Despite my plea to protect the confidentiality of finalist candidates in our recent chief investment officer selection process, Steve Hemmerick chose to publish several names in his May 12 article.
These individuals were recruited into the process by the executive search firm with the understanding that they would compete on a confidential basis.
Disclosure of their names without their advance consent is a great disservice to the individuals and will no doubt have a chilling effect on the propensity of others to compete for high-profile jobs in our industry.
It is hard enough to attract highly qualified individuals into the public sector given salary constraints and the "fish bowl" environment. Henceforth, it will likely be even more difficult.
As one of the best respected trade publications in our industry, I believe you should take some responsibility to help us improve overall quality of investment management in the public sector.
I would like to see a public comment that you will refrain from this type of behavior in the future.
James D. Mosman
Chief Executive Officer
California State Teachers'
We are sorry to say your May 12 story "Putnam, ex-employee at odds over benefits" on page 1 crosses the line of irony and is lacking in perspective. You have taken an isolated record-keeping dispute between Putnam and a lawyer the company fired nine years ago and suggested a whole range of questions about our performance and capabilities.
So here are some relevant answers:
We identified a mistake in a single employee retirement plan record. We took steps to correct it. We are in a dispute with that former employee about how much the employee is owed, if anything.
Is there a pattern here?
No. This is the only one. There are no other related disputes.
How is this related to Putnam's record-keeping for retirement plan clients?
It is not. The systems, personnel and policies are separate. Our record-keeping performance for over 700,000 plan participants meets or exceeds any benchmark for quality and timeliness. So does the performance of our employee plan.
What is the real issue here?
The real issue is money. Records like the one in dispute are kept to determine how much plan participants are owed. It is important that they be accurate, and it is also important that people not be given more money than they are entitled to.
We believe the former employee knew about the mistake long before we found it. His apparent objective is to take advantage of the error and to be paid more than he earned in the plan.
Our goal is to protect the plan assets so employees receive what they have earned.
We set a high standard for excellence and are proud of the service that we provide to plan sponsors and individual investors. One error that we found and corrected was just that, no more.
Mitchell D. Schultz
Senior Vice President
Director of Compensation,
Benefits and HRMS
Your March 17 editorial on CalPERS' "study" of potential internal active management was both premature and extreme in its criticism.
CalPERS is not only one of the largest, but also one of the most innovative public retirement systems in this country.
Why shouldn't staff recommend to the Board of Trustees studying the possibility of internal active management?
If internal management is viable, CalPERS' Board of Trustees and staff would be negligent in their fiduciary duties if they did not at least investigate this possibility. CalPERS is not known to jump into new investment programs without extensive study and preparations prior to implementation.
Internal active management is the dream of many public pension staffs to provide returns competitive with external managers while saving millions in management fees. You have prematurely criticized a study that is not even a board proposal, much less an approved program ready for implementation.
Why not wait and see results of the study and whether it actually results in a firm recommendation for implementation?
CalPERS' staff and board should be commended for undertaking this innovative study.
If successful, CalPERS' internal active management could set a precedent potentially benefiting all public pension plans capable of undertaking such an effort.
Many of the potential compensation and management succession problems you discuss are those faced by external managers on a daily basis.
If external managers can deal with these problems successfully, why can't CalPERS?
Fear of failure and "political implications" should never deter plan fiduciaries from considering opportunities to better their plan's administration.
In addition, living with political risks is a daily part of a public plan staff's job. There is a political risk in almost everything we do.
Lastly, please be realistic about external managers' eagerness to provide an additional layer of fiduciary responsibility.
When was the last time you talked to an external manager that was eager to discuss the additional fiduciary protections they provided for their clients?
It just doesn't happen in the real world.
Next time, a little more support for an innovative study and a little less protection for firms advertising in your magazine would be greatly appreciated by your readers.
James O. Wood
Louisiana State Employees'
Baton Rouge, La.
Reaves's client contact
Please be advised that I am the client contact for W.H. Reaves & Co. Inc. as director of client services.
Any inquiries should be addresses directly to me at W.H. Reaves & Co. Inc., 10 Exchange Place, Jersey City, N.J. 07302.
My telephone is (630) 789-9926.
Robert M. Seward II
Director of Institutional Services
W.H. Reaves & Co. Inc.
Jersey City, N.J.
Editor's note: The contact listed in the questionnaire completed for W.H. Reaves in the May 12 Directory of Investment Advisers was incorrect.