.

Okay.

You don't need that?

Oh, okay.

Good morning.

Welcome to the Defined Contributions Plan Committee meeting on the 10th of December,

2025.

The meeting is now called to order.

Will the clerk please call roll and establish a quorum?

Thank you, Chair.

Member Rogani?

Here.

Member Colville?

Here.

Member Kang?

Here.

Member Tunson is absent.

Member Gardella?

Here.

Vice Chair Levison?

Here.

And Chair Hoekstra?

Here.

Thank you.

We have quorum of regular members.

I'm going to call roll for the alternate members.

Member Contreras is absent.

Member Harland, member Harland is present.

Member Hutchins is absent.

Member Knox is absent.

Member Tran is absent.

And Member Zalaski is absent of the alternate members.

Thank you, Chair.

We may proceed.

Okay, thank you.

I would like to remind the public in chambers

that if you would like to speak on an agenda item,

please turn in a speaker slip when the item begins.

You will now have two minutes to speak once you are called upon.

After the first speaker, we will no longer accept speaker slips.

We will now proceed with today's agenda.

Please rise for the opening acknowledgments

in honor of Sacramento's indigenous people and tribal lands.

To the original people of this land,

the Nisanon people, the Southern Maidu, Valley and Plains Miwok, Patwin-Wintun peoples,

and the people of the Wilton Rancheria, Sacramento's only federally recognized tribe.

May we acknowledge and honor the Native people who came before us and still walk beside us today

on these ancestral lands by choosing to gather together today in the active practice of

acknowledgement and appreciation for Sacramento's Indigenous people's history, contributions,

and lives. Thank you. Please remain standing for the Pledge of Allegiance.

I pledge allegiance to the flag of the United States of America

and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all.

Thank you, everyone.

I would like to remind members of the public that if you would like to speak on an agenda item,

it seems like I already read that.

I know, but it's on here twice.

Anyway, yeah, we know that one.

All right.

Our first agenda item is the consent calendar.

However, I want to, before we get started with that,

I want to make a motion that we extend the meeting

for an additional hour to three hours total.

And I'm looking for a second.

Second.

Okay.

The motion has been made and seconded.

Can we have a vote?

Member Rogani?

Aye.

Member Colville?

Yes.

Member Kang?

Yes.

Member Tunson?

His absence.

Member Gardella?

Yes.

Member Levison?

Yes.

And Chair Hoekstra?

Yes.

Thank you.

The motion passes.

I'd like to get through the meeting minutes as quick as possible.

I would like to change the order since we do have a proposal starting in eight minutes.

And I don't want to cheat any of our people who have traveled so far out of any of their

valuable time or ours.

So I would like to open the approval for the defined contribution plan committee minutes

on file. Do you have anything Murray? Yes Mr. Chair. For our June meeting item number two in

the minutes the word recommend or recommending was not part of the motion. If you listen to the audio

you won't hear that word in there and secondly it was members Alasky that seconded the second motion.

Those are my only corrections to the minutes.

I'll second it.

I have a motion by Member Colville and a second by Chair Hoekstra.

Now do the roll call vote.

Member Rogani?

Yes.

Member Colville?

Yes.

Member Kang?

Yes.

Member Tunson is absent.

Member Gardella?

Yes.

Member Leveson?

Yes.

And Chair Hoekstra?

Yes.

Thank you. The motion passes.

Okay.

The discussion calendar.

Do we have enough time for that?

That's the fiduciary review.

As chair, you can reorder the items.

Right.

Raj, how long would that take to do?

Can you do it in five minutes?

Yes.

I can.

You'd like me to come up and do it.

How do you guys feel like you want to do that or do you want to wait until the end?

Okay.

No one wants to do it.

Let's wait until the end.

So we're a little ahead of a schedule now.

So we're going to change the order and we're going to go to item number four and that's

the retirement plans, investment consulting services, request for proposals.

And we have speakers here from Creative Planning Retirement Services, and they will be first

up with a half-hour presentation.

If I could just provide some additional information to the committee, because I know not all committee

members participated in the RFP review process.

Also, we did communicate to each group what their presentation start time would be.

I believe we're still awaiting one group to arrive.

They're scheduled at the last time, so we probably just want to take under consideration presentation times.

But the RFP process, the RFP was issued in October for the city to solicit investment retirement consultant services

services to advise the city and the committee on the investment and other services within

the city's deferred compensation plans.

The city received six what's considered responsive proposals to the RFP.

The RFP review panel reviewed and scored.

And then what happens is those scores all get averaged together to show the scores that

are published in the staff report.

So you have the scores listed for you in the staff report.

You also see the proposed cost outlined by the top four scored proposals so you don't

have to try to thumb through the proposals that were submitted to figure out what the

fees are that they are proposing.

Each firm was invited or these four were communicated with about providing a presentation to the

committee as a whole today and then we do need to allow some time for question and answer

period from the committee members to the firms and they are aware of that and they are aware

that this is at this point 30 minutes for each of them.

And then as a reminder, the cost of the awarded contract will be paid from the administrative

allowance account that's held at Nationwide.

And that account is funded solely by 457 plan participants through a monthly administrative

fee of $1.50 that's deducted from the participants plan balances.

The city would like to enter into a five-year contract for these services.

It's fairly standard.

Why are we doing this?

I missed that part.

I'm sorry.

Our current contract, which we've had in place with fiduciary group, is expiring.

Fiduciary group originally named the highest, which you're most familiar with that name probably.

That contract is expiring.

And so under the city's practices for a contract where we expect the dollar amount to be around probably the $250,000 mark, we do have to go out for the formal RFP process for that.

So that is where we are today.

And with that, I just want to make sure our first group scheduled to present is Creative Planning Retirement Services.

And is there, okay, their PowerPoint is up.

That is great.

Paul, are you going to lead the way there?

Let's just make sure the microphone's working for you.

And as a reminder, I know I talked to all of you individually.

When you're up here at the podium and you're speaking to the committee,

please make sure you speak into the microphone.

This ensures that the audio is being recorded.

Anyone watching that online can hear.

So I'll remind individuals if necessary.

With that, I'm going to turn it over to Paul,

have him introduce himself and start his presentation.

Good. Samantha, this just, do I point here or do I point there?

Where does he point the remote? There you go.

Perfect. Great. Well, good morning, everybody.

On behalf of our team, I'd like to thank everybody at the city for giving us this opportunity.

We're thrilled about the prospects of working for you and the city's planned participants,

and we're certainly looking forward to spending the next 30 minutes with you.

My name is Paul Nicario, and I'm a partner and managing director on behalf of Creative Planning.

Now, when we received this RFP in October, our response was really based on two simple principles.

How do we make this plan better for your participants, and how do we make this plan better for you as fiduciaries?

So our presentation today is really, really simple.

We're going to start off by talking a little bit about our team and a little bit about creative,

and then we're going to go right into some of the main areas that we know are important to you.

So your investment menu, CITs, cost savings, and your fixed account, just to name a handful of things.

So we know our time is very limited today.

So if you feel like we're glossing over anything or we're not covering something, please just ask.

Just make sure you're aware that everything in our offering encompasses the full line of scope of services in there.

so we don't have any exceptions.

So again, we'd like to thank everybody for this opportunity.

Now, if we're fortunate enough to be able to work with the city,

the three of us, along with Amanda, Sam,

will be the team that services you.

We'll interact with you on a daily basis.

So first off, I'd like to have our team introduce themselves

and then talk about their roles and responsibilities.

So we'll hand things over to Mindy.

Hi, good morning everyone.

My name is Mindy Marburger and I am a partner and senior consultant at Creative Planning.

I've been in this industry for over 20 years.

At Creative Planning, I not only work with other clients like yourself, but I also sit

on the senior leadership team and I head up all of our training and development as well

as work with all of our content groups.

So that gives me a good cross-functional role, which really helps me also leverage all the tools and resources that we have to help you all meet your plan goals.

Hello, my name is Andrew Ness, and I'm a new face for you.

I wasn't outlined in the creative planning proposal.

I've been working at Sageview, which a couple months ago,

Creative Planning announced that they were acquiring Sageview as a firm.

At the point of submitting your proposal,

it seemed too early to feel like we could pull together a team for that.

We're close enough now that we felt very confident with having me attend today.

If we're lucky enough to be retired, I would love to be a part of your team.

I am a consultant that's been focusing on the public sector for my entire career.

It's consulting for over 20 years.

All public sector defined contribution plans.

And I also have a footprint among the larger and jumbo clients across the country, which

really makes me interested in you all as well.

I've been fortunate enough to work with 20 state sponsored plans in California.

I'm currently working with the county of Los Angeles.

and we just signed a contract not too long ago

to do some project work for the State of California Savings Plus Program.

So a lot of robust, larger plans like yourself

that I think can be a helpful resource to you.

I would say that just to finish up,

if we're lucky enough to be awarded the contract,

I fully intend to be a fully participating part of this team.

Thank you.

I am affectionately known as the old dude of the group.

So at the end of this year, it's hard to believe,

but I've finished my 35th year in the financial service business.

And the majority of my career, I've been in the public sector retirement space.

So the bulk of my career has been on the record keeper side

and the last seven years on the investment consulting side.

In 2022, I was elected to the NAGDA Industry Committee.

It's a six-year commitment.

So what that means is starting last month, that puts me on the NAGDA Executive Board for the next couple of years.

So not with us today is Amanda Staples and Sam Henson.

So just a little bit on Amanda and Sam.

Amanda is a highly credentialed individual that will be responsible for all of your investment.

So selection, oversight, replacement.

She has more than 16 years' worth of experience, and she's based out of Denver.

Sam Henson's our attorney.

We're one of the few firms that has an in-house legal counsel that's offered as part of our offering.

So Sam leads everything that is fiduciary governance-related all the way to legislative updates.

So a myriad of things.

It could be setting up and establishing committee bylaws and plan structure.

It could be reviewing plan documents.

It could be helping the city in reviewing CIT contracts all the way to impending secure 3.0 type of options.

So as Andrew alluded to, we've had a busy last couple of months.

So creative planning is built on two simple business lines, our side, retirement services, and then a private wealth side.

So the numbers that you see in front of you are going to change drastically.

So our retirement services side has really grown over the last five years through acquisition.

So five years ago, we purchased Iron Financial and Lockton's retirement business.

Three years ago, we purchased Mesereau's retirement business, and then, as Andrew mentioned, Sageview.

So all of these numbers change drastically.

So those numbers would be 11,500 retirement plans serving over 3,500 retirement plan clients,

assets under management of over $450 billion.

Our associate count essentially doubles, and we have offices all over the country.

and the office, our California office is based in Southern California.

Our client list also changes drastically.

So in the state of California, we now have over 30 public sector plans.

Andrew mentioned the state of California Savings Plus Plan, L.A. County, Santa Barbara County,

tell me if I missed anything here, San Luis Obispo, and Ventura County.

nationally again the client list expands we have seven state plans so the state of Virginia state

of Kansas state of Iowa state of Idaho state of Arizona public safety and the state of Louisiana

teachers with that I'd like to turn things over to Mindy to address the first topic which is going

to be the review of your investment menu.

OK.

So it's half the bottle getting the clicker to work.

OK, we have at Creative Planning, we

have two investment committees that help oversee all

of the different money management that we're doing.

So we have the Investment Policy Committee,

which is oversight for more of our private wealth

side of the business.

And then we also have our retirement investment committee.

That retirement investment committee is the committee that is, if we get a chance to partner with you,

they are a committee that's headed up by Ramesh, who is our CIO.

And then he, along with several individuals that you see on that presentation,

they form that committee and they are going through each quarter looking at basically the universe of funds.

And from there, they're able to create what we have as a preferred list.

And so all of that is showing that we have a great depth to our team.

So all of those folks that you see there, they're all CFA holders.

And then you have several non-voting members there who are also providing their expertise around investments.

That investment committee is utilizing our institutional investment decision process that we use.

I'll tell you, you're going to sit here today, and everyone's going to tell you about their investment process.

And so what we have here is we're using modern portfolio theory statistics,

and basically we're using a quantitative approach where we're looking at various metrics for each investment,

And then we also have a qualitative approach where that investment committee that we just talked about, they're meeting with portfolio managers every quarter to dig deeper into right beyond the numbers that we get from our scoring metrics.

So it's a lot of work done each quarter to ensure that the investments that we're using go through a very thorough process.

for you all we do have

our team along with our several of our investment analysts

we have gotten a chance to look at your fund menu

and we do have we have a myriad of recommendations but the ones

highlighted there are going to really exemplify the sort

of cost savings that Paul mentioned previously on the investment side

The top one there is in regards to your Vanguard target date funds.

We do have an exclusive partnership with Vanguard that allows us to access just a lower share class of CITs for your Vanguard target date funds.

Currently, right, you folks and a lot of other plans out there are holding the share class of eight basis points.

we now have exclusive access to a shared class that's four and a half basis points.

So that along with several of the other CIT options that are exclusive to us,

we are able to bundle all that and provide significant cost savings,

which I'll show you here in a couple slides.

Mindy, if I'm reading your proposal correctly,

that advantageous pricing is only if you're selected as a 338 fiduciary,

which is not what we indicated in our proposal was what we were looking for?

Go ahead, Paul.

Murray, so we would be 338 just for the target date funds.

So in order for any of our clients to take advantage of the enterprise pricing we have, it's just for the target date funds.

It would be 321 for the remainder of the lineup.

Maybe you could explain briefly to the committee the difference between 321 and 338.

Sure.

So 321 is where an investment advisor is a co-fiduciary on the funds.

So what that means is the way that you all have your meetings now is HIAS comes in and they're like, we have investment recommendations.

We need you all to approve those recommendations.

As a 338, the difference is it's considered you're the investment manager on the fund.

So we take discretionary control over those investment decisions.

So instead of us saying, hey, we have these suggestions, do you want to take them?

as a 338, instead it would be our investment committee has gone through these, here are the changes we'd like to make,

and then we let the committee know how we came to those decisions, but then we work in the background with Nationwide to execute those decisions.

Does that help, Murray?

Okay.

on the Vanguard target date funds.

Estimate savings around $63,000 there.

And then here, this is an eyesore, so apologies.

But this really highlights all the different CIT changes

that we would suggest implementing on the current plan.

And then that total estimated savings is there at the top

at around $645,000.

And most of these are like-to-like fund changes,

meaning that, right, if you have Vanguard target date funds right now,

you still keep Vanguard target date funds.

It would just be a lower share class.

And so that's all savings, right,

that you would be able to impart over to your participants.

And I'm now going to hand it over to Andrew.

Can I also ask, so you've made a lot of recommendations,

is if you go back a slide to our funds.

We have a few funds that are on watch.

Okay, yes.

But not as many as you're suggesting be replaced.

Is it appropriate to be recommending fund changes

to funds that aren't on watch?

And at what point do fund changes become too many

or too often causing disruption for our plan participants?

that's murray that is a question i get asked all the time from our clients so a lot of the fund

changes um on here are share class changes meaning that the actual fund right the that's being used

is the same it's just moving into a lower cost for folks to answer your other questions though

right how often do you want to do these what's appropriate um that is

it's always like administratively how many times right do you want to send folks notices

samantha i'm sure can attest to this um and that's really up to the committee so i have

clients who say hey we want to implement these cost savings immediately and they will move forward

with them and right they send out the notice i have some folks who want to bundle all that into

only one annual change.

So then we document in the minutes

this was discussed due to

administrative ease. We're going to

wait another quarter or two when

there's other fund changes where we can

tie it all together.

Our point of view

is documenting

all that is more important

of knowing that you acknowledge

that the committee had the discussion.

They're aware that this change can take

place and for

administrative ease

and you document all that, you can wait, right?

You can wait until it makes sense.

Go ahead.

So are these shared classes specific?

Most of these are exclusive to creative planning,

meaning that we have, just due to our scale,

we're able to leverage lower pricing.

And just to be clear, this is a savings year over year,

this $645,000?

Yeah.

Estimate.

Yes.

Yeah, approximate.

I don't want to guarantee anything.

Right, of course.

Everything goes up and down.

I get it.

Thank you.

Murray, before I hand things over to Andrew, I just wanted to clarify.

So our menu recommendations were really based on two principles, an expense story and having better performance.

So the metrics that we use, probably similar to most of the other firms, three years, five years, seven years, ten years.

So any recommendation we made was based off of performance and expense story.

And the only thing I'd add to that is, you know, we have 30 minutes today, and we intended to bring you some good ideas.

Yes, changing from Fund A to Fund B requires a specific review of the characteristics of

both of those, what are the pros and cons and things like that.

So I think early on you said, you know, is it appropriate to suggest changes?

I would say we're bringing you good ideas.

We think that at the end of this story you might feel like they're good ideas as well,

but that was our intent.

And I wanted to spend a minute talking about the fixed account that you have in place today.

That was one of the highlighted changes.

To be honest, I think that based on my experience, there's some other options in the industry

that you might want to consider.

I think there's some good options, other options at Nationwide, and I think there's some good

other options outside of Nationwide.

The fixed account is a guaranteed product that just has a spread, so it doesn't have

a disclosed fees.

There's other products that are available through Nationwide and outside of Nationwide that are more commonly referred to as stable value options.

They have disclosed fee structures, so you can see specifically what the amount of fees that are charged.

They have better exit provisions.

Fixed accounts generally have like a five-year payout or a market value adjustment at the end,

whereas most stable value products have a one-year put.

You just need to give them 12 months notice, and then you get all the money out.

at value at the end of that period.

And in a lot of situations,

your stable value options may have better returns

than a fixed account.

It does take away that sort of the word guarantee,

but stable value options that we work with

are ones that have been producing positive returns

throughout the span of the fund.

And they do have wrapped contracts

that are meant to make the value

of the stable value portfolio

it would not go below 100% of what was put in.

I would note that a fixed account at Nationwide

is a revenue driver.

So I would give you a heads up

if we're saying that we want to talk to you

potentially in the future about alternatives,

it's kind of like squeezing a balloon.

If you take away some of the revenue in one area

and replace it with something that has less revenue,

then your record keeper is going to ask you

to compensate for that in other ways.

With that, I want to move on to talking about managed accounts.

This is another decent source of revenue for your record keeper.

You can see that what we have listed here is the managed account fee on the left.

We took a weighted average of where your investments are outside of the target date funds.

That's how we came up with 32 basis points.

You could argue whether or not that's appropriate, but I think it's a good place to start in thinking about the scope of this and the scope of fees that are assessed on managed accounts.

I think that to the extent that you have a record-keeping RFP coming up down the road,

that there's room to improve these fees either through nationwide bringing them down as your plan has grown

or also there's other products out in the industry that are structured differently

where you can bring in advisor-managed accounts that use different methodologies

and you can end up with significantly lower underlying fund expenses.

I think that that's something that we would want to work with you on as part of the RFP to think so you can understand your alternatives that are available in that space.

So on this slide, we just wanted to talk to you.

Another idea that we wanted to bring to the table is the thought of.

Can I go back to the pro account?

Sure can.

You indicated in the proposal that if you were selected, you would conduct a full review of Nationwide's pro account offerings.

When you've done this for other clients, what are the range of recommendations or comments that you've provided?

What are you finding about pro account?

I think we've seen the spectrum.

I'll invite if you guys want to add anything different.

But we've seen the spectrum.

sometimes that that comes back and we can show some data that these are priced too high

and that it gives us room to renegotiate.

I will say that we don't come back.

I would not expect that we would show up and say, for instance,

their partnership with Wilshire is not effective or something along those lines,

but a lot of times it results in pricing.

I just wanted to add one thing.

As fiduciaries, you do have to be benchmarking your managed accounts if they're being offered.

That's usually on an annual basis.

This is new.

So if you're like, oh, no, we haven't been doing that, this is new just because managed accounts are a newer product,

and they're being more widely used.

So on our end, we do provide that for clients on an annual basis.

we have a benchmarking tool that we use that looks at other managed account products out there in the market.

And then we're able to take your current managed accounts that you all are using and benchmark them for you

and give you more of an apples-to-apples comparison so you can confirm,

hey, does this seem out of line or is this kind of what we're seeing out there the rest of the market?

So your review is limited to the actual cost of the service,

but you're not looking at whether it's appropriate for a certain sector of our participants to even be in the pro account, the managed account function.

So, Marie, I would say there are two.

We do, with the clients I have who have managed accounts, there's two reviews.

There's a simple, not a simple, but it's a fee review, right, because you want to benchmark costs.

And then there's also a much more in-depth review of where are managed accounts suitable?

Is this something that we should open up to other folks?

So it's a more demographic review, and I view those as two separate things.

And what is it that you're offering us if we were to select you?

So we would benchmark your fees on the managed accounts,

so we'd be able to use our benchmarking tool.

And then if there's appetite for it, we would look at,

and we'd probably work with Nationwide to dig into the demographic of,

hey, who are the folks who are using these managed accounts?

That's looking at age, that's looking at salary.

We look at a whole litany of items.

And then from there, we're able to assess,

are people using this appropriately?

you know is there any red flags here where you know folks are using them or

I don't want to say abusing them but maybe it's not appropriate for them or

in some cases it may be hey actually maybe we should figure out a way to

offer these to more of our population because they do there's argument to say

that in some cases it's even a better investment option than target date funds

And all of that review is covered under the fee that you've indicated?

It is.

Okay.

Just to add to that, my experience with quarterly meetings is typically that you get reporting on the managed accounts

and that it is a journey to take a look at the information.

You get pretty good reporting from the record keeper about what age people are using this,

how much personalization is being added, what are the average account sizes and the average returns by risk tolerance

and things along those lines.

And it is a cause for sort of ongoing participation, us along with our clients,

about sort of looking to see if we see that there are any problems.

problems. The easiest one to look for is that you like to see a lot of personalization in

managed accounts. You find out how many personalization trades employees are putting in. Are they putting

in that they have a pension? Are they putting in outside assets and things like that? Because

those things go into getting useful information on the backside on managed accounts. A lot

of times the follow-up on a regular basis includes trying to make sure that there's a lot of

personalization that's used in the managed accounts. I'm going to pivot to considering

flat fees in the 457 plan, well, in any of the plans. This is a trend that we're seeing

in the industry, moving away from asset-based fees to flat dollar fees. And we wanted to

show you how small a flat dollar fee could be compared to the one and a quarter basis

points that are on there. In the industry, we see a trend towards this largely backed by plan

sponsors that feel it's more equitable among participants. If you think about participants

with small, medium, and large account balances, they're all getting the same number of statements.

They're going to have access to the same call center and access to the same in-person representatives,

and therefore it seems like maybe they should each be charged the same fee, a flat dollar fee.

Also, it takes away the component that asset fees have in place, which causes revenue to go up and down based on the markets.

And you could make an argument that if the market goes up 30%, should you really be paying your record keeper 30% more?

So it's a trend that we see in the industry, and I think it would be something that we would plan to talk to you about in planning for your record-keeping RFP.

It's a change you could make at any time, but oftentimes if you're going to make systematic changes,

it's good to roll them out with an award of a contract,

whether it's a new contract to your existing provider or another provider.

I have a clarifying question on the per participant fee.

What kind of schedule is that fee?

Those are annual amounts.

So you would usually charge them quarterly.

So our example is $16 before dollars a quarter.

You know, I did some math, and at $900 million, one and a quarter basis points is $112,500,

and I think we have about 5,000 unique participants.

So we're talking about a per participant fee of $22.50.

We tried to use math.

A bit more than the 16 you're thinking it might be.

Yeah, a couple caveats on that.

We were trying to use current statistics on the number of participants.

We weren't sure whether to use the number of total accounts or total Social Security numbers,

so one times per person, even if they have multiple accounts.

So I will caveat that that's not set in stone, and it's not an offer we're making.

It's something that Nationwide would need to agree to as well.

It's more of an idea that we wanted to bring forward to you.

And certainly I would say that Nationwide hasn't agreed that their 1.25 basis points

is equal to any specific number.

But it's a thought and it's a trend in the industry that we're seeing an organization

think about.

And even if you stay with the flat fee, it's a good exercise to go through and think about

the pros and cons of each and then make your decision and document it, you know, as made

on an informed basis.

The city did not provide any Social Security numbers or data, so I just want to clarify

you mean unique participant numbers in the reports versus, right?

My intent there was to indicate the difference between unique participants versus accounts.

Thank you.

Okay.

Yes.

I'm going to go really, really fast here.

I know we have, Samantha, two minutes left.

So this slide, focusing on the circle,

so if you just take the target date recommendations

that we made utilizing our enterprise CITs

and the menu recommendations,

that would account to a 27% savings on an annual basis,

and that number would be just over $700,000 a year.

Let me just finish on our fee, our proposed fee.

So, shoot.

Our proposed fee, $60,000 per year.

If the city is going to entertain any kind of best and final, we didn't know if we had any latitude.

Obviously, we'd love to have the opportunity to do a best and final.

So just in closing, you know, so why creative?

Preferred pricing relationships that save your participants money.

A dollar in expense is a dollar that doesn't go into participants' pocket.

Our size and scale in the marketplace.

In-house legal counsel where you can leverage, for example,

utilizing our in-house legal counsel to walk through CIT contracts.

So, again, thank you for the opportunity.

We'd love to work with you.

Okay.

All right.

Yes, sir.

We let these folks get through their proposals and then ask questions afterwards.

I wasn't involved in the RFP review process, so I'd really like to hear what they have

to say before they have to hurry at the end.

I think that's a great idea.

Thank you.

I think the questions are great, but I'd like to actually see the entire presentation before we ask.

And then also, once everyone's able to get through their presentation, remember, we tried to allot some time for questions for any of the groups, any of the vendors after that as well.

Correct.

Yeah.

Okay.

Okay, we're ready for our next, what's that?

Oh, sorry.

We're ready for our next vendor, that is Fiduciary Consulting Group.

Hello, Mr. Roche.

Hello, Mr. Chair.

Hello, committee members.

I'm not used to calling you Fiduciary Consulting Group.

We're not either.

The artist formerly known as Highest Group, I think, as the NAGDA president referred to us.

Okay.

I just want to make sure that it's 1047-ish.

So I just want to make sure you get your full time.

So we'll flex the schedule just slightly so you get your full 30 minutes.

Okay.

Thank you.

I have a clicker here.

So if I hit the play button, does that bring up?

It'll be brought up in just a moment.

Thank you, Jacob.

I never worry, Jacob, when you're involved.

So thank you.

Okay.

we've got a

number of items to discuss here today

thank you

thank you thank you first off

it has

been an honor to be your consulting firm

here to be part of this journey at the

city of Sacramento

gosh for the past six or seven years

seven years if you go back to when we were hired on

as a project consultant

and then six years now as your

ongoing consultant so I just wanted to say

thank you and we certainly hope

to continue working with you all,

helping to build retirement security

for City of Sacramento participants.

We put together the RFP response,

very custom for Sacramento.

This presentation deck is also very custom for Sacramento.

With me today, Jason Davidson,

who is one of the owners, originators of HIAS Group,

who's going to provide the firm overview.

and then I will come back up to highlight some of the

accomplishments that you all as a committee have made over these past six

or so years just remarkable and then we still got more work to do and so I'm

sure you'll hear that today from a number of the firms as to you know

there's it's not always going to be perfect and that's kind of the fun part

of this job is you've got a we've got a almost billion dollar ball of clay there

that we get to continue to mold and mold

so that we can make it as perfect as we can

for our participants.

And then Tom Breeden's here as well.

I think most of you know him.

He's our director of research, CFA,

and so as we have any investment questions

that might come up,

Tom would be able to answer some of those.

So if it's okay with the committee,

I'll step aside and let Jason take it away.

Okay.

Thank you.

and this will advance it.

Good morning, Mr. Chair and committee members.

As Rosh mentioned, I'm Jason Davidson.

I'm the managing principal for our Portland office,

which is the office that services this relationship.

I'll only speak for a couple minutes,

and I understand you want to get questions in,

and so we're going to try and get through this stuff quickly.

I think you're going to hear from a number of firms that talk about how large their footprint is,

how big of a firm they are, how much experience they have with these things,

and I think there's good and bad to being a big firm, and I'll talk a little bit about that.

But I do want you to understand, as it relates to defined contribution, retirement plan consulting,

basically the services we're providing here,

we are focused on that and may be the biggest consulting firm

in terms of providing those types of services.

And if you go beyond that and talk about our public sector expertise,

this is untouchable.

In your package, you'll see a list of our public sector clients.

The state of California has our largest list of public sector clients.

These are clients, and in many cases, your neighboring entities that have hired us to do the exact same thing you're asking us to do.

We do not lose clients.

Hopefully, this is not an exception to that.

We do not lose people.

Every single person associated with this account when you hired us is still at the firm and providing those services.

One of the things that you talk about in the pluses and minuses of being a big firm.

Sacramento Regional Transit, Sac Metro Fire.

We are Sacramento, and I especially am Sacramento.

I grew up here.

I went to Hiram Johnson High School.

So this is my city.

My family still lives here.

On the topic of kind of pluses and minuses to being large, and I'll end here,

this is a big plan, billion-dollar plan, marquee city.

There's no small mistakes on a billion dollar plan.

There's no small lawsuits in this space anymore.

Having a large consulting firm with institutional backing,

in this case from Morgan Stanley,

from an insurance, compliance, and legal perspective

is almost paramount.

It's hard to operate in this space anymore

if you're a small consulting firm.

In addition to that, Morgan Stanley

is a seven trillion dollar company.

That's the assets that they manage.

There's not another consulting firm that you'll talk to here or at any time that has that financial heft behind them.

The good part about that is that means you will not find an investment product, a technology, a concept, a legal construct

that Morgan Stanley doesn't have people to help with, and we are your conduit to bring that here.

You are going to go through things like, should private equity be in retirement plans?

I, Morgan Stanley has been dealing with private equity

since its existence.

You're going to deal with insurance-based

retirement income products.

Where are you going to get that expertise?

And those kinds of things are questions

on the big firm side of things.

The last part of this is like,

sometimes from a big firm perspective,

you might think about, well, am I just a name?

Do I get lost in the shuffle

when you're part of Morgan Stanley?

And I'm hoping that with this servicing group,

and Roche in particular,

you never feel like you're just a name on a page.

I know, because I've worked with Roche for a long time,

he bends over backwards to service

to make you feel like even though we're a big firm,

you are the client.

This is a boutique-level service relationship,

and I'm hoping the combination of our heft resources

and the personal touch of the servicing thing is unrivaled in terms of what we have to offer.

I'm going to stop, and Rosh is going to come back up and talk about accomplishments in particular.

And as I said, we intend to pause there and give you plenty of chance to ask questions after that.

And I can come back up if you have questions specifically about the firm and the organization.

Thank you.

All right.

So as we move, is it the top one here?

It goes to the next?

No, just the one button.

Boy, you made it really easy here.

Okay.

So as it relates to the city of Sacramento,

you know, I wanted to just go back in time.

I'm not going to go through all of these items,

but talk about some of your accomplishments committee

that you've achieved here.

And back in 2018, that's when we started the relationship with the City of Sacramento as far as coming in and developing governance documents.

And when you put together the scope of services in the RFP, we really felt like there were four key themes in your scope of services.

Governance, investments, record keeper management, and then also fiduciary training.

And we feel as though all those kind of work in tandem with one another.

We get to do some of these at the quarterly meetings, but some of them, like fiduciary training, for example,

we should probably do that outside of quarterly meetings or maybe inside, you know, as efficiently as we can.

The point is, though, we started that journey with you back in 2018, primarily on a project level in the governance capacity.

Then, 2021, thank you all.

hired as your ongoing fiduciary.

Right up out of the gate,

took a look at the investment lineup.

Great investment lineup that you'd put together,

but we had some changes to potentially make.

Committee was on board with those changes.

Saved participants $701,000 per year,

starting in 2021.

Those savings now,

and this is as of the September 30th report,

that's the one that we move to later on in the agenda,

but as of the September 30th report,

those savings have been $5.1 million,

just in savings for your participants.

And so, okay, well cost is one thing,

how have they performed your fund lineup?

And your fund lineup has generated another $3.4 million

in alpha, so over your benchmark, comparative benchmark,

which would be 60% equity, 40% fixed income,

so another $3.4 million in additional earnings

for your participants.

So you add those two numbers together, we're at about $8.5 million.

The number in the RFP response at the time, because that was the June 30th number, $7.5 million in cumulative savings for your participants.

So you all have done an amazing job in terms of saving your participants money, in terms of putting investments in the lineup for your participants to consider.

And then we start to fast forward here through 2022.

and we take a look at, we start to see some of those savings investment specific

where we've got Vanguard target date funds.

Remember when they were in the 12 to 15 basis point range,

they came down to eight basis points.

We've already talked to you all about, okay,

there's also collective investment trust versions of these, right?

So there's a couple of flavors of collective investment trusts

and we know the city is doing its due diligence as it relates to CITs.

We've got a lot of plans here in Sacramento, right?

We've got the 457, we've got the four 401a plans.

All of those plans need CIT paperwork.

So it's not gonna be a small process to put CITs in place,

but we believe potentially it's going to be a rewarding

process for your participants.

Because the CITs open the door where we can get not only

savings on the eight to seven and a half basis point CIT,

but if you want to go a different direction with us

as a 338, you can get down to four and a half basis points.

There's all kinds of different numbers in there.

But I think starting that discussion on CITs, we've already started that,

and then continuing that discussion on CITs, that's on the next page here.

So on the right-hand side, you can see at the June meeting,

I want to make sure because we did not have a September meeting.

At the June meeting, we had the initial CIT analysis that just provided the savings.

and we went back and said, okay, that's just savings on the CITs.

And we talked a little bit about this at the June meeting.

The Vanguard target retirement CITs also, because of the international tax remediation,

recapture some additional performance that the mutual funds don't.

And so we said, okay, that's about five to seven basis points for some of these target dates,

these 20 to 2035, 2040, et cetera.

What if we went back and we did an analysis and compared the performance of the mutual funds and the performance of the CITs?

What would that be?

What would that number be?

And it jumped up from what we had originally had, $8,000 to $312,000.

That number, based on our $177 million, by the way, as of September 30th, is now about $448,000 in better performance for Sacramento participants.

That's just moving to the 7.5 basis point CIT.

Again, there's other slices and flavors of CIT that we could potentially consider,

but we've got to get into that CIT doorway first.

Not just target dates, but then also, remember back at the June meeting,

we made our change from Vanguard U.S. growth to J.P. Morgan.

J.P. Morgan also has a CIT.

So it takes us from 44 basis points down to 39 basis points.

that significant savings plus $67,000 based on the $134 million that's in that fund as of September 30th.

These are all things that we've been talking about and we can continue to talk about.

And I just thank you, Jason, for saying it.

I hope you all feel that.

I just want you to feel like you're my only client because there's still work to be done.

And that's what we also put into the RFP.

And thank you for such thoughtful questions.

and for putting your scope of services in here right up front,

because we said, you know what?

You have done a lot,

but we believe that there's still a lot of work

for all of us together to do.

And so we put together this timeline

just kind of right out the gate.

And what I really appreciate from you all in the RFP

was some of your questions,

you opened the door to say, you know what?

are there alternate structures?

Are there other ways that maybe we could operate as a committee?

And so we went through that door with some of our responses to the RFP.

And we're here for whatever makes the most efficient process possible,

because we believe that there's been a great journey so far,

and hopefully you feel that way too.

Your participants, by the way,

and I don't know if we're going to be able to get to this,

But hopefully you're not hearing, you're on the committee and nobody's complaining hopefully right now.

Because since April, your participants have made on average $13,017 per participant for the past six months.

Thanks to the work that this committee has done.

$13,017 per participant.

So hopefully you're getting high fives,

fist bumps as people see you.

Hey, thanks for being on the committee.

You're doing a great job.

So I wanted to put this out there as well

in terms of an initial agenda.

There's other things that I think

we're just scratching the surface

as it relates to NAGDA awards.

And we haven't even scratched the surface there.

Where all these great accomplishments

that the committee has achieved,

why not get an art capel award for nagda why not submit for that and so we'd like to take the lead

on that as we have with some of our other clients work with nationwide but take the lead on that

and get this plan the recognition these plans the recognition they deserve because now we're not

just talking about the 457 and the 401a but we're also talking about the pet plans as well

And Jason talked about so many clients in California.

We referenced this in the RFP.

We have $10 billion of clients that have the 457-401A PEP combination.

$17 billion of nationwide clients.

We're the number one firm for nationwide in the public sector.

So that can really help to potentially create some leverage as it relates to, okay, the fixed account.

that's a pain point right now

2.3%

we've got

and thank you all for making that motion

at the June meeting

we've got our money market now

it's in effect as of September 12th

so we at least have a band-aid

but that fixed account rate

that's not acceptable

and so we've been talking with the nationwide executives

about okay

how can we restructure this fund

or do we need to get something else

One way to potentially restructure that fund would be maybe there's a higher rate that retirees get,

so we retain the assets, but active participants have a little bit lower rate.

We don't know how that would look in the future,

but those conversations are ongoing with the highest nationwide executives.

And so we want to make sure that participants,

thankfully there's only about 12% of assets in that fund,

but you know what, we want those participants to get the highest possible rate.

And right now we believe that's not an acceptable rate at 2.3%.

As we look at the next five years, we just wanted to finish up with some concepts to float out there.

So that last slide was just kind of the next year.

If we were to hone in, you know, put me in coach, we're ready to go.

Let's get a fiduciary training schedule for the committee right out the gate.

any new members and then let's make this more of a curriculum not just a single

training but let's have actual fiduciary sessions about mutual funds versus CITs

how to take a look at the plan fees right do we have the right fee structure

which can also be part of our fee policy statement that we need to update which

again thank you all for asking that in your RFP so do we move maybe to a per

per head fee?

Do we have it where there's a fee range?

Because if we move to a per head fee,

that might penalize some of our lower balance participants

and participation is one of our key metrics, right?

We want higher participation,

we want asset retention in the plans.

Those are some things we've talked about over the years here.

So we wanna make sure that our fee structure

is most beneficial and most efficient.

We already know it's low,

but we wanna make sure that it's low enough

so that we keep our high balance folks in there.

Maybe we have a fee cap, but then we also incent

other folks to wanna join the plan and stay in the plan.

And so that's something that we should talk about

right out the gate as well in terms of just fee structures.

We already got those low fees.

Is there a better way to reconfigure it?

And then another one that I put out there

just for consideration, and again,

thanks for opening the door in the RFP,

but what about having like a planning meeting?

So we have our quarterly meetings, but maybe we have like a meeting where we all get together in person a few hours a year and we talk about the governance documents.

That's where we get all that stuff done.

Maybe we have fund managers come in and present at that meeting.

And then our quarterly meetings can be the rhythm that we're used to, right, where we get the nationwide information.

We have legal regulatory updates.

You get the performance report from fiduciary consulting group.

and we do what we've been doing,

but it just feels a little bit more efficient

because we've got that planning meeting

where it's like, okay, this particular item,

we can set that aside and we can handle that

in January or whenever that might be.

So I just put that in there as an idea as well.

One of my other clients has that annual planning meeting.

Your plans are actually more complex than theirs,

so I'm like, you know, this is probably maybe

a good time to bring this up to Sacramento

where we have that additional meeting as well.

And then are there any ad hoc committees, right?

We've had those in the past here,

but as an example, the NAGDA award.

Let's put an ad hoc committee together

and let's come up with some ideas.

It's a fiduciary consulting group

will drive the bus on that one,

but we'd like to have some participation from members

and so we can all come up with some ideas,

some concepts, and then have a great submission

that we'd be proud of and then hopefully win

at NAGDA out in Orlando with Mickey Mouse

in September of next year.

So I'll pause there.

I want to be mindful of time.

We've got about 10 or so minutes left

and open up and see if there's any questions

from the committee.

Don't everybody go at once.

I'm letting other people go first.

I have plenty of questions, but I'm willing to...

Does anybody have any questions?

No, I'm just glad you touched on that fixed fund

because that was going to be where I was headed

because I actually went back to Ohio.

I went to Columbus and visited Nationwide

through a different hat I wear on this

and talked to them about that.

That needs to change.

I agree, John.

So thanks for bringing that up preemptively.

Yeah, no, I agree.

It's not just Nationwide.

There's another large insurance company.

Rhymes with Shmoya.

and they also have a fixed product that we continuously have to manually get that rate to move.

And we don't like these fixed products.

We would prefer a stable value fund.

We'd prefer something where it's a fish tank and it reacts to interest rates.

It's not this arbitrary, we're going to tell you what the rate is,

and we might have overpaid you at some point, but now we're going to underpay you.

So we'd ideally like to move to a stable value fund.

We're just unfortunately not there right now,

especially in the middle of the contract with Nationwide.

We could, but then that one and a quarter fee

is going to go to 10 basis points or whatever the number is.

Yeah, because it's hard to find safe haven right now

and earn a real return.

That's right.

Because you're not even earning inflation.

So at least we've got Vanguard in there,

the money market fund,

and there's $100,000 or so in there already.

So it's a temporary solution.

Thank you.

Do you ever negotiate fund fees for the managed account, the pro accounts?

Yes.

I don't recall us addressing that with Nationwide.

Yeah, so we have addressed that with Nationwide.

Thank you, Brad, for that question.

So Nationwide has stated that the state of California gets most favored nations.

And so a city of Sacramento cannot get lower fees than the state of California.

And I'm very aware of John Stegall's over my shoulder right now.

So I'm trying to be very sensitive to that, John.

However, what we've also said to Nationwide is the state of California, on a percentage basis,

does not utilize managed accounts the way the city of Sacramento does.

And so we are not pleased with how much is in managed accounts here at the city of Sacramento.

We did an analysis in 2023.

We would like to do these analyses on a regular basis.

And we would like to negotiate those managed account fees lower.

We have attempted to get them lower.

And we have been told because of the state of California relationship, they cannot go below where they are now.

Thank you.

Sure.

Anybody else have questions?

Yeah.

Yeah.

Rush, you wrote that you like to provide guidance on the governance documents.

But we've struggled over the last few years about the meaning of our governance documents.

HIAS was hired to provide our initial drafts of those documents, and you sat with us through

the same seven seats that ended up being on this committee as we created them and changed

them and ultimately agreed on them.

As we've had these discussions about what do they mean?

What should they say?

You haven't really spoken up and said, you know, well, I wrote this.

I had the original draft.

This is what I remember.

You've been silent on that part.

We've had some discussions about, like you mentioned today, you want to get together, you know, some planning meeting ahead of time.

We haven't heard you say that before.

You're saying it now in your presentation.

You've said that you want to improve.

We had a question once about nobody on this committee except for the treasurer has investment experience.

And I felt like I was really having to pull an answer out of you about isn't this makeup of the committee pretty typical?

and you finally said that it was, but my point is I'm starting to question the

independence nature of the relationship that you have with us.

Can I stop you there? How so? What part of the independence?

It feels like you're holding back on expressing your opinion for fear of

having a bad relationship with the city of Sacramento who signs your contract.

And yes, they do sign your contract, but they don't pay for you.

The participants pay for you.

It's this group that has the authority to decide how the funding is.

And so it's just, I appreciate the comments and suggestions of things that you want to move us towards.

Yes.

But we've, there were opportunities over the last few years where you could have stepped in.

and I just didn't feel that you did.

I appreciate those comments.

And the other thing is that one of our responsibilities

is to evaluate our service providers.

We haven't had an opportunity to do that.

So I'm sorry that it's now,

this is like my opportunity to give you some feedback.

I wish we had another opportunity to do that,

but we're being asked to give you five more years

and I'm just wondering whether that's in our best interest

given the performance that I've seen over the last couple years

where I've just felt like I don't know where your loyalties lie.

Well, I'm sorry that you feel that way.

My loyalties are to the plans and to the participants

and I want what's best for your participants.

As it relates to the governance documents

and the discussion, we've had an investment policy statement that we have an investment policy statement

that still says 2021 on it.

Yeah.

I'm upset that it never got updated.

If I may, because there is other people involved in this,

and fiduciary group ROSH has provided updated drafts.

I think we're probably close to bringing that back to the committee for an update, but they have very much so been pushing to get these updated.

And I think we're close to me having the direction to be able to bring back the draft to get them updated.

Two plus years later.

Yeah.

The RFP, and this is, and I'm sorry if I was somewhat vague in my comments.

When I thanked you about your RFP and some of the questions you had in there,

I was specifically talking about the door opening to having structure to be able to get things done

as what you're describing right now.

and do I wish that we had a 2025 investment policy statement

and a fee policy statement and cyber security?

Absolutely I do.

I've been doing the best of my ability

and maybe it hasn't been as efficient as you all would like.

I've been navigating these channels

trying to get what's best for Sacramento participants.

We're not there with CITs right now.

We probably could be.

We're not there as it relates to the governance documents.

We could be.

But I really hope that that's not reflective of me not working hard for

you these years and in your best interest because I have been.

Question, we would not have been where we are,

the $8 million in savings without the work that you provided.

I can never take that away from you.

So thank you for that.

I'm just wondering, you've given us some things that you'd like us to work on in the next five

years, and I'm just looking back at the last couple years and wondering why are we hearing

about them now? If I may, and last comment on this, thank you, unless you have other questions

about this topic. Talk to any of my other clients, and you will not see this kind of

traffic jam. Things will be done, and will have been done. So I'm not

at all criticizing the structure here.

It is the structure.

We've been trying to get things done in that time.

But I would encourage you, please,

to talk to my other clients and ask them

if what you just said,

if you feel as though, you know,

things have not gotten accomplished.

And I think they would all tell you,

no, we've got everything done here.

And that's what I want to get done.

And we were, you all have done amazing work, but we're not there, right?

We need to get there.

We need to get a little more efficient here as it relates to governance, investments, et cetera.

But we're close.

And will we just stop in two years?

Nope, because we're going to keep going.

You know, you're up $100 million a year each of the past three years for participants.

So we were at $500 million just a few years ago.

and we're at a billion dollars now.

But there's some work to be done here.

I also would offer up, and we haven't,

and this is another one, we put it in the RFP,

but a cybersecurity statement, right?

One that's related to the plans,

where we could incorporate to the extent possible

nationwide cybersecurity metrics,

City of Sacramento's, again,

we don't want to share everything but some things,

and then talk about what is the responsibility

of the participants to be in the plans.

That's another idea.

that I'd like to put out there. And I just sometimes don't know where that fits in with our agendas,

candidly. Yes.

Rosh, thank you very much. Your time has expired.

Okay.

I appreciate you. Thank you for coming, all of you.

I'm sorry, Tom couldn't stop.

I want to make a comment before you leave.

Okay.

I don't play investment manager part-time like some people on this thing. I do it every day.

And I think you're doing an outstanding job. You're working in a tough dynamics where there's

There's a battle between the benefit provider and this committee.

So you're dealing with the dynamics of that.

But I think you're doing a great job.

And I live your life every day, not part time.

Thank you very much, John.

So thank you for what you've done.

Thank you.

I agree, John.

Thank you for saying that.

Thank you all.

You're doing great.

Thank you.

Thank you.

I just want to remind you all that there are likely more questions to come after the

presentations are finished so if you step out in the room please stay close and I will come get you.

Okay thank you.

Sorry I couldn't get Tom to stop talking.

Oh.

It's Tom's fault.

Josh, you want to come up? Next we have Josh Schwartz from Retirement Plan Advisors.

and I guess I'm supposed to talk into the microphone yes and forward and backward is that

presentation loaded they're bringing it up okay well while it's coming up because I only have 30

minutes first thank you we appreciate the opportunity to try and try and earn your business

I also want to congratulate you on what I think is an outstanding process this is the most

transparent committee I have ever seen. Scores, pricing, proposals, everything was posted online.

There is no secret. Every participant, any vendor, anybody knows exactly what you're looking at,

and that's going to get you the best results. I also want to congratulate you on what I thought

was an outstanding questionnaire. Can I advance? Not yet. Okay. It'll show up on the screen here

as soon as it's ready to go. They're going to check on it. Am I cheating by talking before my

slides are up. I don't want to go over the 30 minutes. I think we can, we got a little latitude.

You've got the printed versions. Okay. Yeah, we do have a hard time. Because the cover slide,

although beautiful, is not particularly informative. Whereas going with your RFP,

and this one actually might require a question, a slide. It's actually the 10th slide. We're going

to talk a little bit, and you've been hearing everybody talking about funds, fees, fiduciaries.

It's the old three Fs.

What are your investments?

What's the process for picking them?

What are you paying?

What are the internal fees?

Can we save money with CITs?

What about all these newfangled things, guaranteed income,

private equity or credit inside of the solutions,

your governance structure, which you just discussed,

all the different documents?

You went one step further in your RFP,

and on page 10 of our presentation,

I copied five or six questions from your RFP

and included them in our slide

because they thought they were insightful and forward-thinking.

Outcomes.

All the things we're talking about are governance structure, fees, investments,

are all about outcomes.

You have an incredible program, not just a 457,

four 401As and six retiree health care programs

so that your employees, the members of this overall program, can retire better.

And the goal of this committee is to design a program

that actually impacts their retirement outcomes.

We're not just trying to save money.

We're trying to create assets for someone to draw income from

or create a legacy because all of your participants have a defined benefit plan,

and many of them actually don't have an income replacement issue,

but maybe it's finally having the assets where our next generation can go to college for the first time.

So you're doing something very unique here with your RFP

by focusing not just on those fiduciary components but the other components,

And since I couldn't help but hearing the end of Rasha's presentation, or I keep saying highest, we all know each other.

You are interviewing four of the leading firms in the public sector, defined contribution consulting.

You have no bad choice today.

You've made enormous progress in your last seven years, and I'm confident whoever you end up with, you're going to continue to make progress because you're clearly invested in the outcomes.

So I'm going to cheat and jump ahead.

I hope I do the strike to slide.

You're up and running, Josh.

Yes, sir.

I'm going to slide 10.

These questions I thought were really insightful,

and while we certainly don't have time to talk about each of them,

we certainly answered them in detail in the response,

but conceptually I'm going to focus what I talk about for the next 25 minutes,

20 minutes on those.

I will certainly save time at the end for questions,

and if there's something burning, please interrupt me.

This is about you.

It's not here to talk about us.

So I'll now go back to the beginning.

I kept it to a few slides.

All right.

Because we only had 30 minutes, now 27, and you gave the scoring, we ranked second.

You know the incumbent for seven years, and you've never met me before, or maybe in passing at NAGDA.

I've got 26 minutes to make you think that I should be a good partner or our firm should be a good partner.

That's why I came.

I'm the CEO and founder of the firm, co-founder of the firm.

It's not just me.

You also only had one week's notice.

This is the rest of the team that would be working with us.

They are mostly all participating virtually.

I'm sorry, attending virtually, because Samantha had shared with me participation is only in person.

Rob Mangano would be my co-consultant.

There's two of us on large plans like yours.

Rob has 25 years in the business.

Started in government.

We all actually, Rob and I started in government.

I started with actually Nationwide, then Pepsco, in 1989 as an enroller, police and fire in the city of Chicago.

By the end, when I left Nationwide in 2000, the co-found RPA, I was the director for Illinois.

I ran the city of Chicago and Cook County plans.

At the time, they were $3 billion.

Now, collectively, they're $15, run by somebody else.

Still with Nationwide, by the way.

T.J. Kistner is our chief investment officer.

He will be directly working on this plan, on the investments.

In addition to being a CFA, he's a CAIA, which gives him particular expertise in alternatives and private credit, private equities,

which is the next frontier that we're seeing in public sector space.

He is not joining us.

He is day 12 into his new baby.

So he is on paternity leave, but we have our senior analyst, Alex Galt on,

and Kaitlin Cunningham, who's our VP of Marketing and Communications.

How you reach participants.

There was a question about managed accounts and utilization.

Who should be using what and who should be investing how?

And how is that plan being utilized is critical.

We have a team that specializes in helping evaluate the effectiveness of a communication and outreach program

and then talks about how are we going to change outcomes.

A lot of talk about fees.

I'm jumping ahead a little bit.

Let me actually stay on the slides.

Behind us four who are directly is a larger team.

of, well, there's 10 on here.

We've actually, there's four other people we're not showing.

Arc Firm is growing.

We're adding clients and we're adding staff

to maintain the ability to provide excellent service,

consulting team, investment team.

Your plan is unique and also not unique.

Government is a unique animal.

You have collective bargaining.

You don't necessarily have all the controls as a committee

that you might have in a private sector situation.

We understand those complications of working through government.

98% of RPA's clients are public sector.

98% of our clients are public sector.

I don't want to call myself a one-trick pony, but from 1989, you can guess, this is all I've done.

Government defined contribution plans, 401A, 457, HRA plans.

I was on the original NAGDA committee that wrote its first white paper on VEBA back in 2004.

Let's talk about beginning with the end in mind.

The goal of these plans, all 11 of them, as I said in the beginning, and you tell me if I'm wrong, is to help people retire better.

So let's ask ourselves how we do that.

There's the core functions that have to happen.

Your fiduciary responsibility is a governance structure.

The plan has to be competitive.

The funds have to be competitive.

The fees have to be reasonable.

not necessarily the cheapest. Cheaper isn't better, better is better. I'm sure your police

department doesn't buy the cheapest cars. However, the only way we can guarantee a higher rate of

return for your participants is to lower fees. So I don't want to discount fees, but we have to

understand them within the scope of retirement outcomes. And then the last piece is improving

retirement outcomes. Just for a second on fees, five or ten basis points doesn't actually change

somebody's retirement outcome. If you earn 6% or 6.05 or 6.1 over a 25-year working career and a 25-year

distribution, the amount of monthly income difference is between $50 and $100 a month.

Not life-changing. Not irrelevant. It's participant money. They should get it.

what changes somebody's retirement outcome is saving enough and investing appropriately at that

their stage of life and I'm going to share some examples of where we think there's opportunity

in your plan to actually impact that which is far more meaningful than the cost savings

and it's not in lieu of the cost savings it's in addition so sort of looks like you almost have a

question there Jeremy if you want to jump in not yet okay I'm sort of repeating myself I want to

talk a little bit about the pure consulting features and then overall design and outcomes

and then summarize why us. A lot of talk about the three Fs, funds, fees, fiduciaries. You obviously

grabbed that bull by the horn in 2018. You brought in a consultant, you did a project, you did an RFP,

you negotiated your fees, then you hired an investment consultant, you have a process,

you've gone to fee levelization. The earlier comment at the end of the last presentation,

I've known Morgan Stanley, whatever they're calling themselves.

I've known Rosh and Jason for 20 years.

We all know each other.

They do great work.

And as you said, the investment due diligence, you have a fine menu.

We have an equal process.

We have an investment committee, CFAs.

We look at four things on the funds.

People, philosophy, process, performance.

We detailed this in our response.

An investment, particularly a pooled investment like a mutual fund, somebody's picking the funds.

Who are they?

can they articulate their philosophy, can they define their process,

and do the actual results match what they say,

and then performance becomes the proof statement.

It's all detailed in our response.

We looked at the, because of your transparency,

the recommendations from Fiduciary Consulting Group,

the five, now six funds that are either on watch are being recommended.

We'd have five of the same six funds on watch.

We'd have a conversation about the Vanguard International.

Maybe on watch, maybe not, a little discussion.

There's a little bit of philosophy around putting funds on watch.

Some plans like to be, plan sponsors like to be very quick to put a fund on watch.

Watch is not a bad thing.

Watch is the plan sponsor, trustee fiduciary, taking official notice of something not in full compliance with the guidelines and the IPS,

officially noting it in your records, and paying close attention to it so you can make a determination over a period of time.

one, two, three years.

That's our recommendation.

Funds should be on watch at least a year,

not more than three.

That's a slight difference.

The fees.

CITs are important.

They essentially get you the same strategy,

same holdings, same manager, lower cost.

That's a layup.

It's work.

There's extra legal review.

You're signing a participation agreement,

but it's worth the work.

record-keeping administration

I heard the last part of the conversation

clearly there's some conversations that have to happen with nationwide pro account

the fixed account overall fee structure asset fee per head

that's what RFPs are for it's part of your governance

why you're doing an RFP now it's how you maintain and then the overall

governance your governance structure your documents investment policy

statements, cybersecurity fees, legal, your letterhead, there's a council that's a designee

member. I'm forgetting the terminology. I don't know if the plan is audited as part of the city's

audit. Not sure. Is it, Samantha? Doesn't matter. If it is, those are all part of the governance

structure. I'm going to say something that's a little unusual. These three areas are core,

are basic, necessary, essential,

and I'm not sure they're gonna be the distinguishing factor

between the four firms you're interviewing today.

The best firms all do this very, very well.

Best practices in defined contribution design

is well understood.

Best practices for evaluating fund managers

is well understood.

There is so much public data on fees and benchmarking.

It's not hard to know if your plan is priced right.

with everything being public, you're the most transparent I've seen, but most government in

California is very transparent. We know what everybody's government's documents look like.

We can see them. This is going to be core functions that are critical. They have to be there,

but I don't know that there's a big difference between the four of us and our ability to deliver

that. So in what I think is maybe 15 minutes that I have left, 12, something like that,

I want to talk about outcomes.

So when we look at an investment menu,

we take a holistic view based on behavioral economics.

Research has proven over and over again,

most investors underperform when choosing their own investments,

and they want help.

Target date funds and managed accounts are ways to bring those to them,

and we have to, are they being utilized correctly,

and do you have the right ones?

They also often want help from a person.

So you have an on-site service representative right now.

We went to the scheduling website.

There was only one day open in December.

I don't know if that's because everybody's seeing him or

because there's not enough days available.

But we'd want to understand that.

And then plan design, and this is really where this committee is,

has evolved from starting with a menu, hey,

let's have good building blocks with low fees and risk adjusted return,

to thinking of it as a toolbox.

These plans are participant directed.

And you have 11 of them.

And your people have to figure out their 457 and 401A and their PEP plans, their HRAs, and which one am I going to use first?

And does that change my allocation?

And I'm coaching t-ball or maybe it's football and I'm working maybe a second job.

And they don't have the time or expertise.

So how do we create a toolbox with the tools they need, tools that they can't hurt themselves with, and with the services to utilize it effectively to maximize their participation?

And so what we're moving is then from an investment focus to an outcome focus.

And I want to look at that, how that comes together from a consulting standpoint with your target date funds.

No question that we think that the CITs are better or something to consider with the Vanguard versus the retail funds.

You can save a half a basis point.

But that's not what we think drives it.

If you can see the dotted line starting at five years before retirement, in the traditional Vanguard glide path,

It's a through retirement that starts grading down at age 60 to 75 from 50% to about 30%, 32% actually, 31, 32%.

That is a glide path built for the average working American.

Your participants are not the average working American.

They have a defined benefit plan unlike the vast majority of the country.

They also, many of them, have a funding tax-free for health care and a 401A match on top of that defined benefit.

They, we believe, can have a significantly higher equity allocation in retirement because functionally, if you did a discounted value of the pension, they probably have a million dollars in guaranteed assets or more.

If they don't have a million dollars in their investable assets,

you could argue they only have a, even if they were all in equity,

with their 457-41A, you could argue their equity exposure is 50%.

Vanguard has a CIT, if we want to look at the actual table of them,

the Vanguard Retirement Income and Growth Trust 2 levels out.

We have the ability with Vanguard to level it out

where it doesn't continue to grade down,

and we level it at a 51% equity allocation in retirement.

That difference, that 10 or 15 or 20% in equities between 60 and 75,

my mom is 97.5.

That's a lot more than five basis points.

Equities are outperforming fixed income by 800 to 1,000 basis points.

If we can capture 10% of that,

that's about a percent a year or more during those years.

not that we want to forego the fees,

but how do we get people invested correctly

while they're working in that transition towards retirement

and then into retirement to stay in the plan

and maximize the benefit?

This is just one example.

There's a handout.

I hope you got it.

If not, it was in the RFP.

We did this work with Alameda County.

We worked with the committee.

We did an income study.

We plugged it.

We coordinated with the pension.

It might be harder because they control their pension.

You don't.

You're with the state.

We got a pension benefit from every active employee.

We matched it with their 401 and 457 and 401.

And then we did an income projection in retirement,

and we found most employees were at over 80% replacement income

when you included Social Security, those who did and those who didn't.

We had public safety in general.

The result of that analysis supported a significantly higher glide path,

even a higher glide path than we could get with the Vanguard CITs.

So we built a custom glide path that further raised the equity allocation.

We implemented that in 2022, millions and millions of dollars in increased investment return on top of the lower fees.

That's where we think the opportunity is.

That work we did with Alameda first was validated.

There's a white paper that I wrote with AllSpring that studied,

in the defined benefit world, it's asset liability study,

when you start approaching fully funding, you de-risk.

Why?

Because a pension fund's goal is to pay all of its benefits but not have extra money.

For an individual, and target date funds are built on that.

You get more conservatives, hit your goal, de-risk, don't blow it.

your people all have pensions.

They're not going to run out of money.

They can actually consider legacy in their financial planning.

Again, we're not a committee.

You're not responsible for each individual's financial plan.

But at the same time, you've added a 401A and an HRA program

to increase the financial wellness and long-term financial benefits,

retirement readiness of your employees.

Let's understand who they are, what they could accomplish,

and design the program to do that.

Josh, was that study you did with Alameda,

was that an additional cost for Alameda?

That wasn't an additional cost, yes.

About?

But here was it.

We won the NAGDA.

So that was submitted to NAGDA.

They won a NAGDA award.

Every year NAGDA gives out like 20 awards,

and then the group of 20 picks their two favorite.

That was picked by its peers as the two favorite.

The Chicago Transit Authority piggybacked on that study to use the, they didn't quite go to the custom, they didn't want to do that, but they piggybacked on it to do the higher glide path.

Whether you would need a particular study or not, or there's enough similarity in the retirement benefits to do that with Alameda, Nationwide has the ability to build a custom target date fund.

we can design a custom glide path for you that's the kind of work we think differentiates and has

more impact on the outcome again the funds fees for do share the guidance that is critical

and we can all do it but where where who's going to dive in with you and try and see

on the pro account.

I'll argue all day long that anybody under 40

can just simply be, for your participant group,

with a defined bet, 90% in equities, close your eyes.

Don't worry about it.

You got at least 20 years to work, maybe 25.

The market will do its work for you.

Stop it.

We should be talking about savings and budgeting

and whatever the other financial concerns are.

Stop managing your money.

Sit in a balanced equity,

in a almost predominantly equity, diversified portfolio,

and let the markets do its work.

The same argument for a 60-year-old completely falls apart.

Now they don't have the time.

They might start using their money,

and we know from your 60-year-olds particularly,

some are double income, no dependents.

Some grandpa might have had some land that's very valuable,

and some is somebody on their second wife,

second marriage with a quadro on their pension and new kids.

and one might be a single parent with two kids.

Completely different circumstances.

Somebody has a special needs child or a dependent adult.

Completely different circumstances,

but a 60-year-old and a target date fund all have the same allocation.

So how do we work with nationwide or a subsequent record keeper

to target the education and communication by demographic

to get people investing correctly?

that's where we can do the most work yes the funds fees for due shares you got to have the cits

you got to do a bid we got to get a higher rate from nationwide you got to negotiate on the

managed accounts you have to decide if the managed accounts are being used appropriately

let's just look at the demographics how many people are in it under 50

did we just make a rule that it's only available to people over 50 over 55 those are the kind of

questions I want to ask. I think I'm running out of time. These questions that you had in your RFP,

without addressing them specifically, I think went to that. How would you decide, one of the

questions was, how would you decide a new service is worth it? Guaranteed income is a tough one.

It's so appealing. Oh, I'll get 5% guaranteed for the rest of my life. Why wouldn't I do that?

Well, the reason is they're embedded insurance at cost.

It's very expensive, and the fact is you have a pension and Social Security,

and you're buying insurance you don't need.

But some of your employees might need that.

So is there a way to do it in a way that doesn't prevent misuse,

but actually can benefit those or not?

We have to look at that.

Is managed accounts being used appropriately?

Do your older population maybe need more sophisticated solutions in a target date,

especially if you want them to stay in the plan?

Probably. We would say yes. How to do it in a way where it's utilized correctly.

What metrics do we ask from the record keeper so we know it's being utilized

correctly. We know so much about your employees. You know their age, their date

of birth, you know their pension, you know their 401a, you know their 457, their

retiree healthcare. We have decades of history. We can study this and come up

with specific actionable items that we ask your record keeper and their service

team to deliver and measure. That should be more time at the quarterly meetings than the investment

stuff. Again, I'm not trying to discount the investment reviews. My chief investment officer,

TJ, he loves it and hates it when I do this. But that's where we think the biggest impact can come.

Some other things to think about. Nobody touched on this. The industry is changing. The world is

changing rapidly. The industry is changing

rapidly. Secure 2.0.

That may have more impact on the city

than the committee.

You know, Rothification or

PEPRA. There's all these things that impact. You have

lots of people earning over the amount that have

to now do the Roth.

In-plan Roth conversions

is a fascinating opportunity

for tax strategies for your

higher account balance people.

We now know that when you pass

IRA to your kids, they have to

take it out in 10 years. Well, if your kid's

successful and they inherit a big IRA and they have

to take it out in 10 years, they're all of a sudden in a new tax

bracket. You can

have Roth conversions in the plan.

I'm diving into some financial planning stuff.

But these are the

differentiators that would make your plan special.

Let me

stop. I'm probably out of time. I don't

know, Chairman.

Let me then stop for

questions. I don't know if Murray

had a question or John I don't know what you do John but it sounds like you're an investment guy

you're the city treasurer okay

outstanding do you anybody questions no I have a question so um you're obviously the CEO of the

company um how much would you say the rest of your team is aligned with kind of your vision

if we were to choose you, how do we have confidence that your team sort of reflects your...

Thank you. I can state with unequivocal that the team is aligned.

You're talking to some very, very large firms today.

Morgan Stanley. I know it started as Highest Group and now Fiduciary Consulting.

It's a wholly owned subsidiary of Morgan Stanley.

Creative Planning just bought Sageview.

They're a $600 billion firm.

We're a smaller firm. We are a boutique shop specializing in government. We meet

that slide back with the 10 of us now with supports at 14. We meet weekly. We

talk about collectively what's happening with every plan. I don't have a lot of

clients that I'm

co-lead on,

there's four. You would be the

fifth.

I will be at your meetings

with Rob.

Hey, Josh, I have a question.

How long would it take to

do all the analytics and

get all those questions

on different glide paths?

How long would it take you to get up to

speed on something like that?

Roughly.

A year? Welcome to government.

anywhere between anywhere between 90 days and a year,

depending on how cooperative the other departments are on providing data.

Okay. Yeah. Between nationwide, the city, that sort of stuff.

The city, you know, what we can get from the pension fund.

I have to be honest with you in some percentage of cases, the act,

we get no's we won't share that.

So I would need collectively this committee in the city.

We can't do it without the data.

I've met Hank Levy a few times at NAGDA.

He's a very smart individual when it comes to this and savvy.

And I know that he's one of your clients.

So I'm very interested in that.

Thank you.

Are there any other questions?

Remind us again your involvement with other California clients right now.

So our main California client is Alameda County.

We have a handful, I should know better, 15 or 20.

They are all smaller and not necessarily, you know, in the $10 to $30 million range,

not necessarily representative of what you do.

I'm sorry, of the city's size and complexity.

Alameda County is really the example.

And then nationally, the Chicago Transit Authority, the city of Hartford,

and we have many clients in the several hundred million dollar range.

Other questions?

You talk a lot about education, participant education.

Are those services also included with the annual fee that you've quoted

or are there extras for that too?

So the annual fee is to work, collaborate with the committee and nationwide on developing and implement, and they implement the program.

So that collaboration is included.

If there's, I mean, again, it depends what we want to do.

If there's some very comprehensive special projects, then in theory there could be.

Usually you're going to find the record keepers dying to do this with you.

They all want to.

If you go to RFP for record keeping, they will line up and beg for the opportunity to develop an incredible employee outreach program because they want to tell that story at NAGDA.

I've been waiting.

Well, did anybody, when you've been at NAGDA, do you remember the one where the state of Missouri, they had the two millennials, they showed the video of it, were texting each other,

and then at the end of the text conversation, they stood up and gave each other a high five.

You know, just laughing about how millennials communicate and interact.

That was a VOIA video that they did for the state of Missouri that got on the NAGDA stage.

There are four record keepers that do almost every governmental plan of size in this country.

Mission Square, formerly ICMARC, VOIA, Empower, and Nationwide.

Used to have Prudential and MassMutual on that list, but Empower bought both of them.

Those companies are always looking for the next best story that they can tell at NAGDA to get the next billion, $2 billion, $5 billion plan.

Everybody will want your business.

So if you haven't considered an RFP, it's a beauty contest.

We've got a billion dollars and a city and a committee committed to outcomes.

Tell us how you can help us.

That will be an excellent process.

You'd be amazed at what you get.

I don't believe, and I would have to check that,

because an RFP was not included in the scope of work.

I will double, I'd have to double check that.

If it was included in the scope of work,

then it's included at no additional cost.

But that's not a significant cost in RFP, $30,000.

And the winning record keeper will pay it.

I hope I didn't just say something that damaged me,

but always speak the truth.

Then you don't have to remember what you said.

Thank you, Josh.

your time has been expired.

I appreciate you all. Thank you for having me.

Thank you for coming today.

Josh, please stick around because there's likely

to be more questions from the committee for all

the groups once we do

have InnoVest joining us. We have

Rick Rogers from InnoVest.

Please come on

forward. We'll load your presentation up there on the

screen and you can use the remote. I don't

think you probably heard me

say this out there, but

when speaking, please speak

it directly into the microphone to ensure that anyone watching online hears it and it is recorded

as part of the meeting for the audio. Okay. Thank you. Thank you. Thank you for coming today.

Well, thank you for having us. Good morning. It's a delight to be here. I'm joined by my colleague

Thomas Jansen and we'll do quick introductions if that's agreeable with everyone. My name is Rick

Rogers. I'm a partner and consultant at InnoVest. I've been in the industry for a little over 35

years. Interestingly, my very first position in this industry was working on the state of Florida

457 plan. They had seven providers to choose from. It was a very different environment back then and

has certainly evolved significantly over the years. But I've been fortunate to both serve and be an

advocate for public safety and governmental retirement plans over the last 35 years.

So I'll let you do a quick intro.

My name is Thomas Jansen.

I'm a consultant with InnoVest.

I have about 25 years related in this experience.

I started out on the wealth management side of Mary Lynch in San Francisco, and I spent

a considerable amount of time with a national record keeper as a consultant.

And most recently, I was running institutional consulting for First Republic Bank.

I'm very excited to be here.

Thanks again for your time.

All right. Well, we've prepared some information about InnoVest and our approach to working with retirement plans and more specifically public sector plans.

We started InnoVest in 1996. We were one of the very first firms in the country that was created to be truly independent and flat fee only.

and our two co-founders came from a Wall Street firm where they were continually pressured with

conflicts of interest to represent the interest of the firm rather than the interest of the client

and they said there's got to be a better way to do this we can create a firm that will address the

lack of fee transparency that will address the lack of transparency with investment options

to address overcompensation or excessive compensation for record keepers and even advisors.

And so InnoVest was created in 1996.

Many firms followed in our footsteps over the next couple of decades.

We, at the onset, were committed to helping fiduciaries understand how to properly discharge their fiduciary duties

to follow a prudent process.

That led to, in 2004, we were engaged as an expert witness to essentially testify in a national sort of headlines fiduciary breach lawsuit.

It wasn't a public sector plan.

It wasn't probably one that you'd be aware of unless you were following the headlines and more closely related to stock-type cases.

But we were honored to be able to participate in that.

And it really demonstrated that we understood how following a prudent process could help our clients be better fiduciaries for their participants and for the plan sponsor.

And then over the years, many more accomplishments.

All of that led to a very impressive list of clients that, frankly, we won in rooms just like this and presentations just like this.

more than 50% of our client base is public sector.

Our very first client happened to be a public sector client.

And as I mentioned, I started in public sector

and have really stayed in it for over 35 years.

In addition to the public sector clients that we have,

and I know this list is probably difficult to read in that font size,

but we've highlighted a few at the top.

We have a large presence in Northern California.

Weintraub Tobin, a very large, well-regarded law firm here in Sacramento.

Sutter Health, a large organization here in Sacramento.

Several others in both the public and the private sector.

I recalled or noted that you asked Josh about other large public sector plans in Northern California.

So some that you'd be aware of would be the County of San Mateo is about a billion dollar plan.

The County of Santa Clara is about a $6 billion plan.

And the Santa Clara Valley Water District is in the hundreds of millions.

So some very large clients.

In addition to that, not just in Northern California, but nationally.

We're in over 30 states.

The city and county of Denver is a very large plan, multibillion dollar city of Kansas City, Missouri.

and others, as you can see.

We've highlighted a few at the very top there

and the list goes on.

And I suppose one of the questions you might have is,

well, if you're public safety and public sector experts,

what exactly does that mean?

What does that mean for you as the plan sponsor?

We think it means that we understand

that public sector plans are different.

The committees and the plan sponsor

tend to be more paternalistic.

They'd like to take care of the participants in perpetuity.

And that means creating a great place to leave investments

even during retirement.

We work very hard with our plan sponsors

to create very low cost investment structures,

low cost administration and record keeping,

robust array of services,

and create a plan that's attractive

to terminated participants and to retired participants

so that we're not throwing them potentially to the wolves,

to the free dinner seminars where they're likely

to be sold annuities or something like that.

We'd like to create an environment

in our public sector plans that is attractive

to those retired participants.

One of the questions that you're likely to have is,

well, what makes N of S different?

I think the biggest difference goes back to 1996

and the place that we started

where we wanted to be truly independent,

we didn't want to have any conflicts of interest,

not even the potential for conflicts of interest,

that we just completely avoid them.

One of the dynamics that we've seen recently in our industry

is that wealth management firms are buying firms like us

with the idea of then going after

the retirement plan participants and encouraging,

especially the high balance participants,

which are largely the retired participants,

and encouraging them to roll money out of the plan

into an IRA that's managed by them.

Why on earth would we want to do that?

Why on earth would we want to take this marvelous plan

that we've created with fiduciary oversight,

institutional pricing, a robust array of services

from your record keeping provider and plan administrator

and then move them into an IRA

that's multiple times that cost?

It just doesn't make sense.

We can do a better job for participants.

I think the industry's done enormous things

over the years for accumulation,

but we've been lacking a little bit

with respect to completing the journey.

What happens when we get the participants to retirement?

What can we do to support them?

And so that's what makes InnoVest very different

from many other firms in our industry,

is that we're focused on independence.

We are, I would characterize our firm

as a group of people, me and my colleagues,

that are committed and share a passion

for doing good things for other people,

doing it the right way all the time,

not starting with greed.

And so I'll have Thomas walk you through a couple of the high levels.

Thanks, Rick.

So I want to spend a few minutes on how Invest

helps clients like Cedro Sacramento.

We have two main areas that we focus on.

We want to improve readiness for participants.

At the end of the day, what we want to do

is make sure that your participants can retire with dignity

a healthy account balance.

While we do that, though, we want to make sure that we protect the city and mitigate

as much fiduciary risk as possible for us as fiduciaries on a plan and a committee.

And like Rick mentioned, I think we're uniquely qualified to provide these services, given

our intense focus on the client, right?

We're employee-owned.

That focus on the client, I think, enables us to really deliver on these two main goals

in a unique way.

So if we look at retirement plan readiness,

we look at three tenets, really.

Plan design, investment menu, and fees,

and a communication strategy.

Plan design is obviously one of those building blocks.

It starts with a plan document.

You all know this.

You probably have added your plan document many times.

When it comes to plan design, though,

it's not something that we set a fix in perpetuity.

You want to revisit that continuously.

We're all knee-deep in secure 2.0 right now,

so we are with clients reviewing

some of those optional provisions

to see if they make sense.

Plan design starts with that,

and obviously lawmakers have also afforded us

a lot of good features over the last couple of decades

with automatic enrollment.

We can default participants into target date funds,

so we're looking carefully at all that

to make sure that we take advantage

of all the best features out there.

Investment menu line up and fees,

obviously fees is an intense focus for us.

A lot of litigation going around there too.

Fees will obviously,

lower fees will obviously help your participants.

It will also help protect us as fiduciaries on the plan,

So that's something that we look at very carefully.

Lower fees is not the end of all, right?

As long as you can justify and understand if you're paying, that's fine.

But we spend a lot of time with clients around fees.

In an ultimately communication strategy, we can build the best plan in the industry.

If we don't communicate this plan clearly to your participants and employees, we're not doing a good job.

We're realizing that, look, you have a very diverse committee right here,

representing a very diverse pool of participants.

You have probably first responders, city officials, administrators.

All of those diverse groups must be reached in a different way.

And so that's something that we take very seriously when it comes to communication strategy.

We wouldn't be a good consultant if we didn't take a minute to share some comments and observations about your current fund menu.

At the top of this, though, look, I think the committee has done a really good job here.

There's no red flags.

Kudos to you.

You clearly spent a lot of time on this, and it looks pretty good.

There's a couple of things I want to touch on, some brief observations.

and you might have already vetted this and heard about this before,

but again, if you indulge me.

So first and foremost, the real estate fund.

Real estate funds tend to be a little bit more focused, as you all know, right?

So those are sometimes harder for participants to take advantage of in a core lineup.

They're more volatile by nature.

And actually, you have a fund in the plan.

One of the MidCap Index funds has quite a bit of allocation to real estate security,

So participants can get access to that or coverage in that space by investing in a more broadly diversified fund.

The nationwide fixed account is another thing.

The fund you're in right now has lagged similar style funds a little bit over the recent years.

We take a lot of pride in focusing on the fixed accounts.

Coming out of COVID, as you all know, before COVID, we were in a SERP or CERI interest rate policy environment for about 15 years,

coming out of the great financial crisis.

but then of course we hit COVID we had dramatic inflation and then rates went

up dramatically so you can get 4% in a money market fund now everything

changed right so we've spent a lot of times with clients making sure that they

have a competitive fixed account a money market option and that's something that

we look at we also want to be careful not to have that sub rate be subsidized

subsidizing record-keeping fees many times sometimes the record keeper will

give you a lower rate on the fixed account for a lower record-keeping fee

That's something to look out for sometimes.

And then another cool comment is the international large cap value style box is not covered currently.

You have some good international funds, but you don't have a designated international value fund.

As it happens, this has been probably the best performing asset class over the last year.

Not that we're trying to market time here, but we typically have a designated fund in that space.

You know, large institutional investors have rebalanced into international equities now for some time.

We think that's going to continue.

When you look at the valuation delta between U.S. equities and international equities, it's quite big.

And also the dollar is weakening now.

So having good options in the international space we think is important.

And finally, plan size.

We also take it very seriously to value CITs, collective investment trust for the plan.

Your plan is big enough to take that, double click on that and take that seriously.

Now, everything else equal, the mutual fund equivalent is always better.

You get a ticker symbol.

It's easier to communicate that to the participants.

But at the very least, we should double click and really seriously evaluate CITs for some of the asset clauses.

Vendor management.

You know, we look at the vendor, in your case, nationwide.

It's a partner.

We value them.

You know, we think about this as a three-legged stool.

the consultant, the committee, and the vendor.

At the same time, we need to recognize

that the vendor is not a fiduciary, right?

We need to trust by verify, right?

Turn on the lights in the room

and occasionally hold them accountable.

So we like to sometimes go out for an RFP process

or request for quote to make sure

that the fees and services are competitive.

As you can see from this slide right here,

we've done a lot of searches over the last five years

that resulted in meaningful fee changes for our clients.

And we like to say in the industry

that the best record keeper out there is the one you're with right now.

So if you can fix things with your current record keeper, that's the best way.

To move a plan of your size is quite an undertaking.

So you always want to start where you're at to make sure that you have competitive feeds

and services with that provider.

And as you can see from this slide, too, we have quite a few clients with Nationwide.

We know them really well.

And so, and like the previous presenter mentioned,

Nationwide is one of the premier record keepers and managers in this space.

Communication and education solutions are very important.

We take this very seriously.

Like I mentioned before, you're obviously a very diverse committee.

You represent a diverse set of participants and employees for the city.

We want to sit down with you and really understand all the unique aspects of your different constituents, if you will.

So it's important that we meet the participants where they're at.

The first responder is going to have a different type of communication strategy than an administrator or city official.

So that's something that we take very seriously.

The first we evaluate the current program, we then kind of identify goals, maybe reconfirm some goals, add some new goals, and then we roll out the process to roll this out to participants.

And this is in close collaboration and partnership with Nationwide, the record keeper, by the way.

And then you review and monitor education strategy on an ongoing basis.

And the last step there, what we found is that you want to have very clear measurable goals, right?

clear metrics that you can really go back and benchmark against.

And these metrics, these data points,

are ultimately going to help your participants retire

in a larger account balance.

We can proudly beat our own drummers

and say that we've actually been recognized in the industry

a number of times for our outstanding participant communication

strategy and plan design.

The Pension and Investment Magazine has something called the Eddie Award,

which is awarded to some of the best campaigns in the industry,

and we've been awarded that EDI award a number of times over the past few years.

I'll hand it back to you, Rick.

You're going to talk about the fiduciary risk.

Yeah.

Before I dive in, can we do a time check?

Yes, you've got 14 minutes.

Okay, great.

And we'd love to leave time for Q&A.

We presume that you wanted us to do that?

Yes, please.

Okay, excellent.

So the second area, and I alluded to this earlier, it's a founding principle of InnoVest that we set out to help our clients be better fiduciaries.

Much of that is related to following process.

We follow a process to ensure that you're utilizing the lowest cost share class in your investment menu lineup.

We follow a process much like you do or doing right now to take record keepers out to RFP or out to RFQ to ensure that the fees that are being paid by plan participants are not excessive, that they're reasonable.

We follow a process in building plan documents.

We follow a process in monitoring fees and expenses.

And the work that we've done related to process has resulted in us participating in over 70 fiduciary breach litigation cases.

And we served as an expert witness.

And largely, what we testified to was process.

What is the right process that was followed?

Some of these are frivolous lawsuits that never should have been brought.

And we just simply helped show the plan sponsor did the right thing.

They did an RFP on a regular basis.

They documented their committee meetings and minutes.

They documented the process of evaluating investment performance.

They documented their communication strategy to their participants.

They did RFPs on a regular basis and so on.

In other areas, we've observed where plan sponsors have made substantial mistakes.

And I would say that over the years, much of our process that we follow

has been built based upon some of the observations that we've made over the years.

Certainly something that we would do with the City of Sacramento.

In terms of deliverables in our process, they're robust.

They're everything that I just described.

In addition to some of the things that you might expect,

like legislative and regulatory updates,

topics and trends that are relevant to the industry,

sometimes just those related to the public sector,

plan design oversight, plan design recommendations

as new schemes and developments are made available to us.

Always looking at all end plan expenses

and uncovering any hidden expenses

and getting rid of them.

We believe that everything should be completely transparent,

something that you'd be proud to show anyone.

There shouldn't be anything that you're ashamed of.

Of course, providing capital markets updates, an overview of the economic climate, and trying to be contextual with all of that.

So what does it mean for you as a plan fiduciary?

What does it mean for your plan participants if you ask questions about this?

Our reporting is customized, or I should say semi-customized for each one of our clients.

There are some elements to our reporting that is the same across all of our client base,

and there are other elements that are customized for each one of our clients.

And we do all of this by providing service that we believe is uncommon,

returning phone calls quickly, returning emails quickly, delivering on our word,

never guessing about an answer.

If we don't know something, we'll tell you we don't know, and we'll get back to you.

We work in teams, consulting teams, so you won't have just your guy, but you'll have your team.

And the teams that we assemble, we tend to put consultants together that have varying backgrounds.

Mine happens to be I started in record keeping.

I actually worked for a retirement plan sponsor, so I was in your seat for five years,

and I've been in consulting for a very long time.

Much of that comes with an ERISA background,

and even though governmental plans are not subject to ERISA,

ERISA is the only contemporary written guidance that we have to follow.

And so we find ourselves doing so even with many of our governmental plan clients.

Thomas's background is largely in ERISA consulting

and also in the investment management side.

A big portion of mine is on the investment management side.

So we really try and blend teams that will complement one another

and be the most beneficial to our clients.

You'll be served by partners of our firm.

We find that that puts you in a better position.

Partners tend to have greater tenure in the firm.

You tend to have greater consistency with partners.

And so, again, very beneficial for you.

The consulting team that we've put in place for you has an average of 30 years of experience between the two of us,

30 years each between the two of us, as you heard earlier.

We are proud to say that we do a client survey every year.

It's on a scale of one to five.

You can see some of the results

on the right side of the screen there.

We're very proud of the fact that our clients love

the treatment by everyone on our team,

not just the consultants, but all of the wonderful people,

our colleagues who support all of the work

that we do for our clients.

And so I'll pause there.

I know that we included our pricing quote of 49,000

and the scope of services in the written proposal,

but we also included in here what your first 90 days

with Enivest will look like, and we'll turn to questions.

Thank you, are there any questions?

You indicate you have an office here in California.

Where is it and how would that office interact with us?

That office is in Alameda.

And Thomas and I both work out of that office.

Anyone else?

Wow.

You must be really good.

I wasn't muted, was I?

I wasn't speaking Swedish, was I?

Well, you do have three more minutes if there's anything else you'd like to say.

I think we've said exactly what we wanted to communicate.

If there are questions, please don't hesitate to reach out to us.

And we just thank you once again for the opportunity to meet with you today.

Thank you for coming and sharing with us.

I have a quick question for you guys before you bounce.

What do you think your role versus our role is in the whole defined contribution process?

What do you think the role of this committee is and your role,

and how does it interact?

We think that the role between the three of us,

Thomas used the three-legged stool

or perhaps it was the Josh before us,

but I use it often.

We think that it's a collaborative process

between the committee, the consultant,

and the record-keeping provider

and that the committee's primary role is governance.

You have fiduciary responsibilities

to ensure that some of the things that I mentioned

are not happening,

that the participants are not paying excessive fees.

That, I didn't mention this,

but basic fiduciary duty,

and these are legal standards,

that you have a duty of loyalty to the participants.

So as a committee, you have an obligation

to ensure that the decisions that are being made

with respect to plan administration,

investment offerings, and so forth,

will benefit all of the plan participants,

not just a certain group.

You have an obligation to prudence, the duty of prudence.

And that is really the obligation of common sense,

that you're thoughtful, scrupulous, thorough, and diligent

in all of your decision-making.

But ultimately, we work together

because all of the plans that we work with

and all of the plans that Nationwide works with,

they're largely unique.

They have some differences,

and we need to understand those differences

in order to do our best.

So we rely on you to communicate that information to us and communicate to us what your large and even drilling down more finite goals are.

I would add to that, too, that we are the industry expert, right?

So we need to proactively reach out to you, the committee, with our opinions about things, right?

And educate you and maybe keep you up to date on the latest innovation, latest research in the industry and so forth.

Because that's something that, that information is going to come to you and then you as a

comedian, the body is going to make decisions whether or not you want to act on some things.

I think we pride ourselves, we're pretty opinionated when it comes to things.

We're not going to come to you and say, you know, we're going to come to you with a pretty

strong, firm opinion about what we think is best for you, but ultimately it's going to

be your decision.

So think of us a little bit as an expert in that regard too, right?

We're going to be here to inform you at all times to make sure that you have the information

to make the right decisions.

Thank you.

Yeah.

Thank you.

Yeah, your time is now expired.

Thank you.

Thanks.

If you could please stick around just in case there are more questions that come up.

That would be helpful.

If the committee has questions of the other vendors and want to ask those now, they are

here.

And then at any point, the committee then wants to move into deliberations or discussion

about potential vendor.

If the committee feels strongly about, you know, how we go through that process with

them here, I'll look for the committee to share their thoughts on that part.

But certainly any outstanding questions or additional questions for any of the vendors,

I think right now before you go into deliberations or discussion, this would be the time for

that.

Does anybody have any follow-up questions for any of our vendors?

For our firms that are still here, if they do have specific questions for a particular

firm, please go ahead and plan to come to the podium and speak into the mic for the

answer, okay?

Chair Greg Musil.

Chair Greg Musil. Well, if there's no follow-up questions, I'm not,

can you lead us through the deliberation process? This is new ground for me. So we just have an

open forum, talk amongst ourselves. How does that work?

Yeah, you know, we are I understand that, you know, this is all happening in one meeting. We did

put in the recommendation recommending that the committee pass a motion to recommend that the

city award a contract to one of the firms today. If the committee can or can't do that, that's,

you know, up to the committee. So at this point, it's the committee talking amongst itself like it

it does on any other item where a recommendation is being sought by the committee to, for the

committee to be able to get to a point if they can make a recommendation today or they

have a recommendation for something else.

Thank you.

John, I want to lean on you on this because this is what you do every day.

Do you have any feelings one way or the other on the four vendors?

Well, like Josh had an interesting comment.

and he said everyone does the same thing, right?

It's pretty black and white what you do as far as fees,

what you do as far as lineups, as far as things.

So, I mean, that's kind of the basic needs we need.

I would just lean on the committee and say what value add is there on top of that

because that's just a general thing that everyone does.

So we need to think about what's happened in the past.

I think Murray had some good comments on that.

I think Rosh has done a great job on getting us to where we are.

Can he take us further?

I believe so.

But a lot of interesting ideas came from the group,

so I think we need to talk about that more.

But I think everybody can do the basic job.

It's trying to find a synergy with us

because there's not a lot of investment experience on this dais.

So I think education is a big part of it.

I think educating us or some of us on what our responsibilities are is a big thing.

So I think all four are great.

Samantha, I think I heard you say if we can or cannot make a decision.

I mean, if we can't make a decision, we're not meeting again until March.

Well, I mean, the committee could pass a motion requesting the ability to have a special meeting between now and then.

And then we could work with the clerk's office to figure out how we make that happen.

But, yes, the next scheduled meeting is not until March.

I would like to make a statement to the group.

I'm really intrigued about what Josh was saying about the retirement and growth funds that

are available through aside from the target date funds.

You know, for a lot, we do have pensions.

You know, and there's a lot of people that they don't necessarily start taking withdrawals

right away.

They just let their money grow.

I think that's a place or a safe haven that they could land, and that's something that could be very beneficial to retirees.

And they are a large group in the plan.

I don't even know what the numbers are.

They probably have half the money, I'm guessing.

Anyway, that really intrigued me.

And I like the fact that that's something that could be customized to what our plan needs.

So anybody have thoughts on that?

Yes.

I kind of agree.

I think generally being more overweighted in equities, given historical performance,

is a better investment strategy.

and this idea as you approach retirement, you can capture those greater growth.

I guess I would be curious what the other three firms think of that.

Would they, I mean, this is more of, I don't know that that's an exclusive strategy

that would only be employed by Josh's firm.

So I'm curious if the other firms, the other three firms, what they think of that,

would they see that as prudent advice?

And so for those, feel free to come up.

Sorry.

I know this is just sort of a blanket question that I'm throwing out there, but I guess it's kind of twofold.

One, would you see that as a capability or an opportunity where we would have that discretion to modify the glide path of these target date funds,

whether it's a CIT or a traditional fund,

to have greater exposure to equities

as participants approach toward retirement age.

So number one, is that possible within sort of your scope of services?

And then number two, would you advise us to pursue that and explore that?

Sure, feel free to come up.

Raj Kuzino, fiduciary consulting group for the record.

Thank you for that question, Ash.

I'm going to actually have Tom step in in just a moment here.

We conduct a glide path analysis.

And so we get data from Citi, specifically your data.

And then we take a look at that to see how that matches up to what we currently have.

And then do we need to alter the glide path that we currently have to match the data that we receive

as it relates to Sacramento, but I'll let Tom, because this is the guy who creates it.

Thank you for the question.

I want to leave room for the other respondents to answer,

but in short, that ability is extensively possible.

This is something that we can put forward to our other retirement plans.

It basically takes the city's demographic data, can incorporate pension data,

Social Security data, et cetera, and solve for a rate of return

and match that rate of return to an appropriate mix of equities and fixed income.

In some cases, we perform that exercise and match your plan's demographics

and its appropriate glide path to an off-the-shelf product,

such as it could be Vanguard, it could be an alternative firm.

Or, and that's a more extensive exercise, it requires coordination with a record keeper.

You could do a build-it-yourself, if you will, glide path,

where we orchestrate the roll-down, the fund selection, et cetera.

It requires much more, a bit more hands-on by the oversight committee, which is an important consideration.

But that is a feature that we can provide.

And I'll step out and allow the other respondents to respond if they see fit.

Rick Rogers for NFS Portfolio Solutions.

I didn't hear that portion of Josh's presentation, but I presume you're talking about the CIT version of the Vanguard Target Retirement Series?

Yes, and specifically that as a participant approaches retirement, their glide path declines to about 30% equities.

He was suggesting that that could be adjusted and be approximately 51% equities.

Correct.

And so our response to the question is yes, that's something that we've recommended to other clients.

The CIT version, if you're not record kept at Vanguard,

requires 100 million in target date assets,

so it tends to be larger plan sizes.

But the way that that actually works

is the participant gets to make the decision at that point.

When they hit the target year,

do they want to remain in the through glide path

and drop down to 30 by age 72,

assuming that the target year is age 65,

or do they want to remain at about a 50-50 allocation in perpetuity?

And what happens is they essentially take them out of, say, the 2025 fund that they're in today,

and Vanguard moves them into, and this is a participant election, into the income and growth fund.

And, yeah, we like it.

the appropriate glide path into retirement should be unique for everyone,

or at least every group, based upon what is your primary retirement plan.

Is your only defined benefit source Social Security,

or do you also have or do you have a robust defined benefit plan that's supporting it?

If that's the case, perhaps it is reasonable and prudent to be more aggressive

than getting down to 30% in equities.

Thank you.

Paul Nicario and Mindy Marburger with Creative Planning.

Ash, just so we understand the question correctly,

what you're referring to is the Vanguard target date fund,

the series that has a higher allocation to equities

versus the current target date funds that are made available in your menu today.

Yeah, it's the income and growth in retirement, TR2, I believe is what.

But it's customizable by our body of employees.

Yeah, so...

Understanding what the employees have available for their retirement in addition to the plan assets that they have.

Are they eligible for Social Security?

Do they have a pension?

How much is it?

And does that cause a need for the change in the glide path?

I'll start, Paul, and you can chime in.

So it sounds like we're talking, I heard the phrase custom glide path.

We, it, it, that's, that is an option.

I will tell you from our point of view,

we are more conservative about encouraging folks to use custom glide paths.

There's been recent lawsuits.

And on our end, we're just going to be more,

we're going to be more of a conservative shop.

However, if we had a client who was very much interested in doing that,

that would be, again, a look at all your demographics to see if that makes sense.

And then we would want to heavily educate you all.

I know it was mentioned before, there would need to be extra fiduciary education around that

about what that means once you create that custom glide path

and then any extra due diligence that goes along with it.

So the specific target date fund that was referenced earlier, we'll need to see if we can get that, if we have it available.

I did get an email back.

Fidelity has a target date fund that is similar conceptually.

I don't know about the details where you have a higher allocation in the glide path.

We do have that in a CIT class at four basis points.

But, you know, I just want to caveat that I want to make sure we're comparing apples to apples.

Does that answer your question?

Yes, thank you.

Am I allowed to?

Yes, please.

Josh, for the follow-up.

Yeah, well, just very briefly.

So I actually, because I was talking quickly, shared two solution alternatives.

One is staying with Vanguard off the shelf.

And then as Rick mentioned, at that one vintage where he said they tend to do it with a participant election, either go through or stay level,

we made the decision in our recommendation at the committee level to not offer that,

but to have everybody move into that 51%, just like you pick any other fund.

And we as a fiduciary, even the 321 situation, but we hold our contract, we give a hold harmless on all our advice.

321 or 338 doesn't matter.

We take all the liability for that recommendation and we would do that for the city.

What we did for Alameda was more robust.

That was what Creative just mentioned, a fully customized glide path where even the equity allocations in the early years were higher to reflect a defined benefit.

Those are two alternative courses that the city could pursue.

And then back to if you go with the custom glide path, we have to be the 338.

And there is, there's no other way to do it.

We're not the 338 on anything else, but you'd be hiring us, similar with the CITs,

you would be hiring us to build that glide path.

Last thing, don't confuse discretion with no input.

Discretion means you shift liability, we make the decisions.

Not to be confused that we don't listen to you, what's important to you,

that you can't create guidelines around that,

that we then implement on a discretionary basis.

What would the cost be on that, roughly?

The custom?

Yeah, just spit that in here.

It's probably, you know, it depends how custom you want to get.

If we really mirrored what we did in Alameda,

we could probably do it for $15,000 or $20,000 on an annual basis.

It would definitely be a flat fee.

If we had to build something new, there might be a higher upfront cost.

These numbers sound big.

One basis point on a billion dollars is a million.

Did I do that math right?

Where's John?

1% is $100 million.

One, you know, okay, $100,000, one basis point.

I don't want to spend your money, you know, frivolously,

but if you spent one basis point a year and had a completely better program

and did more participant outreach and did all kinds of cool things,

even two basis points more, you could change lives.

not trying to suggest you spend more

but I think it's a value decision

thank you

thank you

thanks Ash

did you have a comment Murray

okay

any more discussion

did you guys want to

go around and say

who you like or this is all new ground for me.

So, I mean, is there someone you have in mind?

Is there someone, you know?

I have a question.

Does city staff have a recommendation for us to consider?

No.

We're looking for the committee's recommendation.

We've provided the scoring that was done by the review panel

where the top score, I'm sorry, everything's averaged together.

It's the RFP process and the pricing and then, of course, all their proposals.

And then you have their presentations today.

But we're looking for the committee's recommendation on this.

I'll make a recommendation based on experience with the firm, amount of California clients,

and the size of a backing of Morgan Stanley that we continue with fiduciary consulting group.

That's my recommendation.

Thank you, John.

I think I'll second that, John.

Can I ask one question just for clarification for myself relating to the reduced fees or the reduced costs for like the Vanguard Target Fund?

Like creative planning offers almost half off on the purchasing.

but I wanted to clarify is that under the 338 model where we don't have control over the investment that I

Believe those were CITs is that just for one? No, I didn't think I thought it was separate from CITs

All the car real creative planning. Yeah, so Jeremy when in order for any of our clients to take advantage of

Enterprise pricing for the target date funds you need to come in as a 338

So that means we're not touching any of the day to day decisions that Fidelity are making.

It's just as a 338, if we wanted to say, hey, let's switch out to the Vanguard target date

suite that are similar, you're authorizing us to do that.

Now we wouldn't do that without any kind of discussion.

So kind of going back to our presentation, that 331 versus 338 discussion.

So in a normal target date structure,

the investment consultant's not touching

what Vanguard does on a daily basis

for doing their allocations glide path.

I mean, she might have a better understanding

of the rationale for why we need to have that 338

to get that CIT pricing,

but we're not doing anything more

than we would in a 321.

You good?

Okay.

I have a motion to second.

Do you want to vote on that or is it substitute motion somewhere?

Oh, I didn't realize yours was on motion.

I thought you said you recommend.

Okay.

My motion.

Well, we can do a vote then.

We got to.

we ran in this before

I believe but you can't have more than one motion

on the dais at a time

so we need to vote on that correct?

There can be multiple motions and you can still

have discussion even after a second

it wasn't a

there is a separate motion to force the vote to end

debate if you want to

close discussion but you can keep discussing even with

a motion on the table

Okay

So

do you guys want to vote

or do you want to, does anybody have another motion?

I'm not making a motion.

I just want to say as far as discussion,

I like the retirement plan advisors.

I like the fact that, you know, they're small

and we're kind of, I don't know, a big fish to them,

so to speak, and that they want to, you know,

we're not going to get lost in the weeds

because they are a large company.

I think we might be able to get more personal service out of them.

And I like what he had to say as far as that goes for my recommendation.

It's not a motion.

It's just I wanted to throw that out to the universe that I liked his presentation the best.

Did you have something?

I'll echo that, yeah.

I mean, I was very impressed with Josh.

I'm just torn because today I don't even if I were to vote on the current motion on the table I

think I'm going to abstain because I just don't feel prepared to to like I've had enough time to

kind of digest all this information at the same time I don't necessarily want to schedule another

meeting and discuss it so that's where I'm a little bit torn so yeah so I I don't know if

If there's any other thoughts on that in terms of how we feel about timing and whether we want to make a decision today versus postpone it, open to other thoughts on that.

I agree with you, Ash.

I feel like there's a lot of information to digest, a lot of reading over it because I got this on Friday, 1,000-page document.

I read as thoroughly as I could, but hearing all the presentations, I mean, I wouldn't be opposed to extending or having another meeting in the future just so we can have a discussion and maybe go through this a little bit more.

You obviously have a lot more experience in this than we do, so digesting the materials.

Jeremy, I agree with you.

I just looked at it starting yesterday.

I got it yesterday.

So, I mean, more time would help me, but I'm just going to change my perspective.

I'm just trying to be realistic in the ability of the clerk's office to schedule us for a special meeting.

My sense is that that's very challenging.

Yeah, it's the holidays.

What's the timeline on this?

The contract ends February 1st.

You'd have to put the information out ahead of time?

Well, yeah.

I mean, there's an advanced schedule to get a report in and routed prior to the meeting.

And then I'll need to coordinate with the clerk's office availability, the room, clerk staff, HR staff availability.

And then availability to have a quorum, you know, ensuring that we can at least have a quorum for whatever date is selected.

whether there's a motion passed today to recommend a contract for someone or it's you know another

meeting there's still a legal process that has to happen between the firm selected and the city

attorney's office to work out any issues in the city standard professional services agreement so

I can't dictate how long that will take but on average that takes you know about a solid month

to go back and forth between our attorney and their attorney and work that out.

So whether that is a recommendation coming forward in January, February, March,

we'll get the contract done as soon as we can.

The existing contract does end at the end of January.

Do you have an estimated timeline for when we could have another meeting?

I do not without talking to the clerk's office

and seeing what their availability is for all the outs, you know,

around any other meetings that are already scheduled in January or February.

I don't work in the clerk's office.

Jacob, do you have something?

Jacob Redberg, city clerk's office.

Typically Wednesday mornings we won't have many conflicting meetings.

So, yeah, again, I'd have to check with the city clerk herself.

but I believe our calendars are pretty open for the standard Wednesday 10 a.m.

that your meetings are scheduled on.

On a weekly basis?

Like from week to week they're usually open?

Usually, yes.

Okay.

That's good to know.

So to get everything ready for a public meeting under the Brown Act,

I myself need about four weeks lead time because this is not really my primary duty.

and I have open enrollment still right now.

So I need about four weeks lead time

to get my part done under the Brown Act.

Okay.

What happens if the contract expires

and we don't have a firm in place?

Like what?

Well, the primary role of the contract

is the investment consultant

that comes before the quarterly meetings.

We won't even have the end of fourth quarter data

for the investment.

You know, that's why our meetings are scheduled the way they are, like kind of a specific date in March for them to be able to look back and do that fourth quarter of the prior year review.

So potentially that fourth quarter review for the committee may not be able to happen at a March meeting.

It may happen at the following meeting.

But that's really their primary role in kind of the day-to-day contract with them is doing that work and getting their reports ready for the committee's quarterly meeting.

I'll just say from my perspective, a delay in that report is not a huge deal.

It seems like more important to make a decision to select the right firm.

And so I would just personally be okay not necessarily rushing the process, I guess, and

taking a little bit more time to make a decision, even if it means a delay in the Q4 report.

So we can make multiple motions here?

Or do we need to close or deal with this motion first?

Right.

The motion maker can retract the motion or you can vote on it for your options.

I'm sorry.

I didn't hear you on that.

So regarding the motions on the table,

we'll need to vote on them or the move,

the movements can retract their motion before a vote to have a new meeting.

That would be,

you don't need to have a vote to have a new meeting.

That's between the chair and city staff.

Okay.

Well, he made a motion.

and I think we should follow through and let's have a vote.

So it's been moved and seconded, so let's have a vote on that.

Well, I just want to be clear.

If we take a vote and it doesn't pass, does that mean that we can not?

Then what the decision's made and there are new consultants for that.

It doesn't automatically just qualify them.

It just goes to another motion.

Okay.

Actually, I think it's an important point, though.

This is a non-binding recommendation, and technically staff could move forward, correct?

Can you clarify? Move forward?

Staff could select the firm.

No, we're looking. That's not our intent, and I don't see us doing that,

considering the services that we need the consultant to provide in terms of the investment lineup

in that review and the plan administrator's fiduciary responsibility.

And the plan administrator is the director of human resources.

We are seeking a specific recommendation from the committee to move forward with that firm.

We were okay with the four in the scoring,

with the four from the panel being invited today for your consideration.

And we, under the fiduciary responsibility of the plan administrator,

and the role of the advisory committee on the investment lineup,

which is a primary service.

We don't want to operate outside of that system.

That's not a good idea in terms of the fiduciary of the plans.

So say that the committee can't come to a consensus.

At some point, staff will need to move forward.

Is that something that we need to consider?

I haven't had that discussion with Shelly

or to receive direction on what happens if the committee has no recommendation that, you know,

a motion that passes that hasn't been discussed.

Or if we can't come to an agreement, right?

Like if we vote and we don't, well, would we have enough?

We would have a tiebreaker somehow.

Is that what I'm...

No.

You need four votes to pass a motion today.

Yeah.

A motion passes or it fails.

Additional motion fails.

Additional motions can be made if those continue to fail

and the committee says we need to have, you know,

more time to evaluate this.

So come back at a, you know, have another meeting.

That's what we'll do.

If we come back to another meeting

and there's still no ability for the committee to pass a motion,

I mean, I'll seek direction on that possibility.

I know that hasn't been something that's been discussed.

It was not expected that no time in the future the committee could put forth a recommendation.

Jacob Redberg, Office of the City Clerk.

As a reminder, per Council Rules of Procedure, Chapter 8D6, a commission meeting may not go past three hours.

And so at this point we have about 14 minutes or 15 minutes to complete the meeting.

Thank you, Jacob.

So Ryan is a motion to table does that supersede the motion that's on the floor?

So

it would be a what I heard was having a special meeting which would be a separate meeting not

we could also continue this meeting but we would need to have a date certain to do a

continuance and it looks like we don't have the date ready yet so essentially this meeting will

close and then we'll have a separate special meeting. Yeah move to table to the next meeting

whenever that is. Yeah, you can have a motion to table the item.

And does that supersede the motion that's on the floor?

Per Rosenberg's, we take motions in the order of most recent to oldest. So if you make a motion now,

that would be the first one voted on. I'm going to make a motion, and I'll just see if there's a second out there,

to advance fiduciary consulting group and retirement plan advisors as finalists for

future discussion at either a special meeting or our next regular meeting.

I don't know. I think I'd prefer if we're going to extend it and we're going to discuss it just

to keep all the groups still in it. Just because I wouldn't say I'm prepared or limited to cut out

anyone and just pick two to move forward.

But I do think we should, if we can schedule a meeting to have further discussion on this,

then that would be my choice.

Is that, I'll accept this as a friendly amendment to my motion to basically continue this discussion to a future meeting.

Is there a second?

So do I need to retract my motion or is this a substitute motion on top of what I just did?

You haven't even voted yet.

Is there a second to extend the discussion to a special meeting?

I'll second that.

Okay.

We have a motion and a second to extend this discussion to a special meeting.

Thank you.

So we'll take the secondary motion first to continue to a future meeting with a motion by Member Raghani and a second by Member Leveson.

Please unmute your microphone.

So I'll now do the roll call votes.

Member Raghani?

Yes.

Member Colville?

No.

Member Tunson is absent.

Member Gardella?

Yes.

Member Leveson?

Yes.

And Chair Hoekstra?

Yes.

Thank you.

the motion passes with four.

Oh, I'm sorry.

Member Kang.

No.

No.

So with that, the motion,

the motion passes, yes.

So the item will be continued to a future meeting.

Special meeting, hopefully.

Correct.

Okay.

Everything works out.

Hopefully in January.

So that is item four.

Did I need to ask if there was any questions from the audience on that?

Yes, thank you.

We had no speaker slips for this item.

Okay.

We are out of order here.

So we should, well, we got 10 minutes.

I'm going to say item three is more important than item two.

Does anybody have a problem with skipping to item three?

All right.

Arash, could you please come up and help us with item three?

Review of the 2025 third quarter by highest group and watch status of investment lineup.

Before you get started, Rosh, I'm looking at the recommendation in the staff report.

It talks about some funds being put on watch for qualitative reasons, but that language

doesn't match up with your stoplight chart.

I agree.

Yeah, it should be for quantitative performance reasons.

But you're mentioning three funds here, one of which you have no recommendation, or two of which you have no recommendation for in your stoplight report.

And then you...

We didn't write that language, so...

No, I know that.

That's...

so the three funds that should stand watch are nationwide fixed mfs value american century

mid cap value yes and then you had two with no recommendation and two that said discuss watch

options hey murray in time in consideration of time can we shelve that for now i'm trying if

we're going to vote on something about watch I want to know what what our consultant is recommending

we do come up and we're gonna have Tom yeah we can certainly have them clarify what the

recommendation is today and the committee could pass a motion on that clarified recommendation

and then that can be reflected in the minutes as a correction very good thank you for the question

and for the question for clarification,

the recommendation would be to place three additional funds,

the MFS mid-cap growth, MFS international diversification,

and Vanguard international growth funds on watch

for performance reasons, quantitative reasons.

That's a little confusing.

And my only point is the document that your firm prepared

doesn't reflect the wording that you just said out loud.

So that's...

This should be the whole...

Is that moving?

Can we go to the page in your report that shows

the actual George report?

Yep, it's page 58.

When I wrote all this down, it says it's 55.

Okay, not used to this.

This is the John Stegel chair.

Okay, so this page here is discuss watch options.

Sorry, I'm coming up to speed.

I have read this, but it's been a lot of information today.

So our recommendation for MFS, as Tom just said,

is to place these funds on watch.

And you're right, Murray, it doesn't reflect the staff report,

which is for qualitative reasons.

This is for performance reasons.

For those three funds, and actually the DFA, the new VEAN real estate

should also be put in that mix as well.

So there's a bit of a carryover