New York City's Bureau of Asset Management should enhance its due diligence and lessen dependence upon senior management, according
Stringer oversees the bureau, a 100-person unit of his office that oversees the investments of the $160 billion New York City pension funds.
"For too long, too little attention has been paid to our investment operations and there was a sense that nothing could be done to cut through an intractable bureaucracy," Stringer said Tuesday. "Today, that era has come to an end."
Public pension consultant Funston Advisory Services LLC of Bloomfield Hills, Mich., compiled the 406-page report, which Stringer said spotlighted critical needs. The comptroller commissioned the report in November 2014.
First, said Stringer, the bureau lacked a standard process across all asset classes to vet investment managers and relied excessively on third-party consultants for such critical tasks as on-site management visits.
At the start of 2014, when Stringer began his four-year term, the bureau had no formal risk-management department, depending instead on consultants for portfolio-level risk analysis.
Overdependence on senior management, Stringer added, creates bottlenecks. Most actions, for example, require former approval of the chief investment officer and/or the assistant comptroller.
Stringer called for adding deputy chief investment officers and forming an internal investment committee. He also wants to add a senior executive with change management experience and separate the assistant comptroller's role into administration and operations.
Stringer also wants to form a multiyear budget, business and strategic plan for BAM, hire a human resources head and an information technology chief to create a comprehensive Internet technology plan for the office.
In addition, he said the bureau should modernize its records management protocol.
Since taking office, Stringer has reworked the ethics, reform and compliance functions of BAM through key hires and process implementation, while working with trustees to enact a placement agent ban and create a common investment meeting.
From June through October 2015, Funston interviewed more than 75 bureau employees, pension-fund trustees, external investment managers, consultants and other key service providers. The firm also and reviewed more than 3,300 documents. The report made 240 recommendations over 20 operational areas.
The city's primary employee pension funds are the New York City Employees' Retirement System, the Teachers' Retirement System of the City of New York, the New York City Police Pension Fund Subchapter 2, New York City Fire Department Pension Fund Subchapter Two, and the New York City Board of Education Retirement System.
Each pension fund is financially independent and has its own board of trustees.
Moody's Investors Service rates the city's general obligation bonds Aa2. Fitch Ratings and Standard & Poor's rate them AA.
