Fiduciary Investment Solutions (FIS) are a small, minority-owned, full-service institutional investment consulting firm of 16 employees based in Philadelphia, Pennsylvania. Founded in 1996, the firm's clients' assets range from $100 million to $4 billion.

FIS operates on the premise that manager size does not guarantee success. The firm's objective is to provide above-benchmark, risk-controlled returns using portfolios comprised of outstanding emerging managers (asset managers who generally have less than $2 billion under management).

In 1999, requests for proposals (RFPs) were sent from the Bermuda Accountant General's Office to six firms found in the Government database as Government searched for a new consultant to the Public Funds Committee. In November 1999 FIS was engaged to perform a governance review, including an overview of the activities and responsibilities of the PFIC as well as provide recommendations on, among other things, investment strategy and performance review guidelines.

FIS provided nearly two telephone books worth of recommendations, FIS CIO and CEO Tina Poitevien said, and held a two-day retreat with the PFIC and various technical officers from areas such as the Bank of Bermuda and the Accountant General's office. A statement from the Accountant General's office said the PFIC was so pleased with the recommendations that a vote was held at that retreat with FIS receiving unanimous support.

Even members who usually held different views, Ms Poitevien said ? citing former chairman Richard Butterfield and current chairman Calvin White as examples ? agreed that FIS was the number one choice for the job.

"All responses (to RFPs) were evaluated diligently on the basis of transparent, quantitative, and qualitative criteria," a Government spokeswoman said last week.

"The factors considered in the assessment involved, among other things, the following: 1) experience with public pension funds, 2) time frame to complete specific projects, 3) cost, 4) ability to meet the PFIC's objectives, 5) level of service, 6) reputation, 7) quality of RFP response.

"Within the selection process routine background information was gathered on all six investment consulting firms from various resources available. The information obtained did not indicate any issues regarding the competence, credibility and integrity of FIS."

The company previously consulting for the PFIC was World Markets (WM) Company. WM had provided the PFIC with performance measurement services only. FIS was brought fully on board in March of 2000 to provide a full range of investment consulting services.

As for the fee being paid to the firm, the Government spokeswoman declined to specify how much the firm was being paid for their services. She did add, however: "It would not be feasible to compare the fees paid to the current investment adviser with the previous since the range of services provided is significantly greater.

"Fees are not paid as a fixed rate but are in fact a calculation based on the current market value of the portfolio."

The FIS recommendations focused on six areas: investment strategy, manager review, the development of an investment policy statement, ongoing plan management issues (for example, how to assess when managers are doing well and when they are not), manager searches (keeping an eye out for new managers), and a review of the master trust/custodian bank relationship.

Regarding investment strategy, both Government and Ms Poitevien pointed out, FIS recommended a move from a concentrated portfolio of 11 investment firms and mainly large-cap equities to a more diverse portfolio of 18 firms ? at the same cost.

The sudden fall in large-cap equities in 2002 meant the PFIC had "dodged a bullet", Ms Poitevien added.

"The strategy was working well (in 2000)," she said. "But it was time to move on."

FIS also renegotiated all the contracts for the money managers and put in place strategies to enhance the long-term returns for the fund in an effort to ease the funding challenge faced by the PFIC.

A review of the fund also showed that the PFIC was using two to four separate master trust banks ? the banks holding all the fund's assets ? which, FIS said, was proving inefficient. After RFPs were sent out to several banks the fund was consolidated, saving some $100,000 annually in spite of the more complex portfolio.

FIS also recommended performance criteria for managers, noting that no criteria for the managers to live up to was included in the previous contracts.

Finally, Ms Poitevien said, there was some interest expressed by the PFIC in finding a more prudent way of encouraging "indigenous money management and brokerage firms" ? i.e. Bermudian ones.

The result, she said, was an accepted recommendation by FIS to implement a local broker and manager programme. Local managers are not excused from following their fiduciary obligations, she said, however if local firms are identified that can fill that criteria they are encouraged to do so.

Since the inception of the programme in 2000, she said, some $2 million in brokerage commissions has gone to Bermuda-based brokers.

She declined to provide a list of those brokers.