Hawaii Fund Taps Portland Firm as Adviser

February 14, 2007 (PLANSPONSOR.com) - A Portland, Oregon firm been tapped as the new investment consultant for the Hawaii Employees' Retirement System (ERS), replacing Callan Associates after Callan's contract expired in December.

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.