Request for Proposal (RFP) Investment Management Services

Transcription

1 Request for Proposal (RFP) Investment Management Services Big Bend Community College Foundation (BBCCF) Request for Proposal Objective BBCCF is requesting proposals from investment consultants to assist in the management of its investment portfolio by advising the Finance, Personnel and Property Committee (FPPC) on appropriate investment philosophy, capital market trends, regular investment performance reports, policy reviews and updates, asset allocation strategy, investment manager searches, investment manager evaluations, compliance monitoring, education, and by providing the Committee with other investment consulting services as needed. Currently, BBCCF has $4.3 million in unrestricted long-term investments. For purposes of your proposal, please assume all funds are liquid and can be transferred immediately. Background - Introduction Big Bend Community College Foundation is a not-for-profit organization chartered in the State of Washington to operate exclusively for the purposes of encouraging, promoting and supporting educational programs and scholarly pursuits at or in connection with Big Bend Community College. The phrase educational programs shall be construed to mean and include all activities designed to improve the cultural, educational, living, and operational conditions of the College, to enlarge or improve its curriculum, its faculty and staff, its property and physical facilities, and to provide financial or other assistance to students in their efforts to acquire an education. Further, to assist in the establishment of curriculum by Big Bend Community College, both within and outside the State of Washington. Big Bend Community College Foundation s Mission The mission for Big Bend Community College Foundation is to actively and visibly support the Mission of Big Bend Community College. The Big Bend Community College Foundation provides: Scholarships for students A. General Scholarship Fund provides scholarships annually to high school seniors, professional/technical students, and returning students. Funds are raised via Cellarbration! for Education. Intervention scholarship funds are raised at Cellarbration! for Education (Raise the Paddle), from annual transfers made from Named Scholarships, and donations from private sources. 1

2 Staff development/professional development A. Funds are budgeted annually for Classified Staff and Faculty Development. B. Nursing Educator s Fund held for BBCC nursing instructors to obtain master s degrees. Equipment/Facility support Examples include: A. New dormitory roofs B. Computerized mannequins for the Nursing Department C. Funds for future ATEC COP payments (Finish the Job) D. Fundraisers for ATEC equipment, holds funds in portfolio E. Holds miscellaneous funds for other departments (music, aviation, etc.) Legislative/Community messaging A. Via meetings and events to solicit ideas and comments, enlist support. Influence college climate A. Via attendance at events, special luncheons/dinners, meetings, and with Community contacts. Response Instructions Please submit 10 hard copies, in addition to one electronic copy (PDF) sent via , of your response to this RFP no later than 3 p.m. (PST) on September 10, Please respond to the RFP questions in the order presented and limit your response to twenty (20) typed written pages for all questions. Appendix items, if any, are limited to an additional twenty (20) pages, bringing the maximum size of the RFP response to forty (40) pages. An appendix is to be presented as back-up information and not directly in response to the questions. Qualifications To be considered a qualified consultant firm, your firm must respond to all items in the RFP and be: An active CIMA licensee in good standing as of August 13, Willing to accept co-fiduciary responsibility for our account on behalf of your firm. Firm to be a Registered Investment Advisor (RIA). Timing RFP to Consultants August 13 Last Day for Questions September 3 RFP Response Deadline September 10, 3 p.m. (PST) Finalist Selections October 15 2

3 Finalist Presentations in Moses Lake Week of November 19 Firm Selection and Begin Implementation January 1, 2016 Contact Information At no time shall any representative of BBCCF be contacted, unless pre-approved by LeAnne K. Parton. This includes members of the FPPC or Board of Directors. All questions and contact by the consultant firms are to be made only to: LeAnne K. Parton Director of Development and Executive Director of BBCC Foundation 7662 Chanute Street NE Moses Lake, WA Format An evaluation committee will review all submitted RFPs. Interviews will be conducted with a short list of finalists. Information and/or factors gathered during interviews, negotiations, and any reference checks, in addition to the evaluation criteria rankings, shall be the sole and exclusive property of BBCCF. BBCCF reserves the right to contact references other than, and/or in addition to, those furnished by your consulting firm. Please submit 10 hard copies, in addition to one electronic copy (PDF) sent via . Where possible, responses shall be limited to single-spaced, single-sided, 8 ½ x 11 pages (excluding exhibits, samples, or other attachments) in no smaller than 10 point font. Include your firm s name on each page. BBCCF shall not be responsible or liable in any manner for the risks, costs, or expenses incurred by any consultant in the preparation of its response to this RFP nor travel expenses incurred by the finalists. Evaluation Criteria Specific attention will be paid to: Organization and capabilities Credentials, experience and reputation of the consulting team working with institutional clients Background and quality of the investment research and methodology Competitiveness of management and advisory fees for our non-profit organization Performance reporting capabilities Quality of existing client relationships and references Fee/revenue transparency and minimal conflicts of interest 3

4 Finalist Presentations Firms selected as finalists should be prepared to conduct a one-hour presentation at BBCCF s corporate offices in Moses Lake, WA. Finalists should be prepared to answer detailed questions regarding their proposals. Confidentiality The proprietary nature of the information gathered for this project is recognized and will be respected. We expect that you will treat all information in this RFP as fully confidential. We will not divulge information and data provided by candidates to any party not directly involved with this selection decision. Please refer to Appendix A BBCCF s Investment Policy Statement and Addendum A BBCCF s current investments for more information about the organization, the asset allocation targets, and other pertinent information. A. Firm Strength and Stability 1. Please provide the full name of your organization, address, telephone and facsimile number, firm website, mailing address of your main office and the name and CIMA license # of the team member who holds an active CIMA license. Include an organizational overview including a description of the corporate structure of the firm, ownership details, year of founding in present form, including the legal form of the organization, the parent company (if applicable), and any affiliated companies. If any change to the firm's corporate structure is anticipated, please also note this. 2. Please indicate the number of years your firm has been performing investment services similar to those that you seek to provide to BBCCF. 3. Please describe your client base, including types of clients served, the number of non-profits for which your organization currently provides services, the length of time of services and the range of asset values among your nonprofit clients. 4. Please disclose the assets under advisement/management for the firm as a whole, for the office of which we will be served, and by the team assigned to us. 5. Please disclose any and all conflicts of interest your organization has in serving as our investment consultant. Disclose whether your firm has any financial or other affiliation with other brokerage firms, banks, insurance companies, investment banking firms, or money management firms. If any such affiliations exist, how does your firm protect against conflict of interest? 4

5 6. Is the firm willing to disclose upon client request, the dollar amount and nature of all material beneficial relationships that the firm or any affiliate of the firm, engages in with investment manager clients? If not, please explain. 7. Describe any material litigation, regulatory, or legal proceedings in which your firm or any of the principals are or have been involved over the past five years. Specifically highlight this information for the consultant(s) for our account. 8. Describe the levels of insurance coverage, including the amounts of errors and omission insurance and any other fiduciary professional liability insurance your firm currently has in force. Provide copies of all the appropriate state and/or national licenses required to act as investment manager as appendices. 9. What do you believe sets your organization s services apart from the competition, and allows your firm to generate superior performance and service levels? 10. Describe your firm's experience and capability for providing education to BBCCF staff and FPPC members. B. Investment Process 1. Comment on your investment philosophy and process for analyzing a client s portfolio structure and for recommending modifications. How active is your management approach towards this portfolio? 2. Describe your manager due diligence/research process. How often does your staff visit with money managers in-house and onsite? 3. Describe the capabilities and differentiating features of your firm's manager research database. Is the database proprietary or purchased? Are managers charged fees for inclusion? How many managers are tracked? 4. Describe the firm's manager search process. How are the managers initially screened? What criteria are emphasized in the latter stages of a search? Is there a minimum number of years of live performance required or a minimum amount of assets in the strategy to be included in the search? 5. How many analysts are employed by your organization that are responsible solely for investment manager research? How many analysts are responsible for performance evaluation, performance attribution analysis, manager evaluation and due diligence, etc.? 5

6 6. Describe your firm's experience in researching, selecting and monitoring managers in alternative asset classes, such as hedge funds, private equity, real estate, portable alpha, and commodities. 7. Discuss the theory and methodology of your asset allocation modeling process. Is your asset allocation software developed in-house or externally? 8. How are your capital market projections derived? How is that information used to develop investment strategy for clients? 9. How would you assist BBCCF s Board and Finance, Property and Personnel Committee in meeting their fiduciary responsibilities? 10. Describe the process you will use to assist us in the maintenance of our investment policy, spending policy, objectives and guidelines for our fund. Appendix A of this document contains BBCCF s current SIP. Please provide us with 3-4 key insights you wish for our committee to review as it relates to our SIP. 11. Address how you would structure the custody of BBCCF s investment assets. Would an internal, external or blended approach be used? 12. Please provide four client references applicable to this RFP whom we can contact. Include the contact name, title, address, telephone, , the length of time providing services and the level of assets under management. C. Service Structure & Accessibility 1. Please provide a full list of consulting services offered by your firm. 2. Provide the location of the office that will serve BBCCF and biographies of the key consulting personnel assigned to our account. Please identify who would be our main representative, who would perform the analytical work on the relationship and who would serve as the back-up consultant in situations when the proposed lead consultant could not attend a meeting. What is the average number of client relationships per consultant? 3. Provide a biography for the lead consultant and how they are compensated. 4. Tell us about the support professionals who would be responsible for this account. Explain how the team dedicated to our account would function. Indicate any special endowment management expertise. List any senior staff departures in the past two years and explain the reason for the departure. 5. Is your firm a registered investment advisor under the Investment Advisors Act of 1940? Can your firm provide fiduciary services to its clients? 6

7 6. Does your firm, its employees, or any affiliated or related entities derive any economic benefit from any investment entities, intermediaries or service providers that are or will be involved in our account? 7. Will you or your representatives be available to meet regularly (primarily via teleconference) to review the account? BBCCF s Finance, Property and Personnel Committee meetings occur 12 times per year. In-person attendance typically would be expected one to two times per year at locations that coincide with our regular BBCCF Board meetings, with the remainder of the meetings conducted via conference call. What is your quality standard for returning telephone calls and/or s? D. Performance Reporting 1. Comment on your process for providing and the nature of performance measurement reports to suit the needs of the FPPC. 2. How frequently do you plan to provide investment performance measurement reports to the committee? When are reports available after the end of each month/quarter? Can BBCCF access performance reporting on a secure website? 3. Describe the performance measurement software your firm uses. Is the software proprietary, or does your firm utilize the software of an outside vendor? If your firm uses non-proprietary software, do you have the ability to influence changes to the software to customize reports for our needs? 4. Please describe how you monitor the style adherence of investment managers. 5. Specifically, what types of reports would you use? 6. Describe the performance attribution analysis services you could provide. 7. Provide, as an appendix, sample copies of portfolio reports that would be provided to BBCCF. E. Fee Proposal 1. Please describe the fees proposed by your organization for providing investment management services to BBCCF. Fully itemize all fees, if any, for the following: Advisory percentage of assets or hard dollar. Trading fees and spread earned (e.g. bonds). Investment manager fees, investment manager revenue share, directed brokerage, soft dollar fees. 7

8 Conversion fee. Transferring assets from one fund/manager to another. Other transaction fees. Travel Training Other administrative. 2. If there are additional fees to be charged as a result of performing services related to preparing or modifying BBCCF s Investment Policy, asset allocation analysis, or conducting manager searches, please describe those fees in detail. 3. Do you receive any 12b-1 fees or other compensation or revenue share from any investments that are or will be contained in our account and, if so, are they used to reduce our costs? Thank you for taking the time to respond to BBCCF s request for proposal for consulting services for our assets! Your effort is deeply appreciated and we will respond shortly. Dated: Chairman of the Board Dated: Director of Development and Executive Director of BBCC Foundation 8

9 APPENDIX A Big Bend Community College Foundation Investment Policy Statement I. Investment Purpose and Strategy The purpose of this Statement of Investment Policy (SIP) is to outline, in general terms, how the Endowment s invested assets shall be managed; identify parties associated with the invested assets and delineate their responsibilities; set limitations and guidelines for investing; provide meaningful basis for evaluating investment performance and set standards of communication. II. Investment Management The Foundation Board, through its FPPC, shall select the investment manager and be responsible for overseeing the management of the investment portfolio. A comprehensive evaluation report shall be made on an annual basis to the Foundation Board. III. Performance Evaluation Performance goals of the portfolio shall be set by the Foundation Board, as recommended by the FPPC, on an annual basis and shall be consistent with benchmarked results for similar charitable organizations. These goals shall be communicated to the investment manager, in writing, as guidance for the coming year. In addition to these annual, or multi-year, goals; equity performance shall be compared to a benchmark of the S&P 500 with the general goal of matching or exceeding the return of the Index. Fixed income performance shall be compared to the Barclays Intermediate Government/Credit Index with the general goal of matching or exceeding the Index. The performance of the investment manager, as outlined by the FPPC and per the index benchmarks, shall be calculated on a quarterly basis. IV. Communication and Review The investment manager shall provide the FPPC with monthly statements and shall meet with the FPPC quarterly, or as requested. All of the goals, objectives and guidelines shall be monitored and reviewed annually by the FPPC. 9

10 The investment manager shall be a professionally qualified organization, which possess the necessary expertise to provide objective impartial investment advice and investment management of security portfolios on a continuous basis. The investment manager shall be a Registered Investment Advisor (RIA) under the Investment Advisory Act of The FPPC shall select a separate custodian to house the assets. V. Objectives The primary objective of the investment portfolio is to ensure the safety of the principal in order to provide funding for the intended purpose and grow to keep up with or exceed inflation. VI. Investment Guidelines The investment portfolios shall consist of equity securities, fixed income securities and short-term (cash) investments in accordance with the asset allocation noted below. The investment portfolio shall be diversified, both as to fixed income and equity holdings to provide risk reduction, a dependable source of income and growth of portfolio value. Investments that are contributed and accepted by the Endowment will be sold immediately upon receipt and managed in accordance with the SIP. No more than 5% of the assets shall be invested in the equity of any single issuer. Exposure to an individual sector within the S&P 500 should not exceed the Index weighting by more than ten percentage points. The following guidelines will apply to each investment segment: 1. Cash - All commercial paper will be rated P-1 or A-1 by either Moody s or Standard & Poor s. 2. Fixed Income - A minimum rating of A by Moody s or Standard & Poor s must apply to all corporate issues. 3. Equities - Investments will be made in seasoned, financially sound companies with a public operating record of at least three years. The portfolio managers will provide a written portfolio review to the FPPC once a quarter. 10

11 VII. Asset Allocation The target asset allocation is 60% in stocks, 38% in fixed income and 2% in cash. Allocations beyond a five percentage point tolerance (due to market volatility) must be submitted by the Investment Manager to the FPPC for approval. The portfolios shall be rebalanced at the end of each quarter to meet the above stated allocation. VIII. Spending Policy The annual spending target is up to 5% of Foundation Assets and will be reviewed annually, or when there are material changes in the market or economic conditions that warrant a review. To ensure the long-term viability of the Endowment, such a review may result in the temporary reduction of the annual target. IX. Prohibited Investments by Investment Management Company Bonds below investment grade Private placements Limited partnerships Real Property Securities not denominated in US dollars Derivatives purchased for speculationin general, investments lacking transparency and liquidity 11

12 Addendum A BBCCF s current Investment Services Provider information about the asset allocation targets, and other pertinent information. Portfolio Summary Portfolio Performance Annualized 3 Months 1 Year 3 Years 5 Years 7 Years 10 Years Total Portfolio +3.2% + 8.1% +10.4% + 9.1% + 5.4% +6.5% Portfolio Stocks +5.4% +11.7% +15.4% +12.5% + 6.5% +7.9% Domestic Stocks +4.8% +13.5% +16.7% +13.6% + 7.6% International Stocks +8.8% + 2.1% + 8.4% + 6.3% + 1.6% Portfolio Bonds +0.1% + 2.7% + 1.7% + 3.1% + 3.9% +4.3% Investment Summary As of April 30, 2015 Beginning Value 12/31/14 $4,292,398 Net Additions/Withdrawals -4,119 Change in Market Value 70,017 Taxable Interest and Dividends 30,651 Ending Value 04/31/15 $4,388,948 Income Summary Year to Date Dividends $ 12,896 Interest 19,395 U. S. Gov t Interest 485 Realized Gain/Loss from Sales Year to Date Short-term gain $ 2,504 Long-term gain $125,727 Short-term loss -1,365 Long-term loss -2,280 Net short $ 1,139 Net Long $123,447 Asset Allocation % Allocation Asset Market Value Actual Target Cash $ % 2.0% Fixed Income 1,625, % 38.0% Equity 2,621, % 60.0% Total Portfolio $4,388, % 100.0% 12

13 Equity Summary Top U. S. Growth & Value Equities Apple 3.5% Discover Financial Services 2.0% Starbucks 2.0% Berkshire Hathaway B 1.9% Johnson & Johnson 1.9% VISA Class A 1.8% Thermo Fisher Scientific 1.8% Danaher 1.7% CVS Health Corporation 1.7% Wells Fargo 1.7% U. S. Growth & Value Sector Analysis U3li3es Tlecommunica3on Services Materials Informa3on Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discre3onary 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% S&P PorHolio 13

14 Equity Style Actual 9.3% 25.7% 24.7% Consistent Growth Rela3ve Value Interna3onal % Allocation Style Market Value Actual Target Consistent Growth $ 1,128, % 25.0% Relative Value 1,085, % 25.0% International 407, % 10.0% Grand Total $ 2,621, % 60.0% Small/Mid Cap. Other and International Equities are not included in Top Equities and Sector Analysis 14

15 Fixed Income Summary Fixed Income Characteristic Yield To Maturity 1.5% Average Maturity 3.53 Yrs. Average Coupon 3.82% Duration 3.26 Yrs. Average Credit Quality A2/A Maturity Breakdown 10 Yrs. And Over 7 Yrs Yrs. 5 Yrs. - 7 Yrs. 3 Yrs. - 5 Yrs. 1 Yr. - 3 Yrs. Under 1 Yr. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Maturity Breakdown 15

16 Sector Style Allocation 1.2% 1.5% 34.3% U. S. Treasury Corporate Infla3on Protected Style Market Value % Held U. S. Treasury 64, % Corporate 1,506, % Inflation Protected 54, % Grand Total 1,625, % Credit Quality Breakdown 9.4% 3.4% 8.3% 79.0% A Baa Aaa Aaa 16