KANSAS CITY, Mo. - When trustees for the $370 million Kansas City (Mo.) Employees' Retirement System decided recently to comparison shop for a custodian, they also decided to expand their search geographically.
Pat Gerrick, administrator for the system, said the fund had been looking in past years for custody from some of the "strong banks" in Kansas City and elsewhere in Missouri. This time, however, trustees wanted to look nationwide for competitors.
For the past five years, the fund has been using Boatmen's Trust Co., St. Louis. The expanded search now will allow the major custody banks in New York, Boston and elsewhere to compete.
The Kansas City fund, according to pension consultants, is like other pension funds - putting less emphasis on proximity and more emphasis on the number and quality of services available.
Boatmen's is expected to compete, and ultimately it may retain the job when finalists are selected.
Yet, Boatmen's probably will face very strong competition.
Ms. Gerrick said she can't say where Boatmen's stands in custodial technology and other areas on a national basis yet because the fund hasn't done a nationwide search for a custodian before.
One of the ways East Coast major custody banks have been able to stand out is to show their global reach. Many provide custody services in more than 55 countries.
However, the Kansas fund doesn't have any separate accounts as yet in international investments. It has international commingled fund accounts, and fund executives don't see a custodian's international custody capability as a major draw for now. Ms. Gerrick said international custody capability is one criteria that will be considered because at some future point the fund might decide on a separate international account.
Other custodian features the fund will be looking at include the overall organization, commitment to custody, commitment to technology, compensation, fees, trading, securities pricing capability, check dispersal, online access and personnel.
Between now and mid-September, the trustees will look over responses to the fund's RFP. The fund's board probably will cull two or three finalists by the end of the month. The fund's pension consultant, DeMarche Associates, is assisting.
SAN FRANCISCO - The $6.2 billion San Francisco City & County Employees Retirement System search for a custodian will look at services and prices.
Custodians have been bringing new technology online, and there has been considerable consolidation among custody banks. Consequently, Carolyn Hamilton, chief investment officer for the San Francisco fund, said it is "very timely" to issue the RFPs for a custodian. She added the pension fund hasn't tested the custody market with an RFP for 10 years. In that time, she said, "the (custody) industry has changed very dramatically."
The pension fund's current custodian, Bankers Trust Co., New York., has been doing a very good job for the fund, she said. Bankers Trust is expected to compete to retain its custodial job with the pension fund, which will be offering a five-year contract.