA clients since 1996
- Largest client - $554M, smallest client - $11M
- Approach - Review the actuarial analysis/financial health of the system, along with the contributions and liabilities, develop an investment policy and asset allocation; also conduct an optimization analysis
- Time frame -
* Investment Policy: 60 days
* Asset Allocation: 90 days
* Investment Manager selection: up to nine months
- Fee Derivations - Clients only (Wainwright Investment Counsel)
- Sample Reports - Provided - very easy to understand/read
- Other - Uses a strategic, not tactical asset approach; currently Middlesex County's consultant (involved in a lawsuit over the valuation of assets - named as a party in the suit)
-Overall - Wainwright provided the best response to the RFP as far as approach and following directions; have experience with clients Hull's size
- Fee - $25,000 consulting only
- Recommend for presentation/further discussion - Yes
Based on the discussions, L. Colten recommended inviting the Pension Reserves Investment Management (PRIM) Board to present prior to the Board making a decision. He cited PRIM's investment policy, asset allocation and low comprehensive fees. The Board agreed to give PRIM an audience however would like to hear from the independent consultants first.
The Board agreed to invite three firms to give a one-hour presentation and interview on November 2, 2004. Key to the presentations will be what value the consultants can add over and above PRIM.
The three firms are:
- Dahab Associates, Inc., Gregory McNeillie
- Segal Advisors, Kevin Leonard
- Wainwright Investment Counsel, Michael Dwyer and Jeff Fabrizio
The Hull Contributory Retirement Board meeting adjourned at 10:09 p.m.
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