Tuesday, July 25, 2017

CIOs come and go; North Carolina's has just resigned

CIOs come and go; North Carolina's has just resigned

North Carolina’s chief investment officer Kevin SigRist resigned.[1]  I don’t know why he resigned, and I don’t expect Mr. SigRist will provide the public any insights into his decision. Mr. SigRist is a consummate investment professional.  However, recent history suggests that CIOs do not survive more than six months after a new treasurer arrives on the scene.

When Richard Moore became state treasurer, Doug Chappell was the state’s chief investment officer.  By the fall of 2001, Treasurer Moore was interviewing me for the job.  In 2009 Janet Cowell became state treasurer, and by the end of the year Shawn Wischmeier was CIO, and Pat Gerrick had departed.   In 2017 Dale Folwell became treasurer and inherited Kevin SigRist as the state’s CIO. Now Mr. Folwell is looking for a replacement.

The relationship between a new treasurer and the CIO is fraught with tension.  The incoming treasurer comes to office with plans to move in a different direction. The incumbent CIO has been instrumental in carrying out the policies and decisions of the previous treasurer.  Thus the new Treasurer enters office with a suspicion about the actions and motives of his predecessor.   It’s no wonder the incumbent CIOs only last about six to nine months.

Mr. SigRist has enjoyed a lengthier tenure than most CIOs, surviving for over four and a half years.  As a general rule State CIOs only last a few years. Many leave for better pay in the private sector or a bigger public pension plan.  Still others have a falling out with the pension’s board of trustees and are forced out.  As in any investment enterprise, this kind of turnover is bad for the performance and stability of the pension.  As CIOs come and go, long-term investments are disrupted and the underlying staff is distracted and/or replaced.  In North Carolina the departure of a CIO is particularly damaging because the treasurer is a sole fiduciary.   North Carolina does not have a board that retains institutional memory about the state’s investment program and can act as a counter balance to the treasurer.   A great deal of institutional memory walked out the door with Mr. SigRist.

North Carolina’s pension has survived the departure of many CIOs and it will continue to make investments for many years to come.  However, we have a new treasurer who seems to want to steer the pension as if it’s a speedboat instead of a $94 billion super tanker.  Without Mr. SigRist’s counsel and experience, an inexperienced captain could damage the super tanker.

Readers know that I disagree with some of the policies propounded by Treasurers Cowell and Folwell.  However, I have great respect for Mr. SigRist.  He has pursued his responsibilities as CIO professionally and honorably.  He will be missed.

[1] http://www.newsobserver.com/news/politics-government/state-politics/article163373913.html

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