David Ranii, business reporter for the Raleigh News & Observer, does a more than admirable job of trying to sort out the issues raised by Edward Siedle, President of Benchmark Financial and consultant to the State Employees Association of North Carolina (SEANC). Mr. Ranii had to dig through Mr. Siedle's blog post and a letter Mr. Siedle sent to State Treasurer Cowell, the response of Franklin Street Partners, the Treasurer's response, and my critique (see, "Not Off to a Good Start (March 3, 2014).
While I agree with Mr. Siedle that pension plans indirectly incur all sort of fees that aren't publicly reported, I remain concerned about his investigative methods, which seem to rely on faulty and highly speculative estimates and premature disclosure of his research results. I will have more to say on indirect fees and pension plans in a few days.
I also agree with SEANC that I am not the best person to have an opinion on matters concerning Franklin Street Partners and the North Carolina pension, since I did work for both organizations. However, I am not endorsing or justifying Franklin Street's investment performance or fees (disclosed or otherwise). I didn't have to rely on any information that I gleaned either as North Carolina's CIO or a consultant for Franklin Street. Any investment professional with reasonable knowledge of fund of funds, the data furnished to Mr. Siedle, and a spreadsheet, would readily reach like conclusions. In short, I simply demonstrated in my blog post that Mr. Siedle's estimates and contentions are off.
I am hoping that Mr. Siedle's final report will eliminate these early miscues, because it is worthwhile having a reasoned debate about the efficacy of alternative investments and the fees incurred to generate returns.