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  #1761  
Old 10-20-2019, 09:52 AM
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Mary Pat Campbell
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NEW YORK CITY
GOVERNANCE
DIVERSITY

https://www.ai-cio.com/news/nyc-comp...paign=CIOAlert

Quote:
NYC Comptroller Calls on 56 Firms to Adopt Rooney Rule
Scott Stringer criticized leadership teams ‘that look like they’re out of the 1950s.’
Spoiler:
New York City Comptroller Scott Stringer is calling on 56 companies to adopt the so-called “Rooney Rule” and establish policies to consider women and minorities when hiring CEOs and board of trustee members.

The Rooney Rule, which was adopted by the National Football League in 2003, is a policy requiring every team with a head coaching vacancy to interview at least one or more diverse candidates. The rule is named after Dan Rooney, the late former owner of the Pittsburgh Steelers, who was also chairman of the league’s diversity committee.

Stringer sent a letter to 56 companies that currently do not have something akin to a Rooney Rule policy, including Walmart, AT&T, Verizon, Ford, Boeing, and Disney. He requested they adopt a diversity search policy requiring that initial lists of CEO and director candidates include qualified female and racially diverse candidates.

Stringer also said he’ll file shareholder proposals at companies with a lack of apparent racial diversity at the highest levels.

The letter to the companies was the third stage of Stringer’s Boardroom Accountability Project, which he launched in late 2014. The first stage involved calling on 75 companies to enact a proxy access bylaw permitting share owners that have collectively held 3% of the company for at least three years to nominate up to 25% of the board. The list included companies that failed to align executive compensation with business performance, companies with little or no apparent gender or racial diversity on their board, and carbon-intensive energy companies.

And the second stage pushed for greater corporate board diversity and transparency reforms, calling on companies to adopt a form of disclosure called the “Board Matrix,” table that describes the skills, gender, and race and ethnicity of individual directors on the board.

Stringer announced the latest stage of the project at the annual Bureau of Asset Management (BAM) Emerging and MWBE Manager conference in New York.

“Increasing diversity at the biggest corporations has been our focus from day one,” said Stringer. “Through our Boardroom Accountability Project, we’ve helped increase diverse board leadership at dozens of the country’s largest companies … now it’s time for the third phase of our campaign to bring real, structural change to the boardroom table and the C-suite.”

Citing a report from Harvard Law School, Stringer said that as of 2018, 66% of board members at Fortune 500 companies were white men, 17.9% were white women, 11.5% were men of color, and 4.6% were women of color. And as for executive leadership, Stringer noted that only 6.6% of Fortune 500 CEOs are women as of May 2019, with similarly low numbers of people of color leading those companies.

Stringer also cited a 2016 study published by the Harvard Business Review that found that the odds of hiring a woman were 79 times greater when there were at least two women in the finalist pool, and the odds of hiring a minority were 193 times greater when there were at least two minority candidates in the finalist pool.

“It’s exactly the boost this industry needs if we’re going to keep growing,” said Stringer. “We want our funds to invest in companies firmly planted in the 21st century, companies that represent the future. We can’t do that if companies have leadership teams that look like they’re out of the 1950s.”
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  #1762  
Old 10-20-2019, 10:07 AM
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https://blog.independent.org/2019/10...in-your-state/

Quote:
How Well-Funded Are Government Employee Pension Plans in Your State?

Spoiler:
These are just three places in the United States that we’ve talked about in The Beacon because their recent history has been defined by the fiscal problems each faces. Fiscal problems that arise only because they don’t have the money to fund the generous retirement benefits their politicians have promised to their government employees.

It’s scary to think that there might be more than three, but there are. Is your state one of them? Or might your state avoid the risk of diverting your tax dollars to its retired bureaucrats?


The Tax Foundation has created a map to illustrate how well-funded each states’ public employee pensions plans are. The more ‘in-the-pink’ your state is, the more likely that your tax dollars won’t be diverted to cover the cost of funding the retirements of bureaucrats. The more orange your state, the less likely you’ll be getting anywhere close to the full value of what you pay in state income, sales, property and other taxes for public services in your community, like police and fire departments or schools. Click the map below for a bigger picture.

How Well Funded Are Government Employee Pension Plans Funded In Your State?

Janelle Cammenga discusses the data behind the map:

Recently released data from The Pew Charitable Trusts shows the strain on state retirement systems nationwide as state pension funds strive to keep pace with benefits owed to public employees.

Fiscal year 2017 (the most recent data available) saw a combined $1.28 trillion in state pension plan funding deficits. While massive, this was actually a decrease from Fiscal Year 2016’s $1.35 trillion gap. Pew attributes this improvement to strong returns on investment from higher-risk plans that helped some states to narrow their funding gaps since last year. To be fair, the improvements have been modest. The message is still clear: many states face a pension crisis.

She also explains why state government pension underfunding is becoming a major problem:

Lower funded ratios indicate when a state’s pension plan is not adequately funded, while higher funded ratios are evident in states where pension assets are keeping relatively good pace with accrued liabilities. Low funding levels are challenging not only because of the large contributions required to make up the debt, but also because they generate less in investment earnings.

A number of the state and local governments with the lowest-funded pensions for their public employees have encouraged their public employee pension plan managers to try to make up the gap by pursuing riskier investments, with the knowing acquiescence of state government officials. But rather than providing a reliable path for generating the higher returns needed to make these pension plans solvent, these investments are really big bets that have a high risk of going belly up and failing.

Bets like those made by several public pension funds in companies like WeWork and Uber that are far from profitable, where WeWork by itself has gone from a valuation of $47 billion to a high likelihood of bankruptcy (corresponding a valuation of nearly $0) in the last six weeks.

These failures come with an increased risk to taxpayers of having to bail out the generous retirements of bureaucrats with higher taxes. City Journal‘s Steven Malanga describes the findings of recent studies into the problem of public employee pensions.

Since 2001, the portion of state pension-fund portfolios invested in stocks and alternate financial vehicles rose by 10 points, to 77 percent. Portfolio managers chased these investments even as the pension systems matured, with a growing percentage of members nearing retirement. This approach departed from that of just about every other type of pension fund. As a 2014 study by the Society of Actuaries noted, “Public sector plans in the U.S. are unique in that they have taken additional risk as the plans have become more mature, compared to private sector plans in the U.S. and private and public sector plans in Canada, UK and the Netherlands, which have taken less risk as plans have matured.”

Politicians and bureaucrats have very different incentives than regular Americans. Making public employee pension plans more like those in the private sector would go a very long way to reducing the risks that government employee pension plans pose to the public.

Craig Eyermann is a Research Fellow at the Independent Institute and the creator of the Government Cost Calculator at MyGovCost.org.
Posts by Craig Eyermann | Full Biography and Publications

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  #1763  
Old 10-21-2019, 09:51 AM
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ILLINOIS

https://chicago.suntimes.com/columni...vestment-gains

Quote:
Property taxes, investment gains make pension move a must
Gov. Pritzker’s task force lays out case for combining suburban and downstate police and fire funds.
Spoiler:
Give Gov. J.B. Pritzker a little credit — not the financial kind, which he doesn’t need and therefore can get in abundance — but the supportive, way-to-go kind. He’s put some attention on the leaden issue of public pension consolidation and done the right things to give it a push in the Illinois General Assembly.

Pritzker highlighted this issue in the campaign and upon becoming governor. He appointed a task force of financial experts and labor representatives to examine pension consolidation. They produced a clear report with achievable recommendations. Pritzker endorsed the findings at a news conference, promising to bring legislation forward for the upcoming veto session.

But his salesmanship is slightly off. He should call it property tax relief, not pension consolidation. It would get more attention. And the governor needs to emphasize that he wants to give police and fire employees and retirees across the state the right to better returns on their money.

The issue here is the future of 649 police and fire pension funds that serve towns and cities outside Chicago in the suburbs and downstate, from Zion to Cairo. Many are small, with less than $10 million in assets, and underfunded, with some paying out more in benefits than they collect in contributions or investment returns. In Illinois, with a well-documented plague of local taxing agencies, it’s not surprising that our government pension funds far outnumber those of any other state except Pennsylvania. New York has nine, for example, and Ohio has one fund for all police and fire personnel.

Analysis
Consolidation would save on administrative costs, but those are peanuts. The big idea Pritzker needs to broadcast is better investment returns from consolidation. Because of their small size, the Illinois funds can place little money in stocks. They must by law rely on U.S. Treasury debt, municipal bonds and bank CDs. Those are fine for safety and diversity, but for better returns, the funds need to visit the global stock markets. If they are combined into a larger fund, those limits are eased.


The Pritzker task force found the difference in fund performance is substantial. It said the suburban and downstate police and fire funds had a five-year annual average return of 5.06% through 2016. That’s about 2 percentage points less than the state’s larger pension funds, such as those covering Chicago. The Illinois Municipal Retirement Fund, considered to be the best-run state system, earned an annual average of 8.28% over the same five years.

“The key word here is scale. If you don’t have scale, you don’t have the buying power to get the best advice at the cheapest rate,’’ said a source involved with the report.

The task force said if the suburban and downstate funds performed as well as the larger Illinois plans, they would earn an additional $820 million to $2.5 billion in investment gains over five years and up to $12.7 billion over 20 years, when the law says they are supposed to reach a 90% funding level.

That’s money that doesn’t have to be drawn from property taxes to bolster the funds. Consolidating pension funds so they can earn higher returns may be the most consequential property tax relief measure legislators have seen in a while.

Opponents, and there are many with something to lose here, argue participants in the police and fire funds want local control and don’t want to trust somebody in Springfield or at an 800 number to get service.

James McNamee, a former Barrington police officer who is president of the Illinois Public Pension Fund Association, said a better answer would be to keep the funds separate but allow them to make more investments in equities. Even the larger funds, which can hold up to 65% of assets in equities, perhaps should go to 75%, he said. McNamee also cites the risk of liquidating assets to combine funds then have to buy them back again.

More broadly, he’s concerned about a hasty legislative vote involving $15 billion that could be handed over to a large fund where his members have little input. “It’s a big rub with us. We performed as well as the law would let us,” he said. His problem is that haste sounds better when doing nothing costs about $1 million a day in lost returns, according to the governor’s task force.

Buffeted by everything from high-speed trading to presidential tweets, stock markets are volatile. But they are retirees’ best hope.

Investment research firm Morningstar said over the long term, stocks earn on average a nearly 10% annual return, and bonds are about half that. Compounded, the difference is enormous, big enough to distract the General Assembly from workaday matters like who’s passing nominating petitions and when the next indictment will drop.


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  #1764  
Old 10-21-2019, 10:15 AM
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KENTUCKY

https://www.tristatehomepage.com/new...n-the-country/
Quote:
Kentucky #1 on list of worst managed pension funds in the country
Spoiler:
NEW YORK (WEHT) – According to a report by 247wallst.com, Kentucky has the worst managed pension fund in the country putting benefits at risk for many future retirees.

To rank the severity of each state’s pension crisis, 24/7 Wall St. reviewed the average pension funding ratio — the market value of a pension fund as a percentage of the total benefits owed to current or retired public employees — for all 50 states as of 2017 with data from The Pew Charitable Trusts.

Here is how the Tri-State ranks:

1. Kentucky
Funded ratio: 33.9%
Total pension shortfall: $42.9 billion (7th largest)
Gov’t workers as share of total workforce: 16.2% (25th lowest)
Avg. annual payout per public retiree: $27,143 (13th highest)
Governor: Matt Bevin

3. Illinois
Funded ratio: 38.4%
Total pension shortfall: $136.9 billion (3rd largest)
Gov’t workers as share of total workforce: 13.5% (7th lowest)
Avg. annual payout per public retiree: $36,490 (2nd highest)
Governor: J. B. Pritzker

18. Indiana
Funded ratio: 65.0%
Total pension shortfall: $17.3 billion (20th largest)
Gov’t workers as share of total workforce: 13.7% (8th lowest)
Avg. annual payout per public retiree: $16,974 (2nd lowest)
Governor: Eric Holcomb

Millions of aging teachers, firefighters, sanitation workers, and other state and local government employees depend on the income owed to them through defined benefit pension plans.

Such plans require employees to contribute a portion of their salaries to a pool of funds that are invested on their behalf and is paid out to them in retirement.

10 State’s with the Worst Pension Funds

Kentucky
New Jersey
Illinois
Connecticut
Colorado
Rhode Island
South Carolina
Hawaii
Pennsylvania
Massachusetts
Click here to see the full list of pension crises in every state, ranked and click here for the full article.

Poor management of the pension funds at the state and local levels, however, has put those benefits at risk for many future retirees.

According to nongovernmental organization The Pew Charitable Trusts, state pension systems currently have, on average, less than 70% of the assets they need to be able to pay out benefits owed to current or retired public employees. In some states, the gap is significantly smaller, while in others the pension funding gap is far worse.
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  #1765  
Old 10-21-2019, 10:18 AM
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ILLINOIS

https://fixedincome.fidelity.com/ftg..._110.1#new_tab
Quote:
From 650 into two: Illinois governor's pension plan consolidation bid

Spoiler:
Illinois Gov. J.B. Pritzker wants to pool into two statewide funds the assets of the nearly 650 public safety pension funds that cover firefighters and police officers outside Chicago.

The proposal follows the recommendation of a report released Thursday by Pritzker and members of a task force on pension consolidation that he named in February.


“One of the most critical long-term fiscal challenges is the need to address unfunded pension liabilities for local governments and the surging property tax burdens they create,” Pritzker said at a news conference, adding that the consolidation marks a first but “significant” step and “momentous achievement” if adopted.

He wants lawmakers to act during the fall veto session, which begins late this month.

Pritzker said the plan could generate $850 million to $2.5 billion in additional investment returns over the first five years and $3.6 billion to $12.7 billion through the 20-year ramp to a 90% funded mandate in 2040, because the available assets would be pooled allowing for better investment opportunities a lower percentage lost to fees, Pritzker said.

About $1 million in potential earnings is currently lost daily and funds fall about 2% short annually of what larger state funds earn, the 22-page report contends.

"The current system is failing and taxpayers are paying a high price,” Pritzker said. “By pooling their investment dollars, the individual plans will improve their funding levels and reduce their net liabilities ... this consolidation will improve the financial health of the plans and secure the future of the retired workers that rely on them and it will alleviate some of the property tax burden."

The roughly 650 systems that are referred to as “downstate and suburban public safety pension funds” carried $11 billion of unfunded liabilities in 2017 — up from $10 billion a year earlier — with an average funded ratio of just 55%, according to a report this year from the Illinois Department of Insurance.

The new police fund would have more than $8 billion assets to invest and the firefighter fund more than $6 billion.

Local governments have been slapped with downgrades as they grapple with rising pension contributions and since last year have faced the threat of state funding garnishments under a law that allows funds to intercept the revenue to cover actuarial contribution shortfalls.

Pritzker had warned that the task force’s initial work would be focused on downstate and public safety funds despite new Chicago Mayor Lori Lightfoot’s pleas that Chicago be included the mix.

“The subject of Chicago pensions as well as the statewide pension” funds “will be taken up by the task force going forward,” Pritzker said. He had previously rejected Lightfoot’s pitch that the state take over the city and other local government pensions.

The report specifically notes that the other 15 pension systems in Illinois outside of suburban and downstate police and fire, which cover state employees and Chicago, Cook County, and its sister agencies, are larger funds that already enjoy economies of scale. "Consolidation would not achieve material improvement of their investment returns," the report said.

“Because the current financial pressures on these systems are so significant, especially for the City of Chicago, it is recommended that the task force to continue to review the potential advantages of consolidation of these larger systems and to make recommendations to the governor on this issue,” the report said.

Market participants who follow the credits of local Illinois governments and the state have suggested a consolidation is a good idea, but it’s benefits are limited given the poor funded ratios of many funds and growing strains on local governments to adhere to a contribution schedule that is supposed to get funds to a 90% funded ratio by 2040. Illinois can't cut benefits under its constitution.

Support and Opposition
The Illinois Municipal League, which represents many local governments, endorsed the proposal.

"This is a win-win-win situation” and a “significant first step forward,” although much work remains to be done to ease pressures on local governments, IML president Brad Cole said at the governor’s news conference.

The Associated Fire Fighters of Illinois, which represents firefighters, supports the deal. It faces opposition from the Illinois Fraternal Order of Police and possibly local funds with better funded ratios.

“Law enforcement officers were not allowed to participate, provide feedback or be shown that this was anything other than an attempt to grab officers' money,” FOP Labor Council Executive Director Shawn Roselieb said in a statement. The group believes the proposed governance board should include more fund members.

The Illinois Pension Fund Association, which counts a majority of both firefighter and police pension funds as members, previously warned against a rush to consolidation and said many of its member funds oppose it. It did not issue a statement Thursday.

Some lawmakers said clearing the General Assembly is tougher without all factions on board and without Chicago in the mix it could prove a tougher sell for Chicago lawmakers.

Pritzker acknowledged those headwinds and sought to cast opponents like the pension fund association, which might seek to “derail” the legislation as representative of “special interests” who use taxpayer dollars to fund pension “junkets.” That’s a reference to the association’s annual meeting in the Wisconsin resort town of Lake Geneva.

Details
Each fund would be governed by a board with equal representation of employees and employers. Each local pension plan would maintain an individual and separate account within the new consolidated funds, such that no assets or liabilities are shifted from one plan to another.

Each of the two consolidated funds would be held in independent trusts, separate from the State Treasury, with sole governance provided by their respective boards.

The task force stops short of suggesting consolidation in the administration of benefits but recommends the issue be studied for its potential savings.

The smallest and the largest suburban and downstate plan assets held $2,000 and $250 million, respectively, with only 3% of the plans having assets exceeding $100 million. “Due to liquidity concerns around smaller plans bearing larger risk, plans with smaller size generally achieve substantially lower investment returns,” the report said.

The task force considered various consolidation scenarios, including merging funds under the Illinois State Board of Investment, which manages several state funds, but scrapped that option because of concerns about conflicts between the mix of state and local employees.

It looked at a consolidation with the Illinois Municipal Retirement Fund, which covers general employees outside Cook County and enjoys a 90% funded ratio, but its investment strategies complicated such a move and the task force was concerned over pushback in the governance structure required to add police and fire representatives.


The timeline calls for an effective date of the legislation of July 1, 2020, with the new funds being fully operational by July 1, 2023.

As part of the overhaul, the state would also address a long-warned-about shortfall in the Tier 2 pension benefit system adopted for employees hired after 2010. Those concerns stem from the potential failure of the benefits to meet the safe harbor standard of the Social Security Administration and Internal Revenue Code that require benefits to be at least what retirees would receive from Social Security.

On average and over a five-year period, the recommended benefit fixes to Tier 2 benefits are estimated to offset between $70 million and $95 million of the $820 million to $2.5 billion in investment return gains, according to the report.

Former Chicago Board Options Exchange chairman William Brodsky, Associated Fire Fighters of Illinois President Pat Devaney and former Illinois Senate Minority Leader Christine Radogno co-chaired the 10-member committee.

A separate task force on the use of asset transfers or sales to shore up the state’s five fund system is still exploring options.


https://wirepoints.org/consolidation...risks/#respond
Quote:
Consolidation of Illinois police and fire pensions: a good idea with limited impact and many risks
Spoiler:
A Gov. J.B. Pritzker task force has recommended that the state’s 650 local public safety pension funds consolidate their assets into two funds solely for investment purposes. It’s a good idea that should help improve the health of the funds. The larger, consolidated funds are expected to earn higher returns on their investments and spend less on fees. Consolidation should have happened years ago. The task force’s full report is linked here.

But if lawmakers pass the proposal, will it be “a momentous achievement in state history,” as Gov. J.B. Pritzker said upon the release of the report?

Hardly.

The public safety pension funds make up just 4.5 percent of Illinois’ combined $270 billion in official pension and retiree health insurance shortfalls. The proposal doesn’t reform how Illinois hands out retirement benefits. And it doesn’t change the fact that cities are hamstrung by state control of the pension rules. So while the savings could be meaningful for the public safety funds, it won’t end Illinois’ pension crisis or its worsening trajectory.

The task force proposal calls for the assets of the 650 downstate funds to be consolidated for investment purposes only. Specifically, two new pension boards, one for local police pensions and one for firefighter pensions, will take control of how pension assets are invested. But local pension fund boards would still exist and still manage their own liabilities independently. They’d also still control back-office functions, actuarial assumptions and “maintain all other authority such as pension awards and disability determinations,” according to the Illinois Municipal League. Chicago’s police and firefighter pensions are not part of the proposal.

How much more will consolidating the roughly $15 billion in assets help the funds earn? Pritzker and his task force claim consolidation can help earn up to 3 percentage points more in yearly returns compared to what the funds have been earning recently (see note below for details). That’s $500 million more in income each year. The windfall is significant – the equivalent to half of the nearly $1 billion local taxpayers pay to the public safety funds today.

Those returns are supposed to be possible because small local pensions are currently forced by law and their circumstances to invest heavily in low-yield, fixed income instruments. Consolidation would allow for longer-term investing in stocks and other securities with better returns. Fees and other administrative expenses will also drop.

However, the report’s investment estimates are overly optimistic. A look at the 10-year returns of various Illinois funds in the report show the gains might be $160 million to $300 million a year. That’s still very significant – 15 to 30 percent of what taxpayers put in today – but not nearly as high. That amount would make some difference on the $11 billion pension shortfall over time if those investment gains could truly be realized – and, everything else remained equal.



But not everything else is equal. Previous history shows that without changes to pension and collective bargaining laws, those investment windfalls could be swallowed up quickly by the unions. Higher returns would relieve some of the budgetary pressure on cities, meaning more cash in their coffers. And that could spark demands for higher pay and more benefits from the local unions.

And there are other concerns, too.

First, the 650 separate police and firefighter pension funds – and their thousands of trustees – would continue to exist. Illinois would continue to have the second-most pension plans in the nation. That would only perpetuate the administrative bloat, waste and corruption that many of these plans have been known for.

Second, the energy spent on consolidation would deflate pressure for real pension reform at all levels. You could expect lawmakers to sell this to the public as a real fix – as if they really tackled the overall pension problem. And the public safety unions for sure will be loathe to accept any other reforms after this is done.

Third, consolidation comes with the risk of lawmakers going further by eventually authorizing a state takeover of downstate pensions – full, substantive consolidation – which would be highly objectionable for many reasons. The socializing all downstate pension debts at the state level would amount to a bailout of hundreds of municipalities. We’ll be writing about that risk separately.

The proposal to consolidate pension fund assets is sound and should be pursued. But don’t think for a second that it solves much of anything. And watch out for the risk of it morphing into a state takeover of local liabilities. That’s when this good idea turns bad.

Note: The task force reached that $500 million amount by comparing the public safety fund returns to the Illinois Municipal Retirement Fund (IMRF) returns over the recent 5-year period. However, it’s not a proper comparison. The IMRF is 91 percent funded. In contrast, the public safety systems are only 55 percent funded in total. That includes 99 individual funds that are each less than 40 percent funded. That means the new consolidated funds won’t be able to take on as much risk as IMRF can, as they’ll need to keep more liquidity for payouts to current retirees.
https://news.wttw.com/2019/10/10/can...ernor-says-yes
Quote:
Can Illinois Save $1M a Day by Consolidating Pension Funds? Governor Says Yes

Spoiler:
Consolidating scores of local firefighter and police pension funds could save Illinois taxpayers between $820 million and $2.5 billion in the next five years, according to a report published Thursday by a state task force that’s been studying the issue since January.

“The fact that there are 649 downstate and suburban pension police and fire funds cries out for reform. Decades of underperformance, high administrative expense and duplication demand change. The status quo is both unacceptable and unsustainable,” said William Brodsky, co-chair of the Pension Feasibility Task Force and former chairman of the Chicago Board Options Exchange.

The group’s recommendation: Mandate merging the 649 various funds’ assets into two – one plan for police, another for firefighters.

“The single most impactful step that the State can take to address the underfunding of downstate and suburban police and fire pension funds is to consolidate the plans’ investment assets,” the report reads. “This step is immediately actionable and beneficial to the health of the plans, retirees, and taxpayers.”

Document: Read the report.
Document: Read the report.
According to the analysis, 24 of the pension funds have “only one active participant.” The smallest held assets of only $2,000. And only 30% of the plans have assets of more than $100 million.

The idea is to merge the assets to achieve the investment version of greater economies of scale. Pooling the assets would allow for reduced fees, more investment opportunities and higher returns.

Higher returns would “ultimately mean a reduction in the required annual employer contribution, and therefore and easing of the burden on taxpayers,” the report reads.

The report also recommends another immediate change, estimated to cost taxpayers $70-$95 million within the same five-year window: Increasing the pension benefits for so-called “Tier 2” workers – first responders hired since 2011 receive a lesser retirement benefit than the “Tier 1” workers hired prior to that. Lawmakers created the smaller pension package as a way to save on costs, but critics have said they went so far in cutting benefits that it could run afoul of a federal “safe harbor” law, which requires certain municipal employees’ retirement packages be at least equal to what they would get under Social Security.

Making the change “avoids a potential and costly safe harbor violation” down the road, the report says.

Lawmakers will have the next few weeks to get feedback on the recommendations.

Gov. J.B. Pritzker, a Democrat, wants the legislature to take up and pass that recommendation during the upcoming fall veto session, which begins Oct. 28.

“We really believe that collectively we’ll be able to get this through,” said Pritzker, who noted pooling the assets would be a “momentous change.”

Already, the plan has buy-in from the powerful firefighters union – Associated Fire Fighters of Illinois President Pat Devaney was another task-force co-chair.

But the Illinois Fraternal Order of Police has characterized it as a money grab and questioned whether the state, with its worst-in-the-nation credit rating and record pension debt, can “responsibly manage (police officers’) money.”

The FOP is upset that the consolidated police pension fund would be governed by a board “where only 50 percent of the trustees are law enforcement officers.

“This committee thinks downstate police officers are the only public employees who are just not smart or sophisticated enough to manage their own money,” FOP Labor Council Executive Director Shawn Roselieb said in an emailed statement from the union.

In a nod to other political difficulties that may lay ahead, the report does not recommend total consolidation – the benefit decisions will still be locally managed by the 649 various pension fund boards.

It also recognizes “challenges” such as initial upfront costs of transitioning assets and that “plan sponsors may feel their influence is being diluted.”

Thus far, Pritkzer has gotten his way on every major item on his legislative wish list. Getting this passed would allow him to take a victory lap upon finishing his first year in office and demonstrate to voters that he’s tried to reign in expenses before he begins in earnest to push them to amend the state constitution to allow for a graduated income tax structure.

Pritzker’s habit of pouring his personal wealth into legislative campaigns keeps him popular with Democrats who may be otherwise be reticent to go along with such a change, and Republicans are apt to be on board as well (former Senate GOP Leader Christine Radogno is another co-chair, and on Thursday publicly encouraged her former colleagues to buy in).

Still, pensions are also thought of as sacred cows, and critics of the plan have been quick to question its feasibility on both a practical and political basis.

Chicago’s police and fire funds would not be part of the consolidation (according to the report, Chicago and Cook County’s nine pension plans’ assets “make up 19% of Illinois’ total pension assets,” an indication that they don’t need to merge in order to capture higher investment opportunities).

Mayor Lori Lightfoot still is looking to the state for additional relief as the city faces escalating pension payments, but it’s unclear what form – if any – that may take.

“The city of Chicago pension funds have experienced their own unique financial challenges in recent years that warrant specific considerations with respect to the future work of the Task Force,” the report reads. “As such, the Task Force and the Governor’s Office will continue to work with the City of Chicago on this issue as part of the next phase of this work.”

Pritzker repeatedly said Thursday that he and the task force are taking a “phased” approach to addressing pension issues.


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Old 10-21-2019, 10:21 AM
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PENSION OBLIGATION BOND

https://www.sgvtribune.com/2019/10/1...hink-is-risky/
Quote:
Pension crisis: Montebello considering debt some think is risky
Spoiler:
Seeking to address the dilemma of rising pension costs, Montebello City Council members plan to issue a $155 million bond to pay off its unfunded portion of the city’s pension liabilities.

It’s a bond that some think is risky, although no one, including council members, spoke up at Wednesday’s meeting. That’s when City Manager Rene Bobadilla was authorized on a 5-0 vote to begin the process. If all goes as planned, the city would issue the bond in February, and it would take taxpayers 20 years to pay off.

Montebello has had its share of financial problems throughout the last few years; this year’s budget projects a $1.4 million defict. A 2018 state audit warned the city is on unsure financial footing.

In a Thursday phone interview, Bobadilla said the bond could stabilize the city’s future retirement costs, which are projected to rise from $11.2 million annually to $15.3 million a year by 2030.


The situation is not unlike a consumer with high credit card debts, he said. “You’re making payments but not paying off debt, so your debt keeps increasing,” Bobadilla said.

The 20-year bond will be used to pay off its pension liabilities to California Public Employee Retirement System, he said.

It will be cheaper to pay off the bond because of lower interest rates in today’s market, he said. He predicted the city will get a rate in the high 2%-range to a low 3%. The bond will be paid off with the city’s property tax override that currently goes toward paying retirement costs. The tax produces nearly $13.5 million annually.

However, pension obligation bonds have come under criticism as being risky. San Bernardino and Stockton, both which declared bankruptcy, issued such bonds in the past.

The Chicago-based Government Finance Officers Association recommends against the issuance of such bonds for a number of reasons.


“In recent years, local jurisdictions across the country have faced increased financial stress as a result of their reliance on pension obligation bonds, demonstrating the significant risks associated with these instruments for both small and large governments,” the association’s written report said.

Other reasons include:

The invested bond proceeds might fail to earn more than the interest rate owed over the term of the bonds, leading to increased overall liabilities for the government.
They increase the jurisdiction’s bonded debt burden and potentially uses up debt capacity that could be used for other purposes and typically are not easily paid off early.
Rating agencies may not view the proposed issuance of the bond as “credit positive,” particularly if the issuance is not part of a more comprehensive plan to address pension funding shortfalls.
The next step for the city is to file a lawsuit to get a judge to declare the bond legal.

Bobadilla said the city and its experts then must decide how much money to seek in a bond.


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Old 10-21-2019, 10:38 AM
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NORWAY
DIVESTMENT

https://www.ai-cio.com/news/norways-...sts-oil-sands/
Quote:
Norway’s Largest Pension Fund Divests from Oil Sands
KLP excludes firms such as ExxonMobil’s Imperial Oil from $81 billion portfolio.
Spoiler:
Oslo’s Kommunal Landspensjonskasse (KLP), Norway’s biggest pension fund, is now excluding investments in oil sands companies from its $81 billion portfolio.

“We continue to reduce our exposure to companies involved in an activity that is not aligned with a two-Degree Celsius temperature target,” KLP CEO Sverre Thornes said in a statement. “By excluding these companies, KLP continues to align its investments so that they contribute to a movement towards a low-emission society.”

KLP said its funds will now exclude companies that derive more than 5% of their revenue from oil sands-based activities. The move builds on the fund’s August announcement that it is excluding investment in companies that earn more than 5% of their revenue from coal-based activities.

“Together, these industries represent highly risky and environmentally damaging operations,” said Thornes, “which can now be replaced by clean energy alternatives through renewable power like solar and wind, battery storage, and the growth of electric vehicles.”

Thornes said the divestment was also a “signal to the markets” that oil sands should not be part of the current and future energy supply, and was intended to inspire other institutional investors to follow their example.

“By going coal and oil sands free, we are sending a strong message on the urgency of shifting from fossil to renewable energy,” he added.

As a result of the oil sands divestment, KLP will exclude Imperial Oil, which is 69.6% owned by ExxonMobil; Cenovus Energy, Suncor Energy, Husky Energy, and Tatneft PAO. The equity holdings divested were valued at more than 305 million Norwegian kroner ($33.4 million), plus 229 million Norwegian kroner in bonds.

As with KLP’s coal threshold, the fund has gone from removing companies with 30% of their business coming from oil sands to 5%.

KLP has been stepping up its responsible investment activities this year. Last month it began pressuring agribusiness companies and their investors to end activities in Brazil that are contributing to the destruction of the Amazon rainforest.

“We are deeply concerned by what is taking place in the Brazilian rainforests,” Jeanett Bergan, KLP’s head of responsible investments, said in a statement. “Therefore, we have engaged companies which undertake significant trade in agricultural products from Brazil because we want rapid dialogues and concrete actions given this extremely serious situation.”

And in May, KLP announced that it would be divesting from alcohol and gambling investments. It decided to exclude 49 companies from its investment portfolios because they earn more than 5% of their revenues from the provision of gambling services. Likewise, it decided to exclude 39 companies because they earn more than 5% of their revenues from the production of alcohol.


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Old 10-21-2019, 10:45 AM
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https://www.thinkadvisor.com/2019/10...&utm_term=tadv

Quote:
Fisher Loses $600M Account After Conference Remarks: Report
The fallout impacts pension funds in Michigan; another state says Fisher's remarks at Tiburon summit "are concerning."
Spoiler:
The fallout from investment advisor Ken Fisher’s crude remarks at an industry event now includes the loss of $600 million of assets, according to a report.

The state of Michigan’s pension fund ended its relationship with Fisher Investments due to the “completely unacceptable comments” of the investment firm’s CEO, the Washington Post reported late Friday.
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In a letter to the state’s investment board (and cited by the Post), Michigan Chief Investment Officer Jon Braeutigam said: “All were in unanimous agreement that prompt termination is the correct course of action. There is no excuse to not treat everyone with dignity and respect. We have high expectations of our managers (and staff), not just with regards to returns but also in how they exhibit integrity and respect to all individuals.”

(Related: Ken Fisher’s Off-Color Comments at Conference Spark Debate)

Fisher Investments had managed the state’s funds for 15 years, according to the letter, which was sent Thursday.

Also in the letter, Braeutigam said that while Fisher Investments’ “performance has been good (beating the S&P 1500). … , this history does not out-weigh the inappropriateness of the comments made by the founder.”

Fisher Investments recently managed roughly $114 billion in client assets, so the $600 million in departing assets from Michigan represent a 0.5% decline in assets.

The State of Michigan Retirement Systems includes about $70 billion in total assets; the funds leaving Fisher Investments account for 0.9% of this figure. Its in-house investment team will take over management of these retirement funds, the Post said.

Fisher Investments manages retirement funds for a number of companies and states, including $386 million of Iowa’s $34 billion in pensions, according to a Bloomberg report.

“Fisher’s remarks are obviously concerning,” Shawna Lode, a spokeswoman for the Iowa Public Employees’ Retirement System, said in an email to Bloomberg. “Although our investment management contracts do not include a conduct policy, we hold our partners to the highest standards and reserve the right to amend or sever any contract at our discretion.”

The Public Employees’ Retirement System of Mississippi has Fisher Investments managing about $500 million, or 2% of its assets, according to CNBC, which also broadcast a recording of certain remarks made by Fisher on Friday.

PERS’ executive director, Ray Higgins, told the network that although it has not decided to end its relationship with Fisher, “… We will certainly consider this matter as well as the response statement that issued by Fisher Investments, as we continue to monitor they provide and ultimately their performance.”

Maxwell Rule, the CFO of Hames grocery chain in Alaska, which has retirement plans managed by Fisher, said that this week’s news “certainly taints [the investment firm's] reputation,” according to Bloomberg.

Rule added: “I wouldn’t comment at this point whether this would lead us to take our business elsewhere, but I will certainly have a conversation with the ownership regarding that. As a fiduciary I have an obligation to have that conversation.”

Event in Focus

Fisher made his lewd comments at the Tiburon CEO Summit on Tuesday. The following day attendee and advisor Alex Chalekian posted a video on Twitter criticizing the remarks; it has nearly 139,000 views. Other advisors later said Fisher made similar remarks at a June 2018 event organized by the firm IMN.

On Wednesday, Fisher seemed perplexed by the negative attention his comments were receiving, before issuing a formal apology on Thursday. He has been barred from future events organized by Tiburon Strategic Advisors, as well as from any events organized by IMN.

Early Friday, Cambridge Investment Research President and CEO Amy Webber said she believes there should be a code of conduct at industry events. Others members of the industry explained that the industry should use this situation as an opportunity for change that can bring more women, younger individuals and others to its ranks.

Webber explained that, although she was not at the Tiburon CEO Summit, she believes that “not only should there be a professional code or conduct and a culture of inclusion at all industry events, those policies have to be enforced and honored,” according to a statement.

The executive adds that such policies should include “organizers, moderators and attendees.” Furthermore, “We must get to a point where this industry, male dominated or not, carries a culture of respect,” Webber said.

Reacting to a blog posted by Chalekian Friday on Twitter, TD Ameritrade Institutional Director of Innovation Dani Fava said: “Our society is at an inflection point and elevating awareness about what’s acceptable and what’s not is important. KEEP. DOING. THAT.”

Fisher Investments CEO Damian Ornani told employees on Friday that the firm intends to form a diversity and inclusion task force, Bloomberg reported. Separately, Ornani told them in a letter: “Let me be clear: Ken’s comments were wrong. He has admitted that and apologized for them.”
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Old 10-21-2019, 11:04 AM
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CONNECTICUT

https://www.greenwichtime.com/opinio...r-14498589.php
Quote:
Opinion: Pension hole getting deeper
Spoiler:
The most pressing public policy issue in Connecticut is undoubtedly its unfunded liability for government employee pensions and insurance. By one count, the total unfunded obligation for taxpayers amounts to more than $100 billion, or more than $32,000 for every man, woman, and child in the state. That may seem abstract, but regular families and workers will need to pay off that massive bill in coming years through much higher taxes and emaciated public services.

Yet this emergency is met with continued silence by Connecticut’s political class. Seldom is spoken a word about it by the politicians in power as prospects for the state wither under the predictable, oncoming financial crisis. Gov. Ned Lamont has only inconspicuously tweeted about the pension crisis a couple of times in more than 3,200 statements from his two accounts. Perhaps rich liberals like him do not think $32,000 from every person in the state is a burdensome bill to pay. But for most Nutmeggers struggling increasingly to make ends meet under the stagnant Connecticut economy and tax increases that Democrats wrought, it’s a millstone around their already tired necks. The problem should be at the tip of every politician’s tongue until it is solved.

An unflattering rationale for Democrats’ silence is that it’s so big and daunting a problem that they would rather ignore it and hope voters do not notice for now. After all, they have consistently fought for lavish privileges and benefits for union bosses and senior government employees, financed by higher taxes on the middle class. Now that their chickens are coming home to roost, as the state’s economy and population decline under the weight of that bill, they hope no one makes the connection.

Another explanation is that current officials believe the problem, while big, is someone else’s and that it has at least stopped getting worse. Unfortunately, new information released by the state government’s Office of Fiscal Analysis says otherwise.


As Marc Fitch pointed out in an article for the Yankee Institute, the unfunded liability for the Teachers Retirement System (TRS) continues to climb even as the government continues to make annual payments “in full” to the fund. After 11 consecutive years of meeting the requirement, the funding ratio for the TRS fell from 70 percent in 2008 to 59 percent in 2014 to just 52 percent in 2018. The last four years of that period is perhaps the most disturbing, without a stock market shock to explain part of the trend.

But it gets worse. Another report this year found the funding ratio of the State Employees Retirement System (SERS), whose unfunded liability is even larger, fell from 42 to 37 percent between 2012 and 2016 despite annual contributions between 99 and 100 percent of the requirement. The future burden on the taxpayer continues to grow even as the government says it is making the required contributions into the state’s two biggest pension funds. What gives?

The likely answer was illustrated in a 2015 Boston College study of Connecticut’s pension system commissioned by the state government. It found that only a small fraction of the growth in the state’s unfunded liability from 1989 to 2014 was due to underpayment of the annual required contribution, which some Democrats like to blame for most of the current problem. Only $4.7 of the $21.0 billion increase in the taxpayer’s liability over the two systems have been due to shortchanging required payments, and only $6.3 billion total is explained by underpaying the levels the government judged necessary to stop the liability from growing.

What does this mean? The pensions for unionized government employees are even larger than citizens have been tricked into believing. Most of the increasing burden has been explained by three other factors. $4.7 billion of it is due to the actuarial assumptions about the benefits state employees would take advantage of being clearly wrong. $3.4 billion more is explained by the investment returns realized being short of what the taxpayer was forced to guarantee. And another $4.0 billion of the increase is just “unknown,” according to the study commissioned by the government itself. Four billion taxpayer dollars to “unknown” should be enough for a citizens revolt.

In the simplest terms, the growing pension liability means the unions and politicians wrote into law illusory measurements of the taxpayer’s promises that were far lower than the promises the state actually forced upon them. But even as that burden grows to this day, our elected officials in Hartford remain mostly silent and wholly ineffectual. If this problem is not acknowledged and addressed, your grocery tax hike this year will look trivial compared to future tax increases and your social services will also be eviscerated to pay for government pensions so bloated that the French would blush. And because of that, Connecticut’s stagnant wages, moribund job market, and outmigration will only get worse.

There is still hope for Connecticut, but only if the politicians in Hartford change — or better yet, they are replaced.

Ryan Fazio is a Greenwich native. He works in commodities trading locally, volunteers at charter schools, writes about politics, and tweets @ryanfazio.


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Old 10-21-2019, 08:44 PM
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ASSET MANAGEMENT

https://www.reuters.com/article/us-p...-idUSKBN1WV2L0
Quote:
Boston pension votes to fire money manager Fisher, withdrawals surge toward $1 billion
Spoiler:
BOSTON (Reuters) - The City of Boston’s retirement board on Wednesday voted unanimously to end its relationship with money manager Kenneth Fisher, whose firm has lost almost $1 billion in assets after allegations he made disparaging remarks about women last week.

FILE PHOTO: Kenneth Fisher, the founder, chairman, and Chief Executive Officer of Fisher Investments, speaks at the Reuters Investment Outlook Summit in New York, December 5, 2011. REUTERS/Brendan McDermid
In addition, on Wednesday evening an official of the Los Angeles pension system for police and firefighters said it will review the roughly $500 million it has invested with Fisher’s firm.

“As with other pension funds, we are very concerned with the inappropriate comments made by Mr. Fisher,” said the Los Angeles system’s general manager, Ray Ciranna, via e-mail.

In Boston, Fisher Investments managed about $253 million for the city’s pensions. The retirement board’s vote came as Boston Mayor Marty Walsh said Fisher’s statements showed “a profound lack of judgment.”

“Boston will not invest in companies led by people who treat women like commodities. Reports of Ken Fisher’s comments and poor judgment are incredibly disturbing, and I have asked our retirement board to take a vote to end any relationship with Fisher Investments,” Walsh said in a statement.

So far, pension plans run for Boston, the state of Michigan and the city of Philadelphia have announced they will stop investing more than $900 million with Fisher Investments.

In a video posted Oct. 9 on Twitter, Alex Chalekian, chief executive of a financial advisory firm, called attention to the comments Fisher made at a financial conference last week.

Chalekian said Fisher made derogatory comments about genitalia, picking up girls and financier Jeffrey Epstein, among other topics. Epstein committed suicide in August while being held in jail awaiting trial on sex trafficking charges.

Fisher, who was not available for comment, has apologized for his remarks. Fisher Investments Chief Executive Damian Ornani has said the firm is launching a task force to address diversity and inclusion at the firm itself.

Comments of public figures have come under increasing scrutiny in the era of social media and as the #MeToo movement, has exposed widespread sexual harassment or abuse of women in multiple spheres of American life and ended the careers of dozens of powerful men in media, politics, entertainment and business.

Meanwhile, Boston-based mutual fund giant Fidelity Investments and pension plans around the country have said they are reviewing whether to keep investing money with Fisher Investments.

Fisher controls an investment company that manages about $112 billion for individuals, mutual funds, trusts and pensions. In recent years, the company has landed several dozen companies, many of them small businesses, to manage their employees’ 401(k) investments, U.S. regulatory filings show.


https://www.cnbc.com/2019/10/18/ken-...ve-stayed.html
Quote:
Ken Fisher fallout: Which pension plans have pulled out and which have stayed
Thus far, four public pension plans — totaling more than $1.2 billion in assets — have ended their relationship with the firm, following Ken Fisher’s controversial comments at a conference.
In all, Fisher Investments had 36 government entities, including municipal pension plans, as clients, amounting to $10.9 billion in assets under management,according to SEC filings.
Pension fiduciaries often proceed slowly when hiring and firing money managers, so parting with a manager in a matter of days is unexpected, attorneys say.

Spoiler:
It remains to be seen how long other clients will stick with billionaire money manager Ken Fisher in the wake of off-color and sexist comments he recently made at an investing conference.

The Iowa Public Employees Retirement System on Friday notified the firm it would end its contract. Fisher Investments oversees $386 million of the IPERS $34 billion trust fund.

More than $1.2 billion public pension assets have left Camas, Washington-based Fisher Investments so far, including the Boston Retirement System with $248 million in assets and $600 million the State of Michigan says it’s withdrawing.

Philadelphia’s board of pensions also said it would move the $54 million it has with Fisher.


WATCH NOW
VIDEO05:46
Investing guru Ken Fisher under fire after offensive comments at private event
While government-run pension funds make up a relatively small amount of the overall assets managed at Fisher Investments, $10.9 billion from 36 entities, according to the firm’s regulatory filing with the Securities and Exchange Commission, how they respond may be a bellwether for other clients of the firm, industry experts say.

In all, Fisher had $94 billion in assets under management as of Dec. 31, 2018, according to their SEC filing. That figure reached $112 billion as of Sept. 30, 2019, according to the firm.



The speed with which pensions moved assets from the money manager surprised even attorneys who specialize in retirement plans.

That’s because these plans normally take two to three quarters to decide whether they want to change investment advisors, said George Michael Gerstein, an attorney at Stradley Ronon in Washington, D.C.

“I typically caution plan fiduciaries against acting too hastily in deciding whether to fire or hire or offer a new investment option to participants,” he said.

Who remains

WATCH NOW
VIDEO03:37
MeToo and Time’s Up impacts on the entertainment biz
The spate of divestitures was spurred by sexist comments Fisher made at the Tiburon CEO Summit on Oct. 8 — which public officials also cited as a reason for firing his firm.

Fisher has since apologized for his comments.

“Some of the words and phrases I used during a recent conference to make certain points were clearly wrong and I shouldn’t have made them,” he said in a prepared statement. “I realize this kind of language has no place in our company or industry. I sincerely apologize.”

While individual investors can pick up their assets and go at any time, retirement plans tend to proceed deliberately, even if they’re investing their funds with an array of managers.

This could be why other plans aren’t yet rushing for the exits at Fisher.



Indeed, the State Board of Administration of Florida, which has a $175 million relationship with the firm, has been in contact with Fisher Investments and is performing its due diligence, said John Kuczwanski, a spokesman for the plan.

Further, the Haverhill Massachusetts Retirement System, which has about $200 million in total assets, expects to address its next steps in an upcoming board meeting in November.

“It’s up for discussion,” said administrator David Van Dam. The Haverhill pension plan has $13 million invested with Fisher.

Public retirement plans are subject to state law, and the boards that govern them are fiduciaries — even though the federal laws that apply to corporate 401(k) plans don’t apply to them.

This means the pension plans must act in the best interest of their beneficiaries and participants, and they must back their decisions with the appropriate due diligence.

“There are a lot of quantitative and qualitative factors that are reviewed before deciding to remove someone,” said Marcia Wagner, founder of The Wagner Law Group in Boston. “It isn’t a snap decision.”

Prudent process
GP: Businesswomen discussing during a team meeting, entrepreneurs, small business
Hinterhaus Productions | The Image Bank | Getty Images
The research plan fiduciaries undertake before firing an investment manager include analyzing fees and performance and determining how that manager fits within the overall asset mix at the plan, said Wagner.

Plan fiduciaries are also responsible for considering whether a move could hurt beneficiaries either in the form of higher costs or a reduction in service, said Bradford Campbell, partner at Drinker Biddle in Washington, DC.

A plan could put a service provider on a watch list for several quarters while undergoing the appropriate research, Gerstein said.

More from Personal Finance:
Ken Fisher’s sexist comments have cost his firm nearly $1 billion
Millennials aren’t counting on Social Security in retirement
Road trip: 10 global hotspots

“There is a duty to continually monitor the prudence of service providers to make sure they are serving the plan’s interest,” he said. “It’s not a ‘set it and forget it’ decision.”

While it may be out of character for a pension plan to drop an investment advisor in a matter of days, this latest development could be a sign that plan fiduciaries are becoming socially conscious — and that’s at least one factor in their decisions.

“People are people, and if they find something to be truly obnoxious, they will vote with their feet,” said Wagner.
https://www.seattletimes.com/busines...er-ken-fisher/
Quote:
Fidelity joined by Florida pension fund in examining billionaire money manager Ken Fisher
Spoiler:
Billionaire money manager Ken Fisher, who is based in Camas, Clark County, is facing more pressure from clients following offensive remarks he made at an industry conference.

Fidelity Investments and the state of Florida pension fund said Tuesday they’re examining their relationship with Fisher Investments. The Philadelphia Board of Pensions said it plans to divest the $54 million in assets held with the firm.

“We are very concerned about the highly inappropriate comments by Kenneth Fisher,” a Fidelity spokesman said in a statement. “We do not tolerate these types of comments at our company and Fidelity Strategic Advisers is reviewing this relationship.”

Fisher Investments manages about $500 million for Fidelity Strategic Advisers, which oversees managed accounts. Fisher is listed as a subadviser for Fidelity Strategic Advisers Small-Mid Cap Fund.

Fisher Investments is also a sub-adviser on a Goldman Sachs Group Inc. equity fund that had about $675 million in assets at the end of April. The firm has not made any decision on changing its relationship with Fisher, according to a spokesman for the bank.

The Florida State Board of Administration, which has about $175 million with Fisher, was concerned enough about the executive’s comments to begin an investigation to determine if it will drop the firm, spokesman John Kuczwanski said in an interview.

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“SBA policies require our employees and service providers to foster positive business and personal practices designed to ensure that everyone is treated with respect and dignity,” Kuczwanski said in a statement Tuesday.

A spokesman for the Philadelphia funds said the decision to divest was made to “protect the assets of the fund from the consequences of Mr. Fisher’s inappropriate comments.” The decision was made on Oct. 10.

Michigan’s Move

Last week, the State of Michigan Retirement Fund’s pension account ended its relationship with Fisher’s firm, which managed $600 million for the state.

At the event last week, Fisher spoke about how he built his company, which manages $112 billion. He compared the process of gaining a client’s trust to “trying to get into a girl’s pants” and talked about genitalia. Fisher has apologized for the comments.

Fidelity came under media scrutiny two years ago after it dismissed a prominent stock picker who had been accused of sexual harassment by a junior female employee. Chief Executive Officer Abby Johnson set out to improve the gender mix at her firm by recruiting more women and tapping talent from within.

Reuters earlier reported the Fidelity news.
https://www.cnbc.com/2019/10/16/fish...on-assets.html
Quote:
Ken Fisher’s sexist comments have cost his company nearly $1 billion in assets
The Boston Retirement System is the latest pension plan to pull its money from Ken Fisher’s investment firm after the billionaire made off-color comments at conference last week.
Philadelphia’s board of pensions and Michigan’s retirement system have also ended their association.
Fidelity has also said that it’s reviewing a $500 million relationship it has with the firm.

Spoiler:
The City of Boston is ending its relationship with Fisher Investments, pulling $248 million in pension assets from the firm.

Mayor Martin Walsh announced on Wednesday that the city would stop working with the company in light of sexist comments Ken Fisher had made at an investment conference last week.

“The statements made by Ken Fisher implicate not only his own judgment, but potentially that of the company as a whole,” Walsh wrote in a letter to the Boston Retirement Board. The board today voted 5-0 to end its relationship with Fisher Investments

“While there are no doubt employees of the firm that are just as disturbed by these comments as I, there remains a risk that such thinking runs deeper than this specific commentary, and this is not a risk to which I believe the Retirement System should expose itself,” wrote Walsh.


The Boston Retirement System has a $5 billion portfolio in total. The pension plan’s board will determine how to reinvest the $248 million that were divested, said Emme Handy, chief finance officer for the City of Boston. It’s not uncommon for pension managers to spread investments across multiple firms.

Boston is the latest pension plan to pull its assets from Camas, Washington-based Fisher.

The state of Michigan is withdrawing $600 million of its pension fund from the firm, as well as Philadelphia’s board of pensions, which yanked $54 million.

Fidelity Investments said on Tuesday that it was reviewing a $500 million relationship with the firm.

“We are very concerned about the highly inappropriate comments by Kenneth Fisher,” said Fidelity spokesman Vincent Loporchio. “The views he expressed do not align in any way with our company’s values.”

Ken Fisher has since apologized for the comments.

“Some of the words and phrases I used during a recent conference to make certain points were clearly wrong and I shouldn’t have made them,” he said in a statement. “I realize this kind of language has no place in our company or industry. I sincerely apologize.”

Tiburon comments

WATCH NOW
VIDEO05:46
Investing guru Ken Fisher under fire after offensive comments at private event
CNBC obtained an audio recording last week of Fisher’s comments at the Tiburon CEO Summit, as well as audio of him speaking at a previous conference.

Clips from both were featured on CNBC Power Lunch last Friday. Combined, they show that the money manager made flippant remarks about sex.

In the audio obtained by CNBC, Fisher says at the Tiburon conference: “Money, sex, those are the two most private things for most people,” so when trying to win new clients you need to be careful.

He says: “It’s like going up to a girl in a bar … [inaudible] …going up to a woman in a bar and saying, hey, I want to talk about what’s in your pants.”


WATCH NOW
VIDEO03:37
MeToo and Time’s Up impacts on the entertainment biz
Further, when Fisher was a speaker at the Evidence-Based Investing conference in 2018 he compared marketing mutual funds to propositioning a woman for sex at a bar.

“I mean the, the most stupid thing you can do, which is what every mutual fund firm in the world always did, was to brag about performance, uh, in, in a direct mail piece, which is a little bit like walking into a bar if you’re a single guy and you want to get laid and walking up to some girl and saying, ‘Hey, you want to have sex?’” Fisher said, according to audio obtained by CNBC.

Organizers of both conferences subsequently banned him from speaking again in the future.
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