In response to the Dec. 10 letter to the editor, “RFPs needed to prevent corruption,” which addressed a Nov. 26 article, “A shift toward streamlining: Firms providing more manager information as public plans move away from traditional RFPs”:
Principled people prevent corruption, not RFPs.
Corruption is not prevented by using RFPs. Higher fees are not the outcome of not using a traditional RFP process. The reality is that public pension plans hire the most talented investment professionals they can afford given their particular situational constraints. These investment professionals oversee and implement the various programs given a set of rules established by their governing entity, including the construction of appropriate search processes. Databases are used and consultants are hired to supplement the skills sets of those hired to help increase the bandwidth and efficiency of the required investment research.
While traditional RFPs may serve a legitimate purpose in the search for some investment service providers, they should only be deployed in those instances where professional judgment determines it is the most effective and efficient tool for achieving an outcome. In addition to traditional RFPs, Kentucky Retirement Systems utilizes other appropriate options such as RFIs, invitation-only searches, and single opportunity evaluation systems which are of equal merit. These methods are all used by public pension boards and staff where appropriate.
Quality investment/vendor outcomes are achieved at public pension plans by hiring experienced, principled investment professionals and providing them with a flexible governance structure, guided by fiduciary duty, under which they can make intelligent, research-based decisions.
T.J. Carlson
Chief Investment Officer
Kentucky Retirement Systems
Frankfort, Ky.