May 2014 Proposal Of Outsourced . - Concordia University
May 2014Proposal of Outsourced ChiefInvestment Officer Services forConcordia UniversitySubmitted by: Jane Kerr610.676.1227 I jkerr@seic.com
Executive Summary3I. Organizational Background and Personnel5II. Client Services10III. Investment Philosophy and Process14IV. Investment Manager Research and Selection24V. Risk Management30VI. Performance Evaluation and Reporting32VII. Client Base35VIII. Code of Ethics & Conflicts of Interest37IX. Fees40X. Additional Information43Important Information45
Appendix ItemsA. BiographiesB. Form ADVC. Thought Leadership SamplesD. Sample Manager ThesisE. Sample Client ReportSEI Investments Management Corporation, itself and/or including its affiliated entities (collectively,―SEI‖), are providing you, solely for the purpose of your review of the response to this RFP, certainconfidential information which includes, but is not limited to, any and all information that relates tothe business and products of SEI with respect to which SEI has taken reasonable steps to preventthe unrestricted disclosure (―Confidential Information‖). SEI’s provision of information to you willnot transfer, grant or confer to or upon you, any rights, licenses or rights in or to such ConfidentialInformation SEI provides to you. In maintaining strict confidentiality under this Agreement andpursuant to your receipt of such Confidential Information, you agree that you may not, withoutfirst obtaining SEI’s written consent, disclose or make available to any person, business, orentity, reproduce or transmit, use (directly or indirectly), sell, distribute or communicate foryour own benefit or the benefit of others, any Confidential Information provided herein.
EXECUTIVE SUMMARYDue to an increasingly complex investment environment, many Investment Committees arelooking beyond traditional consulting providers and evaluating the benefits of discretionarysolutions. SEI is recognized as a leading provider of discretionary fiduciary managementsolutions, also known as an Outsourced Chief Investment Officer (OCIO), dedicated tocustomizing and executing timely investment strategies and ideas.SEI’s OCIO SolutionSEI is one of the largest providers of OCIO services worldwide. For 20 years, we haveimplemented a nonprofit solution designed for our clients to focus on their strategic decisions.We have taken the limited, traditional role of an investment consultant or investment managerand expanded it to meet a range of client needs. Our comprehensive solution offers:Investment FunctionOperations and Administrative Function Investment policy advice with asset Investment Policy Statement documentationallocation and capital market research Comprehensive reporting Active portfolio design, projections and Affiliate relationship supporteducation Portfolio operations and treasury services Active manager search, selection and Measurement, reporting and custody servicesmonitoring Economies of scale and manager Active portfolio monitoring and riskdiversification from 239 billion in assets undermanagementmanagement as of March 31, 2014 Depth of resources and experience Non-SEI assets oversight and reportingSEI remains a leading provider of manager research, selection and monitoring. We identifymanagers with clearly differentiated investment processes and combine them to achievemaximum diversification. Unlike a traditional approach in which the Investment Committeechooses managers, our professionals take responsibility for these functions. This allows clientsto have additional time and resources to complement their staff and operations.The foundation of our approach is active management, and client portfolios are designed tocapture opportunities over the short and long term. Our strategic Advice Process is an integralcomponent of our offering and combines in-depth analysis of your goals and objectives with ourproprietary modeling technology to design a custom investment portfolio. SEI’s solution alsoincludes custody and donor administration.Proposal of Services for Concordia University Page 3
Concluding RemarksThank you for considering SEI to be the OCIO for Concordia University (the University). As ademonstration of our qualifications, this proposal includes information on our investmentphilosophy and approach, an explanation of how we customize portfolio management and abreakdown of our fees for providing these services.Kind regards,Jane KerrRegional DirectorSEI’s Institutional GroupProposal of Services for Concordia University Page 4
I. ORGANIZATIONAL BACKGROUND AND PERSONNELA. Provide a brief summary and history of your firm, including year of inception,ownership structure, affiliated and subsidiary companies and relationships, jointventures, business partners, number and location of offices, and number ofprofessional consultants. Indicate which office would service our account.HistorySEI Investments CompanySEI Investments Company (SEIC) was founded in 1968 by the current Chairman and CEO,Alfred P. West Jr. Today, SEIC is a leading global provider of investment managementsolutions to endowments, foundations, corporations, healthcare organizations, private banksand financial advisors with 239 billion in assets under management as of March 31, 2014.We have over 2,700 employees worldwide and operate from 11 offices around the world.Your Client Portfolio Manager, Mark Morgan, CFA, will be based in our Chicago office withall other team members supporting the University account based in SEI’s headquarters inOaks, Pennsylvania. This includes relationship management, investment management,research, advisory, administration and custody. More than 300 employees are involved insupporting the delivery of these services to our institutional clients.SEI Investments Company has 10 additional offices worldwide located in: Global OfficesBenelux, The Netherlands Johannesburg, South AfricaChicago, Illinois London, EnglandDubai, United Arab Emirates New York, New YorkDublin, Ireland San Francisco, CaliforniaHong Kong, China Toronto, OntarioSEI’s Institutional GroupSEI’s Institutional Group is one of the largest fiduciary management providers to institutionalclients with 474 client accounts worldwide. We have continually evolved our solution andservices to address the needs of our clients by integrating advice with investmentmanagement, risk management, custody and administrative services.SEI’s Institutional Group was one of the largest institutional consultants to clients in both theU.S. and Canada by the late 1980s. Capitalizing on the knowledge and experience gainedfrom providing manager search services in the consulting business, we began to offer amultimanager investment implementation in 1990. In 1992, we introduced the industry’s firstcomprehensive and fully integrated Fiduciary Management Solution. Recognizing theconflicts of interest inherent in providing both a consultant-based model and a fiduciarymanagement model, we divested the consulting business in 1994 to focus solely onproviding institutional clients with an OCIO model.Proposal of Services for Concordia University Page 5
OwnershipSEI Investments Company (NASDAQ: SEIC) is a publicly traded, diversified financialservices firm headquartered in Oaks, Pennsylvania, a suburb of Philadelphia. SEIC is aPennsylvania corporation that was incorporated in 1969 and launched its initial publicoffering in 1981. Approximately 17% of outstanding SEIC shares are held by employees,officers and directors of the company (as of March 15, 2013).SEIC has a number of wholly owned subsidiaries that are regulated by government authorityand self-regulatory organizations. These subsidiaries include: SEI Investments Management Corporation (SEI) provides investment managementand advisory services and is a federally registered investment adviser with theSecurities and Exchange Commission (SEC) under the Investment Advisers Act of1940.The SEI Institutional Group provides investment management and advisory services,the core of this proposal, through SEI Investments Management Corporation. SEI Private Trust Company (SPTC) provides trust and custody services and is alimited purpose federal savings association regulated by the Office of the Comptrollerof the Currency (OCC). SEI Investments Distribution Co. (SIDCO) provides broker-dealer services, isregistered with the SEC and is a member of the Financial Industry RegulatoryAuthority (FINRA). SEI Trust Company (STC) provides services for bank-maintained collectiveinvestment trusts and is a state-chartered bank subject to oversight by thePennsylvania Department of Banking.AffiliateSEIC has a minority ownership interest (39.3% as of March 31, 2014) in LSV AssetManagement (LSV), which also serves as a manager in a small number of SEI’s investmentstrategies. In 1994, SEIC provided seed capital to help LSV commence operations andentered a relationship with an ownership interest that has generally declined over time. As amanager within some of our vehicles, LSV is subject to the same diligent monitoring,oversight and selection criteria as other managers.Proposal of Services for Concordia University Page 6
B. Provide the names, titles, home office locations and biographies of key individualswho would be directly responsible for providing services to our account. Include theyear each individual joined your firm, current responsibilities, area of expertise,experience, education, professional designations and memberships. Detail their rolesand the scope of their involvement for this assignment.SEI Team Supporting the Concordia University RelationshipClient Portfolio ManagerNonprofit Advisory Director Regular portfolio and manager reviews Strategy designed to meet alpha objectivesand portfolio goals Active point of view on global investmentmarkets, asset classes, managers andinvestment vehicles Risk managementMark Morgan, Strategy and investment oversightCFA Collaborates with asset allocation andmanager research specialistsMANAGER RESEARCH &SELECTION Portfolio construction Alpha source identification Equity, fixed income, alternativeinvestments manager selection Dynamic asset allocation Ongoing manager oversightMJ Bobyock,CFA Spending studiesLiquidity analysisAsset allocationCapital markets reviewMarket / industry researchCommittee education & trainingPlan giving strategyInvestment policy formulationASSET ALLOCATION /RISK MANAGEMENT Capital market assumptionsPortfolio modelingStress testingActive investment managementAlpha source and tracking erroranalysisCUSTODY /ADMINISTRATION Custody servicesUnitized sub-accountingRebalancing servicesIntegrated technology /performance reporting Audit assistanceYour Client Portfolio Manager, Mark Morgan, CFA, is your primary contact and will befamiliar with your organization, goals and objectives. Mark will be responsible forcommunicating SEI’s investment point of view and overseeing the management of yourassets. In addition, Mark is fully accountable for coordinating the services provided by SEIand partners with a Client Service Director, Lisa Herzog, CAIA, who is directly involved withall aspects of the relationship and serves as a secondary point of contact. MJ Bobyock,CFA, will implement advisory and asset allocation services and work with Mark and Lisa.You will also be assigned a Transition Manager, Chuck Esposito, to see the entire initialtransition process through to completion in conjunction with Jane Kerr.SEI’s environment is team-based at every level to provide comprehensive accountcoverage, flexibility and experienced resources for our clients that can vary according toaccount needs. Mark, as your dedicated Client Portfolio Manager, will work regularly withour experts across several account areas such as strategic advice, finance and investmentstrategy. Depending upon your needs, we have the capability to leverage knowledge andresources across our firm in addition to your Client Portfolio Management Team members.Please see Appendix A for the biographies of the key individuals.Proposal of Services for Concordia University Page 7
C. Does your firm have any ownership or financial relationships with any other financialfirms, including asset management, broker/dealer, banking, insurance or actuarialfirms?Please see question A for all subsidiary and affiliation relationships.D. Is your firm, its parent or affiliate(s) a registered investment advisor with the SECunder the Investment Advisors Act of 1940? If not, what is your fiduciaryclassification? Please provide a copy of your most recent SEC Form ADV Part II.Yes. SEI Investments Management Corporation (SEI) is a registered investment adviserwith the Securities and Exchange Commission (SEC) under the Investment Advisers Act of1940, as amended. SEI first registered with the SEC on June 27, 1985. SEI is a whollyowned subsidiary of SEI Investments Company, a publicly listed company (NASDAQ:SEIC). A copy of SEI’s Form ADV Part 2A and B is attached in Appendix B.E. Within the last five years has your organization or an officer or principal been involvedin any business litigation or other legal proceedings relating to your investmentadvisory and/or consulting services? If so, provide an explanation and indicate thecurrent status or disposition.SEI’s parent company, SEI Investments Company (SEIC), is a large international financialservices firm and several of its subsidiaries are subject to extensive regulation andexamination by regulatory authorities and self-regulatory organizations in the U.S. and inother countries around the world. These authorities and organizations in the U.S. include:the Office of the Comptroller of Currency, the Securities and Exchange Commission and theFinancial Industry Regulatory Authority. In other countries the authorities include: the UKFinancial Conduct Authority, the Central Bank of Ireland, the Ontario Securities Commissionand other agencies and authorities.As a result of the examination, investigation and enforcement activities of these agencies,authorities and organizations, various SEIC entities are constantly in communication withregulatory agencies about examinations, inquiries, investigations and other proceedings. Asa publicly traded corporation, SEIC is also subject to federal securities laws and required tofile annual and quarterly reports with the Securities and Exchange Commission on Forms10-K (Part I, Item 3. Legal Proceedings, Related Notes to the Financial Statements, etc.)and 10-Q (Part II, Item 1. Legal Proceedings, Related Notes to the Financial Statements,etc.). To the extent that any such regulatory or litigation matters are material and required tobe publicly disclosed, SEIC discloses such matters and any other regulatory considerationsin those filings which are available online at www.seic.com.Proposal of Services for Concordia University Page 8
F. What protection does your firm offer its clients from negligence or willful acts ofomission? Acts of fraud? Describe any insurance coverage your firm may have that isapplicable in this area.SEIC’s insurance coverage is detailed below:Errors and Omissions Professional Liability (Professional Indemnity) PolicyThe policy has a limit of liability of 80,000,000 per occurrence and in the aggregate. Thepolicy provides worldwide coverage for all insured’s business activities and is broader thannormally available in the marketplace. The policy is designed to respond to a claim madeagainst an insured in the conduct of any professional services by or on behalf of an insuredthat an insured is legally obligated to pay. Professional services are defined as servicesrendered or which ought to have been rendered for or on behalf of a customer or client of aninsured for a fee, commission or other remuneration or consideration that inures to thebenefit of an insured. The policy’s limit of liability and retention is continually reviewed usingpeer study data and qualitative factors in order to ensure that proper coverage ismaintained. The lead insurance carrier for the policy is CNA (Continental CasualtyCompany). All insurers participating in the policy have an A.M. Best rating of at least ―A‖.Fidelity BondThe bond provides insurance coverage for losses sustained by SEIC arising out ofemployee dishonesty and includes forgery or alteration, on premises, in transit, counterfeitcurrency, computer systems fraud and ten (10) other causes of loss. The bond wasmanuscript to provide the broadest coverage available in the insurance marketplace. Thebond coverage limit is 60,000,000 per occurrence and 120,000,000 in the aggregate. Thelead insurance carrier for this bond is CNA (Continental Casualty Company). All insurersparticipating in the bond have an A.M. Best rating of at least ―A‖.Other InsuranceSEIC carries other insurance typical of a large publicly held corporation including but notlimited to property, general/excess liability, automobile, workers’ compensation, employersliability, directors’ and officers’ liability and miscellaneous bonds.SEIC will provide clients with evidence of insurance (i.e. certificates of insurance) asrequired by the business agreement.This summary does not take place of or alter any of the conditions, exclusions and other terms of thepolicies herein summarized. It is merely a short descriptive guide to the policies for convenientreference. The information contained within this summary should be treated as confidential andproprietary to SEIC and its distribution limited solely to furthering SEIC’s business relationship withcurrent and prospective clients.Proposal of Services for Concordia University Page 9
II. CLIENT SERVICESA. Describe your firm’s client service philosophy in regards to the OCIO services model.If you provide traditional consulting services, how do your OCIO services differ?Client Service PhilosophyClient service is an integral part of the culture at SEI. We take a focused approach thatdelivers three key themes: Become partners with our clients - To help you succeed, we must have an in-depthunderstanding of your situation and goals and how you define success. Our ClientPortfolio Management and Advisory professionals maintain close contact in order tomake sure our solution continues to meet your needs, however and whenever theychange. Always be available and exceed expectations - Our collaborative environment andentrepreneurial spirit help us attract and keep high-quality professionals whogenuinely care about the well-being of our clients. Empower clients through communication and education - Our solution isdesigned to reduce your day-to-day burden so you can focus on key strategicdecisions such as asset allocation and evaluating new asset classes. In addition to ourin-person meetings, we offer a variety of programs to support you. Prudent decisionsrequire that you understand issues impacting your program.OCIO Services ModelWe work as a strategic partner with our clients to incorporate strategic advice, investmentmanagement and risk management into a portfolio management solution that is customizedto their unique financial goals and objectives and assists them in satisfying their fiduciaryresponsibilities.SEI takes a comprehensive approach to active asset management when acting as an OCIOfor our clients. This approach includes manager selection, security selection by moneymanagers, allocations to money managers, risk management across portfolios and clientportfolio allocation across asset classes.We view the role of the Investment Committee as a governing fiduciary focusing on thehighest impact strategic decisions. The Investment Committee will maintain responsibility fordefining objectives, setting strategy, monitoring SEI’s performance and providing timelyupdates on the University’s operating environment. We will also rely on the InvestmentCommittee to communicate changes to their financial objectives, risk tolerance, liquidity andreporting needs.Proposal of Services
Proposal of Services for Concordia University Page 5 I. ORGANIZATIONAL BACKGROUND AND PERSONNEL A. Provide a brief summary and history of your firm, including year of inception, ownership structure, affiliated and subsidiary companies and relationships, joint ventures, busines
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September: 2013 33,391.18 9/24/2013 October: 2013 33,391.18 10/24/2013 December: 2013 65,031.50 12/20/2013 January: 2014 33,099.37 1/23/2014 February: 2014 33,099.37 2/24/2014 March: 2014 33,099.37 3/24/2014 April: 2014 31,662.23 4/25/2014 May: 2014 31,662.23 5/22/2014 June: 2014 31,662.24 6/26/2014 392,881.03
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