Midwest OCIO Summit - FRA, LLC

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Financial Research Associates presents

The 2014

Midwest OCIO Summit April 28-29, 2014

The Standard Club

Chicago, IL

Case Studies and Discussion from These Investors: • • •

Texas Presbyterian Foundation Iona College The Jewish Federations of North America Ball State University Missouri Baptist Foundation UND Foundation

• • •

• • • •

Arizona State University Foundation The Culinary Institute of America The FIU Foundation Kansas City Employee Retirement System

TOPICS INCLUDE: • • • • • • • • •

All, Some, or None: Making the Decision to Outsource How to Hire an Outsourcer: RFP, FRI, or a Specialized Search Firm? Outsourcing Models—What Really Differentiates the Providers? A Brief Examination of Fees and Outsourcing Strategies Onboarding and Preparing for the Transition to an OCIO From Start to Finish: A Detailed Case Study on Launching and Executing and Outsourced Strategy Operationalizing Your OCIO Relationship: How Governance Determines the Quality of the Dynamic How to Evaluate your OCIO: Monitoring, Maintaining, and Benchmarking Performance Your Fiduciary Responsibility under an OCIO Structure

SILVER

GOLD

PLATINUM

SPONSORS

The ONLY event thoroughly exploring the outsourced CIO option!

To R e g i s t e r : C a l l ( 8 0 0 ) 2 8 0 - 8 4 4 0 o r v i s i t u s a t w w w. f r a l l c . c o m

As investment management continues to become a challenging venture, several institutions are turning towards outsourced providers to carry the burden. But with so little information on best practices in researching, recruiting, and monitoring the OCIO, the gravity of the decision becomes even more severe. That’s why institutional investors from Ball State University, The Jewish Federations of North America, UND Foundation, Arizona State University Foundation, The Commonwealth Fund, and The Texas Presbyterian Foundation have come together to discuss critical steps in selecting, interviewing, analyzing, and onboarding an OCIO. They’ll also be highlighting governance and fiduciary issues surrounding the management of the relationship, ways to benchmark and evaluate the partnership, and challenges surrounding the maintenance of the agreement. This comprehensive look at the start-to-finish process of implementing an outsourced strategy allows for you to interact directly with investors who have taken the crucial first leap and are on their way to a successful association. What was the catalyst in making the decision to outsource, and how did you first approach it? How can you work with the board to prepare for this change? What are the first steps in building an RFP? Should you request the information on your own, or work with a specialty group? What are the available models, and which one will work best for my organization? When do I start preparing for the transition, and how can I be ease the onboarding process? How will responsibilities be divided, and who gets the final word on what? What does all of this mean for my fiduciary responsibilities? What aspects of the relationship should I be measuring—is performance the only thing that matters? Outsourcing your investment management functions could be the best decision you’re about to make, but it will also be the hardest. There’s a lot of due diligence that goes into this process, and the best first step will be to learn from those who have been there before. Register today! Call (800) 280-8440 or online at www.frallc.com.

IMPORTANT INFORMATION To Register: Fax: (704) 341-2640 Mail: Financial Research Associates 18705 NE Cedar Drive Battle Ground, WA 98604 Phone: (800) 280-8440 Online: www.frallc.com THE 2014 MIDWEST OCIO SUMMIT April 28-29, 2014 The Standard Club 320 South Plymouth Court Chicago, IL 60604 (312) 427-9100 We have a limited number of hotel rooms reserved for the conference. The negotiated room rate of $150 per night will expire on March 27, 2014; although we expect the block to sell out prior to this date. To ensure you receive a room at the negotiated rate, book well before the expiration date. Upon sell out of the block room rate, availability will be at the hotel’s discretion. FEES AND PAYMENTS The standard fee for attending The 2014 Midwest OCIO Summit is: $1,795 Endowments, Foundations, Pension Funds, Sovereign Wealth Funds, and Health System Funds: $695* Free registration for the first 20 Endowments, Foundations, and Pension Fund*! (*Subject to FRA approval) Please make checks payable to Financial Research Associates, and write code B919 on your check. You may also pay by Visa, MasterCard, Discover, or American Express. Purchase orders are also accepted. Payments must be received no later than April 21, 2014.

TEAM DISCOUNTS:

Josh Krenz, Conference Director FINANCIAL RESEARCH ASSOCIATES, LLC

P.S. This event is free to attend for the first 20 Endowments, Foundations, and Pension Funds to register.

OFFICIAL PUBLICATIONS AND MEDIA PARTNERS

• • •

Three people will receive 10% off Four people will receive 15% off Five people or more will receive 20% off

In order to secure a group discount, all delegates must place their registrations at the same time. Group discounts cannot be issued retroactively. For more information, please call Whitney Betts at (704) 341-2445 or [email protected].

SOFT DOLLAR YOUR CONFERENCE REGISTRATION! This FRA conference may be eligible under section 28(e) of the Securities Exchange Act of 1934 for payment via soft dollars. For further information or a Soft Dollar Application form, please visit our website www.frallc.com/softdollars.aspx.

CANCELLATIONS If we receive your request to cancel 30 days or more prior to the conference start date, your registration fee will be refunded minus a $250.00 administrative fee. Cancellations occurring between 29 days and the first day of the conference receive either a 1) $200 refund; or 2) a credit voucher for the amount of the original registration fee, less a $250.00 administrative fee. No refunds or credits will be granted for cancellations received after a conference begins or for no-shows. Credit vouchers are valid for 12 months from the date of issue and can be used by either the person named on the voucher or a colleague from the same company. Please Note: For reasons beyond our control it is occasionally necessary to alter the content and timing of the program or to substitute speakers. Thus, the speakers and agenda are subject to change without notice. In the event of a speaker cancellation, every effort to find a replacement speaker will be made.


ABOUT THE VENUE

THE CONFERENCE ORGANIZER Nationally recognized as one of the most prestigious private city clubs in the country, The Standard Club has been an integral part of Chicago’s business elite and fashionable society since its founding in 1869. The Club is revered as one of Chicago’s civic treasures, an organization whose incomparable prestige and principles have attracted the city’s business, cultural and charitable leaders for generations - a legacy that lives on today.

Financial Research Associates provides the financial community with access to business information and networking opportunities. Offering highly targeted conferences, FRA is a preferred resource for executives and managers seeking cutting-edge information on the next wave of business opportunities. Please visit www.frallc.com for more information on upcoming events.

“Great exchange of ideas, takeaways, and useable information.” Jeffry Haber, IONA COLLEGE

TOP REASONS TO ATTEND • • • • • • • •

Hear directly from peers who have gone through the outsourcing process Learn critical steps in performing due diligence when selecting a provider Examine unique ways to request information on outsourcing Gain specific takeaways on benchmarking and evaluating performance Discuss best practices in governance and policy constraints Learn ways to ease the transition into an outsourced system Understand the complexities around terminating the arrangement Connect with colleagues and expand your network!

WHO SHOULD ATTEND This conference is designed for investment staff, including (but not limited to): • • • • • PLUS: • •

Endowments & Foundations Health System Funds Pension Funds Family Offices Sovereign Wealth Funds Investment managers and consultants Providers of outsourcing services

CPE CREDITS Financial Research Associates, LLC is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org. Sponsored learning activities are measured by program length, with one 50-minute period equal to one CPE credit. One-half CPE credit increments (equal to 25 minutes) are permitted after the first credit has been earned in a given learning activity. Please note that not all state boards adopted this rule. Some participants may not be able to use one-half credit increments. This course is offered as a group-live course and does not require prerequisites or advance preparation. We offer advanced level courses. Although no prerequisite courses, experience, or advance preparation is required to participate in this program, working knowledge of Finance is required, as well as, prior knowledge of the program topic. For specific learning objectives and program description, please refer to the individual conference sessions topics in the conference brochure located on our website: www.frallc.com/thefineprint

The recommended CPE credit for this course is 9 credits in the following field(s) of study: Finance

Get Answers to These Important Questions: • • • • • • • •

What process goes into determining if you’re going to outsource, and how much control are you giving up? How do you involve the board of trustees in hiring an outsourcer? What are the fee structures, delivery systems, and value propositions of the different outsourcing models? Are passive strategies a way of offsetting high fees? How quickly can an OCIO strategy be implemented? Which aspects and attributes should you measure when evaluating performance? Does the board’s fiduciary responsibility change under the outsourced arrangement? What are the deal-breakers that will end the arrangement, and how should you respond?

SPONSORSHIP AND EXHIBIT OPPORTUNITIES Enhance your marketing efforts through sponsoring a special event or exhibiting your product at this event. We can design custom sponsorship packages tailored to your marketing needs, such as a cocktail reception or a custom-designed networking event. To learn more about sponsorship opportunities, please contact Menna LloydWhite at (704) 341-2440 or [email protected].

“Information on the various ways to outsource.” Anita Clemons, PRESBYTERIAN FOUNDATION

UPCOMING EVENTS The 11th Annual Made in America The 2014 Taft-Hartley Benefits Summit February 10-11, 2014 * Orlando , FL The 2014 DC Defaults Forum Securing Brighter Futures with New Opportunities in QDIAs February 24-25, 2014 * Boston, MA The Hedge Fund Due Diligence Master Class Meeting Investor Demand for Heightened Research, Analysis and Operational Excellence March 25-26, 2014 * New York, NY


DAY ONE: Monday, April 28, 2014 8:30 - 9:45

Registration and Continental Breakfast

8:30 - 9:30 What We Can Learn From Each Other Private Closed-Door Institutional Investor-Only Breakfast Roundtable A casual forum for institutional investors to discuss challenges and best practices in outsourcing.

9:45 – 10:00 Chair’s Welcome

• • • • •

What are you ultimately paying for—returns, guidance, or peace of mind? Do the fees hamper the returns? Have the fees been justified? Is performance the only way to benchmark costs? Are passive strategies a way of offsetting high fees? Which areas and asset classes are best for this option? What’s the value in using a passive outsourced strategy?

Laura Block, CPA, CFP, Chief Financial Officer UND FOUNDATION

2:00 - 2:30

Invited*

Provider Perspective: Building an Outsourced Portfolio

Eric Macy, Managing Director, Fiduciary Solutions RUSSELL INVESTMENTS

•

10:00 - 10:45 All, Some, or None: Making the Decision to Outsource

Mike Ruff, Portfolio Manager, RUSSELL INVESTMENTS

• • • • •

What process goes into determining if you’re going to outsource? What were the major catalysts, and what finally made you decide to change strategies? Are all of your investment functions outsourced? How much control do you relinquish, and why? How can advisors provide better support during this time? What’s a deal-breaker and what’s a deal-maker? Getting committees to comply—what steps needed to be taken to bring everyone together on this decision? Identifying key differences between Taft-Hartley, public, and corporate investors looking to outsource

• •

What does an outsourced CIO provider look for when selecting sub-advisors? How are exposures monitored and managed at the total portfolio level? What investment strategies are currently emphasized? Where are outsourced providers looking to invest?

2:30 - 3:00

Keynote Address: Economic Outlook

This keynote address will dive into the challenges of the U.S. economy and the broader capital markets as well as provide an outlook on the developed and emerging markets. We will address issues pertaining to demographics, global economic challenges, thematic opportunities, and how institutions should be thinking differently in managing their longterm pool of assets.

Russ LaMore, CFA, CAIA, Partner, MERCER HAMMOND

Michael H. Strauss, Chief Investment Strategist and Chief Economist COMMONFUND

John C. Furlow Jr., Executive Vice President, Chief Operating Officer TEXAS PRESBYTERIAN FOUNDATION

3:00 - 3:15

Afternoon Break

Steve Gross, Senior Director, THE JEWISH FEDERATIONS OF NORTH AMERICA

3:15 - 3:45

Managing Risk from the Client’s Perspective

10:45 - 11:30 How to Hire an Outsourcer: RFP, RFI, or a Specialized Search Firm? • • • • •

Effectively involving your board of trustees in the process What critical steps need to be taken during the interview? Which questions need to be asked? What should your expectations be? Did you stick with your current custodian or select a new provider? Why? How can advisors and consultants retain the clients that they have? What new functions should they be offering to encourage and expand their role as an OCIO? What tools were used to evaluate the RFP response?

Crissie Fortmeyer, Director, Non-Profits, RUSSELL INVESTMENTS Chris Calmer, CPA, CFA, President, MISSOURI BAPTIST FOUNDATION

11:30 - 12:15 Outsourcing Models—What Really Differentiates the Providers? •

• • • •

The pros and cons of the available outsourcing models, and understanding the differentiators - Boutique advisory firm - Customized and off-the-shelf - Fund of funds - Consultant-based - Dedicated outsourcing firm - Multi-asset money management firm What are the fee structures, delivery systems, and value propositions? What were the greatest influencers in deciding upon a model? How did you prioritize needs and cost when comparing options? How did you stratify, eliminate, and ultimately decide? Open or closed architecture? What needs to be considered and how will it affect your outcomes? Applying due diligence to the decision—what steps are taken to determine the best model for outsourcing?

Steven F. Charlton, CFA, Director of Consulting Services, Partner, NEPC John Daly, Trustee Emeritus, Vice Chairman of the Investment Committee THE CULINARY INSTITUTE OF AMERICA John Keshner, Managing Director, Multi-Manager Solutions, NORTHERN TRUST

12:15 - 1:15

Networking Luncheon

1:15 - 2:00

A Brief Examination of Fees and Outsourcing Strategies

Managing risk effectively is a key responsibility of every board of directors, which requires understanding the full array of the risks organizations face. While traditional risk management looks at the investment portfolio through the eyes of its investment managers, today’s fiduciaries must evaluate investment risk within the context of the organization’s mission and its goals, providing the board with the true risk of its investment portfolio. During this presentation, U.S. Trust will discuss risk from the client’s perspective and present highlights from a new whitepaper examining these issues and how to manage, understand and measure risk in today’s financial landscape. Speaker: TBA U.S. Trust

3:45 - 4:30 • • • • •

Beyond Traditional ALM: Understanding LongTerm Risks in Liabilities and Asset Management Approaches

Traditional ALM used in most OCIO strategies often lacks cohesion and neglects long-term risks Understanding the implications of long-term risks Taking account of the interrelationships between financial and non-financial risks Coordinating investment and risk management strategies Ensuring cohesion in the approach to asset allocation, hedging and implementation decisions

Guy Coughlan, Managing Director, PACIFIC GLOBAL ADVISORS Raj Kundra, Managing Director, PACIFIC GLOBAL ADVISORS

4:30 - 5:00

Dynamic Investment Management Outsourcing: What Does it Mean for the Portfolio?

•

What are the impacts of shifting from an advisory model to an outsourced CIO model? • What were some of the challenges in implementing this shift? • How has the portfolio changed? • Have there been any innovative strategies or alpha generating managers since the change? Roger Wittlin, Investment Committee—Chair OCIO Task Force ARIZONA STATE UNIVERSITY FOUNDATION

5:00 - 6:00

Cocktail Reception Immediately Following Sponsored by:


Contact Menna Lloyd-White at (704) 341-2440 or [email protected] or more information on our sponsorship opportunities

DAY TWO: Tuesday, April 29, 2014 8:00 - 8:45

Continental Breakfast

8:45 - 9:00

Recap of Day One

9:00 - 9:30

Operationalizing Your Strategy: How Governance Determines the Quality of the Dynamic

• •

What happens to the investment staff once you’ve outsourced? How do you prepare committee members for the transition? What culture change scenarios do you need to be preparing for? • Capital calls and distributions—who watches for it, who makes the call, and how do the processes get handled? • Developing a matrix of responsibilities and establishing the continuum of services—what is the optimum structure? Where do providers need to improve? • How to maximize the relationship between investment committee and the OCIO Howard Lipman, President and CEO, THE FIU FOUNDATION

9:30 - 10:15 • • • • •

How to Evaluate Your OCIO Relationship: Monitoring, Maintaining, and Benchmarking Performance

How is performance reported? What benchmarks need to be established from the get go? What aspects and attributes should you measure? What are you benchmarking against? Is it all about performance? What other factors should you be keeping track of? How often should you be analyzing and re-analyzing your numbers? Should you hire a second set of eyes to monitor your OCIO?

Thomas Heck, CFA, Chief Investment Officer, BALL STATE UNIVERSITY FOUNDATION

10:15 - 10:30 Morning Break 10:30 - 11:00 The Holistic OCIO: Looking Beyond The Portfolio The OCIO was once regarded merely as an investment management and advisory function. Recently, however, the role has evolved to a total strategic partnership that delves into broader issues than the institution’s investment portfolio. In this discussion, we will focus on the value of a “Holistic OCIO” model. Through a case study we will present how the Commonfund OCIO Governance ModelTM examines multiple facets of an institution—from balance sheet to income statement—to yield an investment strategy integrated with strategic planning. Learn how a Holistic OCIO relationship can be a true partnership—one that incorporates current and future business issues into a customized investment solution and asset allocation strategy. Sarah Clark, Managing Director, Head of Commonfund OCIO Solutions COMMONFUND

11:00 –11:45 Your Fiduciary Responsibility under an OCIO Structure •

What legal considerations do you need to account for under this new dynamic? • Does “co-fiduciary” absolve, alter, or displace any of the board’s responsibilities? What are the “best practices” for the board? • What are the remaining liabilities? • Has the OCIO acknowledged that they’re acting as a fiduciary? Should they? Jeffery S. Johnson, Director of Investments KANSAS CITY EMPLOYEE RETIREMENT SYSTEM

11:45 – 12:30 From Start to Finish: A Detailed Case Study on Launching and Executing an Outsourced Strategy This session will offer a complete evaluation of the outsourcing process, everything from initial consideration to eventual implementation. Review and selection, transitioning, and monitoring—it’s all under the microscope for this unique and interactive presentation. Jeffry Haber, Ph.D, CPA, Professor, IONA COLLEGE

12:30 End of Summit

SPONSORS PLATINUM For more than 40 years, Russell Investments has focused on providing sophisticated outsourced investment solutions to endowments and foundations. By leveraging our five core competencies - capital markets insights, manager research, portfolio construction, portfolio implementation, and indexes – we are able to provide a customized, total portfolio investment management solution with your spending target as the outcome oriented goal. There is no “one size fits all” approach with Russell it’s up to you to decide how you want to work with us. Russell manages $256.7 billion in assets* (as of 12/31/13) and has over 20 offices around the globe.

(*includes $74.8 billion of derivative overlay AUM not included prior to June 30, 2013)

GOLD

U.S. Trust Bank of America Corporation provides OCIO services along with customized goals-based investment management solutions to nonprofit organizations and defined benefit plans. In addition, we help clients with asset-gathering strategies, spending policy analysis, and thought leadership that can help them transform their goals and objectives into meaningful action. From mission-appropriate asset allocation modeling to spending policy analysis, rigorous manager selection process, and deeply experienced investment management, we create solutions tailored to the specific needs of your organization. Our professionals average 15 years of experience in the philanthropy sector1. Pacific Global Advisors (PGA) is a QPAM providing customized solutions and implementation services for institutional investors with a focus on corporate defined benefit pension plans. PGA has an interdisciplinary team with deep expertise in the areas of asset-liability management, asset allocation, hedge implementation, collateral management, actuarial science, manager selection, ERISA, and pension risk transfer strategies. PGA’s platform is centered around core corporate finance principles and the issues PGA’s clients face as senior decision-makers. This unique shared perspective allows PGA to bring clarity and efficiency to pension plan management and achieve funded status risk reduction within the framework of PGA’s clients’ objectives. Commonfund is an independent investment firm with a 40-year history of meeting the investment needs of institutions across all asset classes and strategies. Headquartered in Wilton, Connecticut with investment offices in San Francisco, Beijing and London, Commonfund is considered to be a pioneer in the development of the “endowment model”. Additionally, in 2001, Commonfund was the first investment firm to launch a dedicated fully outsourced-CIO practice for nonprofits. Commonfund’s holistic OCIO practice now manages nearly $7 billion on behalf of 75 nonprofit institutions. Our key points of differentiation include our single-minded focus on delivering highly customizable and flexible solutions exclusively for endowments and foundations.

SILVER NEPC, LLC is an independent, full service investment consulting firm, providing asset allocation, manager search, performance evaluation, and investment policy services. We work with institutional investment programs and private wealth clients on both an advisory and discretionary basis. We service 323 retainer relationships, representing assets of $773 billion with approximately $55 billion committed/invested in alternative assets, from our offices in Atlanta, Boston, Charlotte, Chicago, Detroit, Las Vegas and San Francisco. Mercer is a leading global provider of investment services, and offers customized guidance at every stage of the investment decision, risk management and investment monitoring process. We have been dedicated to meeting the needs of clients for more than 40 years, working with the fiduciaries of foundations, endowments, pension funds, wealth managers and other investors in over 46 countries. We assist with every aspect of institutional investing (and retail portfolios in some geographies), from strategy, structure, and implementation to ongoing fiduciary management. For the past 18 years, we have offered OCIO services and now have $80+ billion in global discretionary assets under management. The multi-manager solutions team at Northern Trust Asset Management has a deep understanding of the unique investment programs of not-for-profit entities, foundations and endowments. For more than 30 years, we have been providing clients a collaborative, flexible approach that begins with listening to their needs. Our investment models focus on long-term consistency while employing cutting edge tactical positioning. Your investment program manager leads an accountable team that is backed by the deep investment resources of a leading global asset manager. We work with you to develop customized answers, designed to reach your organization’s long-term goals while managing risk.


The 2014 Midwest OCIO Summit

Financial Research Associates 200 Washington St. Ste. 201 Santa Cruz, CA 95060

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Financial Research Associates 18705 NE Cedar Drive Battle Ground, WA 98604

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n EE tio 50 , FR tra rst nts nd gis e fi e s, a s!* Re r th wm on nd o u fo nd dati n F E n io u s Fo en P

Financial Research Associates presents Financial Research Associates presents

The 2014

Midwest OCIO Summit April 28-29, 2014

The Standard Club

Chicago, IL

Case Studies and Discussion from These Investors: • • • • • •

Texas Presbyterian Foundation Iona College The Jewish Federations of North America Ball State University Missouri Baptist Foundation UND Foundation

• • • •

Arizona State University Foundation The Culinary Institute of America The FIU Foundation Kansas City Employee Retirement System
