The following is a list of questions officials at the Teachers Retirement System of Texas asked money managers interested in being considered as one of the $115 billion plan’s strategic partners (See “Lone Star Fund Breaks New Ground”):
1. Priorities: What priorities does your firm have that are significantly different from your peers? How have those priorities changed over the past three to five years? Which areas that are of importance to us are you either increasingly emphasizing or de-emphasizing?
2. Strategic Relationship: These are common outside the investment industry, but not inside it. Why is that? Without having to name anyone, describe what you consider your most valuable long-term investment relationship.
3. Competitive Advantage: When you think of all the important issues that global pension investment organizations face, what do you consider to be the two areas where you have a clear and sustainable competitive advantage? How do you know? List at least one important area where you feel that you know that you are trailing your peers.
4. Competitive Advantage: What are the three to five significant potential competitive advantages that you believe are least capture by pension plan investors?
5. Compensation: If you were managing a large, long-term pension plan, how would you structure a fair compensation plan with proper incentives?
6. Customization/Differentiation: What kind of a business do you believe you are in? It is easier to produce one product and sell it a “million” times. Is that what you do? If not, then what is it that you do?
7. Efficiency and Global Effectiveness: How capable are you (really) at organizing your firm in order to deliver a single, seamless global product to one customer?
8. Talent/Commitment: Who are the five most influential and talented people in your firm? How many of them would be assigned directly to this relationship?
9. Preparing for Problems: Do you believe that this will be comparatively easy or difficult? If you choose “difficult,” why bother?
10. Culture and Values: What are they? How do they align with ours? If you would, please include the company’s mission and value statement with your proposal.
11. Austin: We consider it the “center of the universe” and believe that it should be the institutional capital of the Southwest. Do you?
12. Macro or Micro: Do you believe that you are currently best suited for a macro or micro strategic relationship?
