NY Times: Concerns Raised Over Consultants to Pension Funds

Mary Williams Walsh wrote a long article in today’s New York Times about the relationship between money managers, plan sponsors, and the consulting firms who represent both.

Pension consultants sort money managers into asset classes and build databases using their own criteria to help trustees compare and select managers. Some consultants also sell their databases and tracking software to money managers and even sell advice on how to achieve higher rankings.

True. Like an Internet search engine, products must be sorted into asset classes and sub-classes. Callan sells its database and tracking software in the form of PEP. Wilshire has Compass.

Many consultants hold educational conferences for pension trustees. The trustees pay a modest admission fee or none at all; the costs are borne by money managers, who pay tens of thousands of dollars for the chance to attend and meet the trustees.

Callan hosts an annual conference at Pebble Beach. You tend to get higher quality attendees when you hold a conference at one of the top golf resorts in the country instead of a hotel in downtown San Francisco. Callan used to hold these events as educational forums for its employees. Now few employees are allowed to attend.

I am currently employed by Callan Associates, one of the companies under investigation by the SEC.

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