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Consultants

CalPERS finds varying levels of satisfaction with 3 consultants

CalPERS investment committee members generally like the consultants they have hired to advise them on investments but not entirely on all matters, show the results of an anonymous survey taken by 11 of the 13 members, who are also CalPERS board members.

The survey, which was released at the $331.6 billion Sacramento-based pension fund's investment committee meeting Monday, marks the first time all board members have had a chance to rate the consultants.

In previous years, the California Public Employees' Retirement System board president, the investment committee chairman and vice chairman, and three random investment committee members were given the survey.

Consultants were rated on a variety of questions, with five rankings from "very satisfied" to "very disappointed;" no firm received the lowest rank.

The system's general investment consultant, Wilshire Consulting, received a very satisfied rating from nine board members on whether its executives "thoroughly understand CalPERS' questions and concerns," while another member gave the firm the second-highest rating, satisfied, and another gave it a neutral rating. Pension Consulting Alliance, rated as the backup general consultant and a consultant for the responsible contractor program, received a very satisfied ranking from eight board members, satisfied from two and neutral from another. PCA was also surveyed a second time in its function as real estate consultant; six were very satisfied, four were satisfied and one was neutral. Infrastructure consultant StepStone Group was only found as very satisfied by two board members, while seven were satisfied and two were neutral.

Wilshire's score went down when board members were asked whether the consultant provides "independent, unbiased insight and advice." Only four board members said they were very satisfied, while five said they were satisfied and two said they were dissatisfied. Six board members said they were very satisfied with PCA on that question, while three said they were satisfied, one was neutral and one was dissatisfied. As real estate consultant, four board members were very satisfied, five were satisfied and two were dissatisfied. Three board members were very satisfied with StepStone, six were satisfied, one was neutral and the one was dissatisfied.

Nine board members said they were very satisfied when asked if Wilshire "acts with honesty, integrity and competence" and two said they were satisfied. Seven members said they were very satisfied with PCA and four said they were satisfied on that question. As real estate consultant, eight board members were very satisfied while three were satisfied. Four board members said they were very satisfied with StepStone, six were satisfied and one was neutral.

Seven board members said they were very satisfied that Wilshire "works cooperatively to add value to CalPERS," three said they were satisfied and one was neutral. Five board members said they were very satisfied that PCA works cooperatively to add value to CalPERS, five reported they were very satisfied and one was neutral. As real estate consultant, six board members were very satisfied, four were satisfied and one was neutral. Five board members were very satisfied with StepStone, four were satisfied and two were neutral.

Five members said they were very satisfied that Wilshire "fulfills fiduciary responsibility," while five said they were satisfied and one was neutral. Only three board members said they were very satisfied with PCA, while seven were satisfied and one was neutral. As a real estate consultant, only three board members said they were very satisfied with PCA, seven said they were satisfied and one board member expressed a neutral view. Two board members said they were very satisfied with StepStone on the question while seven were satisfied and two were neutral.

In a discussion at Monday's meeting about the consultant surveys, investment committee members did not name any of the consultants by name.

Committee member J.J. Jelincic said he wanted to be more aware of discussions between consultants and investment staff, noting the investment committee does not receive reports on those discussions.

The consultants work for the board but consult with investment staff, and Mr. Jelincic has been a critic in the past of that relationship, questioning whether the consultants are doing their job as independent monitors.

In response to Mr. Jelincic's comments, investment committee Chairman Henry Jones said a discussion on strategic investment information the board should receive from consultants will be held in closed session.

PCA and StepStone did not respond to requests for comment. A Wilshire spokeswoman declined to comment.