The decision by Mercer LLC's investment consulting division to stop advising U.S. public defined benefit plans has put 24 clients in play, with roughly $240 billion in combined assets under advisement.
Executives at other investment consulting firms say they'll compete vigorously for that business, even as they debate the validity of the liability concerns driving Mercer — or more likely parent Marsh & McLennan Cos. — from that market segment.
Executives at other consulting firms report only one RFP outstanding from Mercer's public fund clients, from the $9.4 billion Public School Teachers' Pension & Retirement Fund of Chicago. But that RFP was issued before the Oct. 7 client e-mail in which Jeffery J. Schutes, Mercer's U.S. leader of investment consulting, informed clients of the firm's decision.
Clients say they'll be meeting with their boards to decide how to proceed, but at least one got an extension from Mercer.
Connecticut state Treasurer Denise Nappier said in an e-mailed statement that Mercer agreed to a one-year contract extension through September 2011 as general consultant to Connecticut's state plan, “which will afford us time to transition to a new consultant.”
Lorrie S. Tingle, chief investment officer of the $18 billion Public Employees' Retirement System of Mississippi, Jackson, said in an e-mail that officials there will issue an RFP Nov. 1, and look to have a new investment consultant in place by April 30.
Executives with other Mercer clients, including Tom Rick, chief investment officer of the $4.2 billion City of Milwaukee Employes' Retirement System, and Bonnie M. Wise, director-finance, for the $413 million City of Tampa (Fla.) General Employees' Retirement Fund, said their boards will discuss the matter in the next week or two.
Corporate plans account for the bulk of Mercer's current roster of 311 investment retainer clients. Still, the firm has attracted a number of state fund clients as well over the years. They include the $52 billion Ohio Public Employees Retirement System, the $22 billion State of Connecticut Retirement Plans and Trust Funds and the $21 billion Arizona State Retirement System and the $14 billion Indiana Public Employees Retirement Fund.
Likewise, the firm serves a number of county and citywide plans, including the $5 billion Sacramento County (Calif.) Employees Retirement System, the $850 million Fairfax County (Va.) Retirement Systems (Police) and the $950 million Firemen's Annuity & Benefit Fund of Chicago.