Key Takeaways
- • Orange County Employees Retirement System (OCERS), a $12 billion plan, selected Meketa Investment Group as its new general consultant, replacing NEPC, according to CIO.
- • Meketa's five-year engagement is pending final contract negotiations; Pension Consulting Alliance was named as backup finalist.
- • Meketa pitched strategies that could save $8 million in fees per year and increase expected gains by $12 million per year.
- • Meketa recommended reducing allocations to unconstrained fixed income and tactical asset allocation products while increasing private equity exposure over five years.
- • Meketa quoted $475,000 in consulting fees for the first year; Co-CEO Steve McCourt will serve as primary consultant once the contract is finalized.
Summary
Orange County's pension system has chosen Meketa Investment Group as its general consultant, replacing NEPC, CIO has learned. The selection follows a competitive process that began with a demanding 56-page request for proposal, which OCERS' investment chief Girard Miller had described as "the RFP from hell." Meketa will begin a five-year relationship with the $12 billion plan, subject to final contract negotiations. Pension Consulting Alliance was named as backup finalist.
NEPC has served as OCERS' general consultant since 2011 and will complete its obligations through 2016, the board said. In a memo obtained by CIO, Miller praised Meketa's "broad organizational depth in a conventional consultant business model," citing a larger overall staff, more research personnel, and capacity to assist staff with bullpen managers. He also highlighted Meketa's local presence in San Diego County, with more than 30 professionals able to serve OCERS.
In its presentation to the OCERS board, Meketa proposed strategies that could save $8 million in fees annually and increase expected gains by $12 million per year. The firm recommended reducing allocations to unconstrained fixed income and tactical asset allocation products, and increasing private equity exposure over a five-year period. Meketa quoted $475,000 in consulting fees for the first year. Co-CEO Steve McCourt will act as OCERS' primary consultant once the contract is finalized.
The RFP was designed to be rigorous. Miller required custom, non-boilerplate responses from all applicants and asked whether bidders hosted or sponsored "pay-to-play" conferences. Bidders were also asked to identify two aspects of their consulting practice of major relevance to OCERS and to show a better track record than peers. According to the RFP, "Self-awareness and candor will be judged more favorably, as nobody's perfect all-around."
NEPC has served as OCERS' general consultant since 2011 and will complete its obligations through 2016, the board said. In a memo obtained by CIO, Miller praised Meketa's "broad organizational depth in a conventional consultant business model," citing a larger overall staff, more research personnel, and capacity to assist staff with bullpen managers. He also highlighted Meketa's local presence in San Diego County, with more than 30 professionals able to serve OCERS.
In its presentation to the OCERS board, Meketa proposed strategies that could save $8 million in fees annually and increase expected gains by $12 million per year. The firm recommended reducing allocations to unconstrained fixed income and tactical asset allocation products, and increasing private equity exposure over a five-year period. Meketa quoted $475,000 in consulting fees for the first year. Co-CEO Steve McCourt will act as OCERS' primary consultant once the contract is finalized.
The RFP was designed to be rigorous. Miller required custom, non-boilerplate responses from all applicants and asked whether bidders hosted or sponsored "pay-to-play" conferences. Bidders were also asked to identify two aspects of their consulting practice of major relevance to OCERS and to show a better track record than peers. According to the RFP, "Self-awareness and candor will be judged more favorably, as nobody's perfect all-around."
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