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HomeMy WebLinkAbout1993 05 25 Board of Trustees Regular Minutes -- PENSION BOARD OF TRUSTEES MEETING CITY OF WINTER SPRINGS MAY 25, 1993 The meeting of the Board of Trustees was called to order at 7:00 p.m. by Chairman John Ferring. Roll Call: John Ferring, Chairman Art Hoffmann, present William Dickey, present Seymour Berman, present Attorney Tom Lang, present Bob Davis, Financial Advisor, present William Jacobs, absent Chairman John Ferring asked Bob Davis, Financial Advisor to give the Board an update. Mr. Davis said he took all the information that was presented from the proposals last week and tried to provide the Board with a matrix of comparable information. Mr. Davis said he contacted each Company and told them he needed a 50-50 mix. ~ Mr. Davis explained he still does not have comparable information from Investment Management & Research, Inc. Another item not on the matrix is the management fee for CIGNA. Mr. Davis said he received a letter from them saying basically that they do have a Connecticut General Pensions Services Inc. Division of the company that does the management services, they would do an investment policy statement, allocation strategy, and they accept fiduciary liability for the work they perform, and the letter basically says that they bill for these services on an hourly basis and the estimated fee would be somewhere between $2,500 and $4,000 for the manage- ment. Mr. Davis said the only other concern he had was on the second sheet which was Plan Administration proposals. Investment Counsel said they do not do their own but there are reputable companies that do this; Investment Management said the same thing; Provident Mutual gave a fixed fee for doing everything; CIGNA gave a fixed fee for doing everything and Sun Bank Capital Management fees have been adjusted. Mr. Dickey discussed the defined benefit plans and the defined contribution plans. He said he wanted to feel comfortable that everyone understands the concepts. Attorney Lang explained the way the City has designed the plan now it is structured that trustees direct the investment as opposed to giving any individual the right to direct their investment. If we were to change that we would have to go back to the City Commission and say you need to reconsider your plan and decide whether you want to allow each individual to have it self directed, a deferred compensation plan. Mr. Davis said what the City has right now, he thinks it is the least costly for the City and the administrative fees are the minimum that they could be. Attorney Lang said the Board has to make prudent decisions and cannot be arbitrary such that they waste the money. If they were to go to somebody who arguably a prudent man would not invest with, and the money was wasted, they might be sued by an employee who is a beneficiary of this plan. -- .- Board of Trustees Meeting, May 25, 1993 Page 2 Attorney Lang said the Board will have to give some direction to whoever they hire to be the financial manager. He said as Trustees you are going to have to give them some direction as to whether you want a conservative portfolio, whether we want a moderately risky portfolio or whether we are willing to go with some high risk equities, that will be up to you. Mr. Ferring said we can make up a written policy statement concerning what our values are in a prudent fashion. I think that would come on monthly beside what management firm we are going to take on with the caveat that if these people do not perform, we do not have to go through a whole number of things. We can bring in the analysts to look at the fund to see if it is performing the way it should be performing and if it is not, we can make other recommendations back to the City Commission saying we are not satisfied with this particular investment manager, but we have the control, we have the records. Mr. Dickey said he wants to understand for himself that it is a defined contribution plan but it is a defined contribution plan with the employer in essence, directing the investment mix for all the participants. Mr. Ferring said he would like to go around the table and hopefully get recommenda- tions from the people that are here. He said he would go first. He said he has looked at the presentors and it was a very difficult decision on his part as to whether or not to go with the theory that you have an independent manager and an independent administration. There is good and bad in that. - He said he broke it down and looked at two companies basically he thought stood out among the rest of them. He broke it down between Sun Bank and Investment Counsel. Then he said he had the decision to make what the benefits from each one. He said he finally settled on Sun Bank Capital Management because he felt they were offering us all of what our needs are at this particular point, and for us Trustees to have a good grasp for the coming year that they would be handling a lot of the area that we would be concerned about. They would be handling the administration end of it. They would be local. They would be meeting with us regularly. They are a little higher in their management fee but they make up for it in the administrative costs. He said it boils down to they have a quality firm, quality results, a ten year perform- ance showing itself down the line and it was close, but he said he felt that something pulled together at this point because we are a fairly new Board of Trustees. As far as CIGNA and Provident Mutual he said he felt they were o.k. and he would have put Provident Mutual third, but they hit too much on the fixed end of it as opposed to a balanced area. Again they were just going to do the balanced fund. Mr. Ferring said he went with Sun Bank and Investment Counsel with Provident Mutual close. He said he went with Sun Bank because he thinks their record proves them out and being local and they would be very helpful to the Board. Mr. Dickey said he would like to hear what Mr. Davis has to say. _. Mr. Davis said you saw the presentations when he evaluated the first proposals in the order that he rated them. He said after he heard the proposals he flipped Sun Bank and Investment Counsel because he had had Investment Counsel first. He said - Board of Trustees Meeting, May 25, 1993 Page 3 Sun Bank has had no employee turnover in their investment management company in the last five years; they have not lost a single client in the investment depart- ment in the last five years and they are bigger than Investment Counsel. Mr. Hoffmann selected Sun Bank because they are local and they have a lot of Florida municipalities. His second choice would be Investment Counsel. Mr. Berman selected Sun Bank. He said he narrowed his choices down to Sun Bank and CIGNA. He said CIGNA impressed him, not by the calibre of the people who made the presentation and he was not too thrilled with the fact that what really goes on goes on in Hartford. CIGNA has only Vero Beach as a Florida municipality; however, 67 billion dollars in assets is impressive. That represents mostly corporate clients. The cost for CIGNA to manage our plan is a little bit lower than Sun Bank. Mr. Berman said when it came to a final decision he had to go with Sun Bank mostly because they are local. Mr. Dickey chose Sun Bank and City Manager Govoruhk chose Sun Bank as his first choice and Provident Mutual as his second. Attorney Lang chose Sun Bank because he said they are here and can give you the service you want. Attorney Lang suggested the Board make a report recommending to terminate the Florida League of Cities and the City retain Sun Bank Capital Management as the Plan Admini- strator and financial advisor of the pension plan. ,,- Motion was made by Berman, seconded by Hoffmann to recommend we terminate the Florida League of Cities at the appropriate time, and that the City retain Sun Bank as the asset manager and plan administrator. Discussion. Vote on the motion: Hoffmann, aye; Berman, aye; Dickey, aye; Ferring, aye; motion carried. Meeting was adjourned at 8:10 p.m. Respectfully submitted, Mary T. Norton, City Clerk -