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City of Missoula, Montana Item to be Referred to City Council Committee Committee: A & F Item: Award Contract for Professional Services – Section 457 Deferred Compensation Plan Consulting Services Date: August 14, 2009 Prepared by: Brentt Ramharter Initiated by: Brentt Ramharter Action Required: Authorize Mayor to execute The Professional Services Agreement for Section 457 Deferred Compensation Plan Consulting Services with Arnerich Massena Recommended Motion: I move the Council awards the contract for Professional Services Agreement - Section 457 Deferred Compensation Plan Consulting Services Timeline: Referral to committee: August 14, 2009 Committee discussion: August 19, 2009 Deadline: Have council approve ASAP. Background and Alternatives Explored: 1. The city has never pre-screened any of the providers of Section 457 Deferred Compensation investment products for appropriateness of investment products provided or fees charged. City employees had over $5,000,000 of investments with our current providers. These investments are contributed by employees on a voluntary basis and are tax deferred and are supplemental to their state retirement. The Section 457 deferred compensation plan is similar to the 401K plans offered to employees in the private sector. 2. The fees charged by the various providers can vary by as much as 500% or more between providers and products offered. 3. The choices available to our employees may not be the most appropriate offerings. All of the investment portfolios incurred significant losses over this past year, some considerably more than others. 4. As a result, the city issued an RFP to contract with a firm that would act as an independent third party to develop a set of investment choices for all of our employees that will have fair but not excessive fees from a list of appropriate retirement investment products. One record keeper will be identified in this process so that all investment reports will come from one source. The contractor will issue an RFP to obtain responses from interested investment providers so that they can help the city evaluate which responses will provide the best services, products and pricing to our employees. 5. The city received one response by an independent third party, namely Arnerch Massena out of Portland, Oregon. We received many inquiries from local investment advisors who will be contacted and given a chance to respond to the RFP to be issued by the city's consultant. 6. The city would like to involve representatives from all of the unions in the selection process for a record keeper that will offer appropriate investment products with fair and reasonable fees and reporting that meets professional standards. Financial Implications: ---PAGE BREAK--- The cost for this contract will be $20,000. This one-time cost is budgeted in the Finance office budget. Attachments: RFP Deferred Compensation Plan Consultant Deferred Compensation Plan Consulting Contract RFP Response