AUSTIN, Texas -- The City of Austin Employees' Retirement System added a step to the consultant selection process: it selected a consultant to help in hiring an investment consultant.
The move is rare.
"It's still sort of sporadic," said Luke Collins, director, investment management consulting, at KPMG Peat Marwick, Chicago.
Mr. Collins remembers being a candidate in a consultant search while he was a consultant with Slocum & Associates, where the search for an investment consultant was handled by a public fund's auditing firm.
It's mainly smaller public funds that would use an outside consulting firm to handle an investment consultant search, Mr. Collins said.
The $1 billion City of Austin fund hired Cooper Consultants, Houston, to help trustees determine the role of their investment consultant, developing a proposal format and recommend selection criteria. Also, the consultant will analyze the responses to the RFP, which is to be issued in November.
Cathy Harrington, pension director for the retirement system, said, "I feel we are hiring an adjunct to our staff . . . There is a whole lot of other work that needs to go on outside of managing money."
The fund last had a consultant nine years ago and trustees felt it was time to hire one. She declined to name the firm.
Once hired, the investment consultant probably will conduct an asset-liability study.
According to Tim Solberg, consultant at Hewitt Associates, it is common for funds to hire one of the big accounting firms when hiring an investment consultant for the first time. Usually the fund has a relationship with the accounting firm.
Mr. Collins said KPMG has relationships as an auditor for funds, but has yet to do a consultant search for any of them.
Dick Zaccaro, a consultant with H.C. Wainwright, Boston, said most of his funds' trustees are sophisticated investors and would not need to hire an outside consultant for that kind of work.
Jennifer Ann Cooper, founder of Cooper Consultants, would disagree with Mr. Zaccaro. She is currently working with small to mid-sized pension funds in the Northeastern United States, Florida and Texas.
Cooper Consultants has been in business for a little more than a year and specializes in serving public funds. The firm does offer investment consulting, but only on a project-by-project basis.
Before starting the firm, Ms. Cooper was executive director of the $1.4 billion Houston Firemen's Relief and Retirement Fund, where she completed a consultant search in-house. The Austin assignment is her first consultant search as an outside consultant.
"I think it's going to be a growing area, to tell you the truth," she said of the process of retaining a consultant to hire a consultant.
