Investment Management Fees Revealed

In the Aug. 14 Whispers column, we told readers about the city of Fayetteville’s bid process for investment management services.

The city denied a request from the Business Journal under the Arkansas Freedom of Information Act to view all the bids because a contract for the service has not been issued. Although the city has notified the final four bidders of a selection committee’s recommended firm (Crews & Associates), the Fayetteville City Council has to vote on the firm before a contract is awarded.

In part, the denial from the city stated: “This is to protect the bidder or proposer’s information to prevent the possibility of giving an unfair advantage to a competitor.”

But, we found a May addendum to the requests for proposal to bidders. In it, the city disclosed the amount it has paid Garrison Financial Inc. (formerly Garner Asset Management) to manage its money for the last five years. The fee was $31,090 per quarter, or $124,360 per year. Since the city’s funds are about $69 million, that calculates out to an annual charge of about .0018 percent.

Apparently, “unfair advantage” has less to do with price than other services an investment management firm might be able to provide Fayetteville. But that’s the case with all bids that have had previous contracts with the city. The contract value eventually becomes public information.

Andrea Foren, buyer for the city, said the investment management services project is slated for the council’s Sept. 5 meeting. If approved, the bid information will be subject to FOI laws.