In order to fulfill their fiduciary duty to monitor ERISA service providers, an energy exploration and production company engaged North Pier to perform a defined benefit investment program evaluation and subsequent OCIO search for their $300 million pension plan.
The evaluation and OCIO search process was conducted in two phases:
- Phase One: Evaluation – The first phase of the project focused on analysis of the four main components: Governance, investment management approach, historical performance, and fees.
- Phase Two: OCIO Search – The second phase of the project focused on the identification, evaluation, and selection of a superior OCIO through an RFP process.
Process & Findings
Phase One: Evaluation
North Pier began phase one by reviewing the plan sponsor’s governance and fiduciary process including procedures, policies, and governance documents (Charters, Bylaws, Investment Policy Statements, and other guiding documents).
Using the information gleaned, North Pier performed fee and service benchmarking using a Request for Information (RFI). The RFI included both the current services and services not currently received, but could add value to their investment program moving forward. The inclusion of this information offered a window into the best thinking from the top organizations included in the RFI.
North Pier also performed an in-depth historical performance review of the client’s investment program, including asset allocation and portfolio construction.
Upon review of the RFI and historical performance analysis, the client found that the current provider’s fees and services were suboptimal. Additionally, in comparing fees from 19 organizations, North Pier found that a better and more transparent fee structure could be negotiated.
Phase Two: OCIO Search (RFP)
Because the findings outlined in phase one demonstrated that there were organizations better suited to manage their pension fund, and that more competitive and transparent pricing was negotiable, the client chose to perform an RFP.
North Pier constructed and distributed a detailed RFP to the qualified firms identified in the RFI. An in-depth review of responses and additional due diligence was performed on each proposal submitted. Using comprehensive analyses of the proposals which included decision-ready summaries, North Pier assisted the plan sponsor in selecting three firms to interview as finalists.
Ultimately, the client felt confident in their decision to hire a new OCIO with an experienced team, strong fiduciary support, a proven process, and a superior track record of consistent performance under various market conditions. North Pier was able to negotiate 50% lower fees than the client was previously receiving.
Additionally, North Pier was engaged to provide comprehensive representation, oversight, and advocacy throughout the transition and implementation process. This oversight and support helps to confirm that the newly engaged service provider honors all proposed timelines and service commitments and uses industry best practices to mitigate risks inherent in investment replacements.