MUNICIPAL EMPLOYEES’ ANNUITY AND BENEFIT FUND OF CHICAGO
Request for Competitive Proposal: Transition Management Services
INVESTMENT CONSULTANT QUESTIONNAIRE
All data should be as of June 30, 2015
I. Firm
1) Please provide the organization’s name, and the name, title, address, phone
number, fax number, and email address of the individual who will be our
primary contact.
2) Please provide the address and website of the firm’s headquarters and all
branch offices.
3) Please provide the year your firm was established and give a brief history of
your firm.
4) Please comment on the financial solvency of your firm.
5) Do you have any firm debt?
6) What is the amount of firm debt?
7) What are the plans, with timeframe described, to pay off the firm debt?
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8) Please provide a brief description of your firm’s plans for growth, such as asset
growth, personnel growth, succession planning, over the next 3-5 years.
9) Please give succession plans for key employees if retirements are planned
within five years.
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II. Ownership
10) Please discuss your general ownership structure, including what percentage of
your firm is owned by current active employees. Please note Key Employees.
11) Have there been any changes in the ownership structure of your firm in the
past five years?
If yes, please explain in detail.
12) Please explain any known or potential changes in firm ownership or personnel.
13) Are you a registered minority (at least 51% minority owned) investment
manager?
14) Is your firm a "minority owned business", "female owned business", or
"business owned by a person with a disability", as those terms are defined in
the Illinois Business Enterprise for Minorities, Females, and Persons with
Disabilities Act?
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III. Investment Professionals
15) Please provide brief biographies of the investment professionals in the firm
dedicated to transition management.
1. Please indicate which investment professionals will service the MEABF
account.
16) Please list your branch office locations that house investment professionals
dedicated to transition management.
17) List ownership and % held by the investment professionals dedicated to
transition management at your firm. Please identify the key personnel on the
list.
18) List directorships or board positions held by investment professionals at other
firms.
19) Please complete the following table.
Functional area
# Staff
Trading Analysis (e.g., pre- and post-trade) and trading
coordination
Transition Strategists
Transition Portfolio Management
Trading and Execution
Transition Support and Custody Interface
Compliance and Risk Management
Client Service/Relationship Management
Sales and Marketing
Legal Counsel and Support
All Other: Identify by functional area, including
administrative support; add lines as necessary and provide
totals.
Total as of June 30, 2015
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20) Are the investment professionals under employment contracts with the firm?
21) What are the terms of the employment contracts, including non-compete
clauses?
22) Does your firm work with outside independent contractors to execute
transition management services?
If so, please provide details of working
relationship.
23) Discuss all turnover of investment professionals dedicated to transition
management in the firm during the last three years.
24) Is your firm represented by any third party firm or individual whose purpose is
marketing and/or gathering assets for the firm? If so, list all relationships and
compensation structure.
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IV. Compliance/Conflicts of Interest
25) Please attach a copy of your firm’s Code of Ethics.
26) Do you have a dedicated compliance officer?
27) Does this person serve other roles within the firm? If so, please describe.
28) Who is the firm’s independent auditor?
29) How long has firm’s independent auditor been serving in this capacity?
30) Who is the firm’s legal counsel and or do you use an in-house legal team?
31) Please provide brief biographies for your legal counsel, indicating how long
they have been serving in this capacity.
32) Please describe your firm’s disaster recovery and business continuity plans.
33) Please address the most recent date and the numbers of times you have
practiced and tested your procedures in the past 5 years, and the results of
those exercises.
34) Please provide a copy of your firm’s disaster recovery and business
continuity procedures.
35) Please address your back-up capabilities and/or offsite location, particularly
related to your trading desk, in the event your primary office location was
inaccessible.
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36) What software, systems and/or processes ensure client-specific guidelines
and regulations are adhered to?
37) Describe the procedures that are in place to safeguard confidentiality
throughout a transition. How do you avoid information leakage to the
market?
38) Disclose any sanctions or disciplinary actions taken against the firm or any
of its affiliates by the SEC, NASD, or other regulatory body within the last
five years.
39) Disclose any legal or arbitration claims the firm or any of its affiliates has
settled or been required to pay within the last five years.
40) Can your firm act as a fiduciary as a Registered Investment Advisor under
the 1940 act? Has your firm served in this capacity in the past?
41) Describe those services/functions which would be performed when acting
in a fiduciary capacity vs. not acting as a fiduciary.
42) Does your firm, including subsidiaries or closely held firms, receive any
economic benefit other than what is explicitly quoted as a fee or
commission for transition services?
Please disclose all such means for
economic benefit including soft dollars in addition to the fee or quoted
commission charges.
43) Does your firm or an affiliate have a company or proprietary account in
which you may be the other side of a given transaction?
If so, what
safeguards can you describe that ensure you are placing the goals of the
client ahead of your firm’s capability to book revenue in this manner?
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44) Does your firm have any counterparty arrangements with hedge fund
trading accounts? If so, please explain why this will not have a negative
impact on the transition.
45) Please list all insurance carriers supplying your firm with coverage,
including the type of coverage, and coverage amount.
46) Will your firm attest that your firm’s only sources of material benefit
resulting from transitions will be from commissions or fees explicitly
accounted for with regard to the transition? Will you attest that your firm
provides no opportunity for any outside party to gain knowledge of the
trades that will be implemented?
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V. Past Experience
47) Please complete the table below, based on your firm’s use of the listed
sources of liquidity in all transitions performed during the past three year
period:
Sources of Liquidity
Percentage
In-Kind Transfer
Internal Crossing
External Crossing
Primary Exchanges/Open Market
Principal Trades/Risk Based
48) Please complete the table below, based on your firm’s transition activity in
the past three years, using round-trip values:
Number of
Transition Market Value
Transitions
Total Market Value
Less than $100 million
$100 million-$250 million
$250 million-$500 million
Over $500 million
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49) Please complete the tables below, based on your firm’s transition activity,
using round-trip values:
Total Transitions
Year
Number
Number of
Completed
Shares
Total Market Value
2010
2011
2012
2013
2014
Large & Mid Cap U.S. Equity Transitions
Year
Number
Number of
Completed
Shares
Total Market Value
2010
2011
2012
2013
2014
Small-Cap U.S. Equity Transitions
Year
Number
Number of
Completed
Shares
Total Market Value
2010
2011
2012
2013
2014
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Developed Non-U.S. Equity Transitions
Year
Number
Number of
Completed
Shares
Total Market Value
2010
2011
2012
2013
2014
Emerging Markets Non-U.S. Equity Transitions
Year
Number
Number of
Completed
Shares
Total Market Value
2010
2011
2012
2013
2014
U.S. Fixed Income Transitions
Year
Number
Number of
Completed
Shares
Total Market Value
2010
2011
2012
2013
2014
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Non-U.S. Fixed Income Transitions
Year
Number
Number of
Completed
Shares
Total Market Value
2010
2011
2012
2013
2014
FX Transitions
Year
Number
Number of
Completed
Shares
Total Market Value
2010
2011
2012
2013
2014
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VI. Process
50) Does your firm consider itself a specialist in any specific asset class? If not,
please identify one asset class your firm believes it can add the most value in
through its transition management group.
51) How do you add value to the process? Why should your firm be selected?
52) Does your firm sub-contract any portion of the transition management
services?
If so, please provide details regarding your sub-contracting
agreement/arrangement.
53) Discuss the primary goals of your transition management process.
54) Describe the relevant factors influencing your choice of transition execution
strategy for a particular client circumstance.
55) Discuss your firm’s process in determining the optimal mix between
opportunity cost and market impact.
56) Describe the quantitative tools your firm uses during a transition
management event.
57) Is your firm an agency, principal brokerage, or solely a manager? Please
describe the brokerage relationships your firm has in place. Please describe
the process used to select brokers for trades.
58) Discuss the risk management tools (both from an operational and trading
standpoint) your firm utilizes during a transition management event.
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59) Discuss your firm’s methods for maintaining market and currency exposure
to asset classes during a transition management event.
Does your firm
favor a particular method?
60) Discuss how the FX trades associated with international portfolios are
executed.
61) Discuss your firm’s capabilities handling non-U.S. equity and fixed income
transition management events.
62) Please discuss your firm’s usage of internal and external crossing, including
your firm’s definition for each. Please discuss what role your firm believes
internal and external crossing should play in a transition management event.
63) Does your firm internalize order flow? If so, please list the various conflicts
this situation creates and explain how you assure client orders are given
best execution in regard to timing and price?
64) If given this transition, your firm will be expected to provide advice on
methods to minimize both implicit costs and explicit costs, including trading
costs. If your fees are based solely on commissions, how will you handle
this conflict of interest?
65) How will you verify that you have performed and accounted for the
transition properly?
66) Explain your firm’s communication process with the client and investment
consultant during the transition.
67) Explain the communication process with the target and legacy investment
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managers during the transition.
68) Please list all Minority, Woman, or Disabled-Owned broker/dealers that your
firm utilizes for open market trading in the transition process. In the
previous calendar year, what percentage of commissions of open market
trades was executed through Minority, Woman, or Disabled-Owned
broker/dealers?
VII. Reporting
69) Discuss your firm’s calculations of relevant data when submitting a pre-trade
report.
Please make sure to discuss the estimated bid/ask spread,
opportunity cost, market impact costs.
70) Discuss your firm’s method of determining a security’s liquidity when
submitting a pre-trade report, and when determining the strategy for a
transition management event.
71) How does your firm measure its relative success or failure after the
completion of a transition management event?
72) Does your firm provide any reporting that shows the quality and cost
effectiveness of FX trades that are performed?
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VIII. Fees
73) What is your fee or rate for transition services?
74) Is the fee based on cents per share and as a percentage of market value?
What factors do you use to calculate your rate - trading volume, frequency
of trades, and trade difficulty?
75) Is the fee negotiable?
Would this include both equity (domestic and
international) and fixed income (domestic and international) transactions?
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IX. Illinois Pension Code Disclosures
Public Act 98-1022 Disclosures.
Public Act 98-0122 (the Act) amends the Illinois Pension Code to require
certain disclosures regarding utilization of minorities, females and persons
with a disability.
For purposes of this Policy, the terms “minority owned
business”, “female owned business”, and “business owned by a person with a
disability” are as defined in the Business Enterprise for Minorities, Females,
and Persons with Disabilities Act.” In accordance with the Act, all (i) vendors
submitting bidding proposals to MEABF and (ii) vendors retained by MEABF,
must provide the following numerical data:
a. The number of the vendor’s investment and senior staff and the
percentage of its investment and senior staff who are a (i) minority
person, (ii) female, or (iii) person with a disability;
Total Investment &
Senior Staff
Number
% of Total
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Minority
Female
Person with
a Disability
b.
The number of contracts, oral or written, that the vendor has in
place for investment
services, consulting services, and professional and
artistic services that constitute a (i) minority owned business, (ii) female owned
business, or (iii) business owned by a person with a disability; and
Minority
Female
Person with a
Disability
Number of Contracts
b. The number of contracts, oral or written, that the vendor has in
place for investment services, consulting services, and professional
and artistic services where more than 50% of services performed
pursuant to contract are performed by a (i) minority person, (ii)
female, or (iii) person with a disability but do not constitute a
business owned by a minority, female, or person with a disability.
Number of Contracts
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X. Attachments and Disclosure
Please check off items included as attachments. If any required items are excluded,
please indicate an alternate means for our review of requested items.
Required
Included?
ADV Part II
Sample Pre-Trade Analysis
Sample Post-Trade Analysis
Disaster Recovery and Business Continuity Plans
Code of Ethics
Include, if Applicable
Included?
State or Local Registration for M/WDBE
Chief Compliance Officer Signature
I, chief compliance officer of
, have
reviewed all of the aforementioned statements and documents. To the best of our
ability, we believe all statements and documents to be accurate, truthful and timely.
Signature
Print Name
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