An HFMA Forums Tool (hfma.org/forums)

RFP for Investment ConsultantA. Organization and Background (4 page limit)

1. Briefly describe the firm, the year it was founded, location of its headquarters and other offices, ownership structure, and affiliation with other companies.

2. Describe the ownership structure of the firm with specific detail regarding the percentage owned by current active employees, retired employees, parent company, affiliates, etc. Please provide the names of the individuals possessing ownership including their title or position in the firm along with their percentage ownership.

3. Please describe the entire range of consulting services the firm provides to clients. Indicate which services are the firm’s specialties or areas of greater expertise, and describe how expertise is maintained and expanded.

4. Briefly outline future plans for the consulting business including growth of the business, number of consultants and areas of specialization.

5. Disclose all conflicts of interest the firm has in serving as an investment consultant (e.g., relationships with custodians, investment managers, brokerage firms, etc.). Describe any revenue coming from sources other than consulting?

6. Has any officer or principal of the organization been involved in litigation relating to consulting activities, or have they otherwise been involved in a SEC or regulatory investigation or litigation? If yes, provide a brief summary and indicate the current status of the proceedings.

7. Does your firm have a written code of conduct and/or ethics? How is it monitored and enforced? How many individuals hold a CFA Charter or are CFA candidates? Have any staff members had their CFA Charter suspended or revoked?

8. Will your firm serve in a fiduciary capacity over the investment assets of the define contribution plans? If not, please explain.

9. Does the firm carry professional liability insurance and if so, describe the nature of the coverage and the dollar amount?

10. Describe the firm’s diversity policy and provide the number of female and minority employees in management positions. Provide specific information (including amount of financial contributions) on how the firm supports its community and charitable organizations through either firm sponsorships or through support of employees engaging in these activities (or both).

B. Staffing (3 page limit)

1. Provide an organizational chart that includes all individuals employed in the consulting group (specifically identify those dedicated only to the defined contribution plans). Specifically identify consultants, professional staff, and administrative staff along with their credentials (e.g., CFA).

2. Provide the following information on the key personnel to be assigned to the account:

Name:

Title:

Total years of institutional investment experience:

Total years of institutional investment consulting experience:

Total years with the firm:

Educational qualifications:

Total current number of assigned accounts (lead) Health Care Assignment:

Total current number of assigned accounts (support) Health Care Assignment:

Number of Defined Contribution Accounts:

3. What is the firm’s client-to-consultant ratio?

4. Give a brief description of the firm’s compensation arrangements for consulting staff including any incentive compensation plans. Are there any other incentive arrangements employed to help retain key professionals?

5. Please list the name, title, role and year of departure for all professional employees that have left the firm in the past five years.

Source: HealthPartners. Used with permission.

C. Menu of Funds (2 page limit)

1. Are there common beliefs about the investment markets which underpin the firm’s investment advice across all clients? If yes, please describe.

2. Describe the firm’s approach in generating new ideas for client portfolios? Are portfolio recommendations consistent across the firm or do they differ by consultant? How are ideas developed?

3. Provide the firm’s philosophy on risk. How does the firm define risk (i.e., standard deviation, tracking error, value-at-risk, etc.)?

4. Comment on the firm's philosophy and menu of fund preferences in the following areas:

Active versus passive management:

Capitalization:

Style (growth tilt, value tilt, or neutral):

Quantitative versus fundamental:

Short, Intermediate and long fixed income:

5. How do you handle differences of opinion with client’s staff or investment committee regarding investment recommendations?

6. Outline the firm’s approach to the development of a client’s investment policy.

Source: HealthPartners. Used with permission.

D. Manager Search (3 page limit)

1. How many individuals are dedicated to manager research within your firm and what is their industry experience and tenure with the firm? Describe their role in the manager search process. Are the manager research staff generalists or do they specialize by asset class? Is the manager research staff compensated by the performance of the investment managers they recommend? If not, please describe the compensation structure.

2. Provide an overview of the manager search process for identifying, evaluating and selecting potential investment managers for a specific client. Describe any biases the evaluation may produce. How many manager searches did the firm perform in 2014 by asset class?

3. Describe the database utilized to monitor and evaluate investment managers’ performance for the purpose of manager selection. Is it proprietary or third-party? If third party, who is the vendor? Does the firm receive any direct or indirect compensation from managers to be included in the database? How many managers are included in the database? How frequently is the investment manager information updated and what characteristics are tracked?

4. What are the key factors that the firm relies on in assessing manager skill?

5. How do your rate/rank investment managers? What are the key criteria to be considered a highly rated firm?

6. Describe the manager due diligence process. What tools are used to assess manager capabilities? How often does the staff meet with investment managers both in-house and onsite? Are research notes provide to clients as a result of on-going manager due diligence?

7. How does the firm monitor emerging managers (those with less than 3-year performance record)? Will the firm recommend these managers to clients?

8. List the top five equity and fixed income managers with whom the firm has placed the most clients and assets.

E. Manager Monitoring (3 page limit)

1. Describe the firm’s ongoing quantitative and qualitative monitoring of investment managers.

2. Describe the process for when the firm recommends that an investment manager is terminated.

3. Describe your firm’s involvement in preparing and monitoring investment manager guidelines.

Source: HealthPartners. Used with permission.

F. Performance Measurement (3 page limit)

1. Does the firm calculate performance measurement internally or use an outside vendor? If the firm uses an outside vendor, please identify the vendor used.

2. Is a reconciliation prepared to ensure that the results of the investment manager matches the custodian’s accounting system’s records?

3. Describe the methods and sources of data used for analyzing the performance of investment managers and the portfolio. Specifically, include the monitoring of performance, risk, style integrity, manager guideline compliance, account restrictions, etc.

4. How many business days after the end of a reporting period are monthly and quarterly performance reports available? Can the reports be customized?

5. Do the quarterly reports provide an executive summary which makes specific recommendations for issues that should be investigated or discussed?

G. Research (2 page limit)

1. Describe the internal structure and organization of the firm’s research department. If no separate department exists, describe how this function is performed.

2. Are external resources used in the research process? How does your firm monitor and report on market trends?

3. How does the firm develop capital market assumptions and how often are they revised?

4. Please describe in detail the type and frequency of research that is available to clients.

5. What educational opportunities are available to clients and investment committees?

H. Other (2 page limit)

1. What technological capabilities does the firm have to add value and efficiencies to the investment consulting and monitoring process? What software systems are in active use or are expected to be acquired within the next 6 months? Does the firm have a manager content database? Does the firm have a web site? If so, what information is available to clients and what is the web site address?

Source: HealthPartners. Used with permission.

2. List any other support services the organization provides (e.g., customized research projects, educational seminars, etc.).

3. Are there other services that you provide that have not been addressed in this request for proposal? If so, please describe.

I. Clients/References (3 page limit)

1. Provide the name, asset size and key contacts of the firm’s healthcare clients.

2. Describe the firm’s experience in working with healthcare systems. Provide specific examples of work performed that displays knowledge and experience in working with such entities.

3. Attach a list of three references, including at least one multi-institutional healthcare client, if available. Provide the contact name, address and telephone number. Indicate the length of time the firm has provided investment services to the client and the extent of those services. Provide a synopsis and approximate size of the funds (defined contribution plans only).

4. Please list the number of full-service retainer clients served by the firm as of September 30, 2015:

5. Provide a list of all accounts lost in the last three years with a brief explanation as to why the relationship was terminated.

J. Fees (2 page limit)

1. How do you propose your firm would best provide services to our continuum of investment needs? How do you propose charging us for the services you may provide?

2. Please provide a listing of additional services and fees provided outside the Scope of Services and not included in the fees stated above?

K. Summary (1 page limit)

What do you believe sets the firm’s services apart from the competition and what unique value added services could the firm provide?

K. Fees (2 page limit)

Source: HealthPartners. Used with permission.

L. Additional Information

Please provide the following sample reports and information as exhibits to the Proposal:

1. Quarterly and monthly performance reports including an executive summary, if applicable

2. Manager search example (one fixed income and one equity)

3. Capital market assumptions

4. Investment manager guidelines

5. Research report or white paper

6. A copy of the firm’s most recent SEC Form ADV

7. Any other sample reports that are relevant to the request for proposal

8. Compliance Reports

M. Defined Contribution Plans (401(k), 403(b), etc.)

1. Describe the firm’s experience with defined contribution plans (e.g., vendor relationships, manager selections, monitoring, etc.) Explain the firm’s process and database used to select and evaluate mutual funds used in defined contribution plans.

2. Will the proposed lead consultant serve in an advisory capacity for these plans or will other individual within the firm be involved?

3. Does the firm have the ability to prepare performance reporting on the investment options in the plan?

4. Describe what your firm believes are the current best practices in the oversight of defined contribution plans.

5. Please provide a case study where your firm completed a consolidation of multiple record-keepers, investment consultants and investment committees into one record-keeper, one investment consultant and one investment committee

a. What were the obstacles and barriers?

b. What were the opportunities and successes?

c. How many times has your firm done such a consolidation?

6. Please provide a sample project plan along with timeline.

Source: HealthPartners. Used with permission.

Source: HealthPartners. Used with permission.