Hawaii Fund Taps Portland Firm as Adviser

Pension Consulting Alliance began work forthe ERS on January 1 as part of three-year contract worth $975,000, according to a news report in the Honolulu Star-Bulletin. The San Francisco-based Callan had been advising EFS for 30 years.

ERS administrator David Shimabukuro said Callan was one of three finalists for the new contract, but that Pension Consulting, which manages $750 billion in assets, was chosen based on receiving the highest score in its five-category rating system.

According to the report, criteria in the ERS rating system featured:

• ability, including resources, knowledge and independence of judgment, to perform the services (worth 30 points),
• fees (25 points);
• philosophy, process, soundness of approach and understanding of the ERS needs (20 points);
• stability and relevant history and experience of the firm and the individual consultants (20 points);
• client references (5 points).

Last November, Callan agreed to pay the city of San Diego $4.5 million to settle a lawsuit accusing Callan of steering business to money managers that paid it for consulting. Under the settlement, San Diego said it had no proof that Callan engaged in so-called “pay-to-play” or unfair business practices (See  Callan Settles $4.5M Suit over Pay to Play Conflict Charges ).

Shimabukuro said ERS board members were aware of the San Diego case, but didn’t know whether it was a significant factor in their decision.

The ERS also is searching for a new chief investment officer after Kimo Blaisdell stepped down on January 31 to accept a position as senior vice president in the Honolulu office of New York-based Robeco Investment Management. Blaisdell had been with the ERS since September 2000.

The ERS, which has $10.7 billion in assets, provides retirement, disability and survivor benefits for more than 100,000 employees and beneficiaries.