North Carolina is one of only three states that has a “sole trustee” model for its pension plan, meaning one person is responsible for the plan’s investment decisions. Brad Briner, the state’s newly elected treasurer and current sole trustee, wants to change that.
“Governance always leads to performance,” Briner said, noting that the $127 billion North Carolina Retirement Systems, Raleigh, consistently falls toward the bottom of the ranks when it comes to investment performance in the long term. For the retirement system's latest fiscal year, which ended June 30, NCRS ranked last in its five-year return rate and was among the bottom six for it's 10-year return rate, compared to other public pension plans, according to P&I data.
Most states have a board of trustees, as opposed a sole trustee, responsible for managing their pension fund’s investments, which Briner said is due to two reasons.
“The first is concentrating that kind of authority in a single public official has risks that that public official behaves badly,” he said, though he gave the caveat that North Carolina has not had that issue.
However, the more pressing issue, according to Briner, is that a sole trustee model “has costs in terms of investment performance.”
“We have seen sole fiduciaries decide to do exactly the opposite of their predecessor and change investment strategies every four years. And that is the enemy of long-term performance,” he added.
In 2014, former North Carolina Treasurer Janet Cowell formed a commission to study the state pension system's governance structure, and the commission's report ultimately suggested switching to a sole trustee model.
"At the time, the reception from the legislature was, 'This is interesting, but why does it matter? Our performance has been okay,'" Briner said. However, 11 years later, he said, "that performance gap has widened tremendously," and lawmakers are interested in ways to improve it.
Historically, pension plans were formed with a sole trustee — typically the state treasurer — but as “portfolios became more and more complex, then they started to move the responsibilities away from the sole fiduciary to boards,” explained Rick Funston, CEO of governance consultant Funston Advisory Services.
The challenge with a board of trustees, according to Funston, is ensuring that board members are “financially literate and investment literate,” though he noted that some states have requirements around their board members’ expertise.
Briner, who campaigned on the promise to change the pension fund’s governance model to a board of trustees, said he wants to create a five-person board, which would include the treasurer, “with real criteria around expertise,” including a minimum of 10 years of professional money management experience.
In addition, there would not be compensation associated with the board to avoid drawing interest “for the wrong reasons,” Briner said.
Prior to running for treasurer, Briner was the co-CIO of the investment firm Willett Advisors, which manages the philanthropic assets of Michael R. Bloomberg, including those of Bloomberg Philanthropies.
He left his position to run for office, noting, “I did run for office with the intent to diminish the power of the office.”
While the North Carolina Retirement Systems currently has an investment advisory committee, Briner said the committee is “purely advisory." Switching to a board of trustees model would shift the committee from "from advisory to fiduciary" and ultimately give board members a say in major investment decisions, the North Carolina treasurer explained.
Since Briner suggested the idea in his campaign for treasurer last year, pension officials from all over the country have reached out with advice, he said, adding that he’s been in “real dialogue” with at least a dozen other states.
Briner’s been working with state legislators to draft legislation creating a board of trustees, and “there’s been real reception to hearing our ideas” on both sides of the aisle, he said.
On March 24, North Carolina House Majority Leader Brenden Jones, along with four Republican lawmakers, filed the first version of such a bill, named the 2025 State Investment Modernization Act.
