2021 Knowledge Brokers

Glenn Ross

Nominated for being “outstanding” with a leading CIO, his team, and his investment committee, Glenn Ross, managing partner for Marquette Associates, is an investment consultant veteran with 40 years of experience, servicing many mid-Atlantic nonprofit and pension plans as a primary consultant.

Ross joined Marquette in 2013 through its merger with Archstone Portfolio Solutions (which he co-founded in 2006), and he is now an owner of the firm and a member of the health care, endowment, and foundation committees.

He is also the co-author of How to Select Investment Managers & Evaluate Performance: A Guide for Pension Funds, Endowments, Foundations, and Trusts. In the days before Archstone, he was the senior vice president, head of institutional services, and a quantitative portfolio manager for Mercantile Bankshares and also served as the director of quantitative services for Brown Investment Advisory & Trust Company.

Ross has a Master of Business Administration in finance from Loyola University Maryland and he earned his bachelor’s in finance from Towson University, where he was the recipient of the College of Business and Economics Dean’s Recognition Award as part of the Alumni of the Year Awards in 1998.

He’s a member of the Maryland chapter of the Healthcare Financial Management Association (HFMA) and was a board member of the Towson University College of Business and Economics, where he was a finance department advisory board member and an adjunct professor of finance. Ross is also the founder and former chair of the Spending Affordability Committee for Harford County, Maryland—where he remains a member— and president emeritus of the Albert P. Close Foundation board of directors.

CIO: What new qualities do you look for in a manager/service provider given the pandemic’s financial and economic impacts?

Ross: Above all, I want to see managers and service providers listen to their clients’ and their prospects’ needs, goals, constraints, and wishes for the portfolios they currently, or might, serve. But these are attributes of providers that we’ve been seeking all along, long before the pandemic began. We’ve always sought those managers that are asking the thoughtful questions of how their services and methods will best fit with our clients. In fact, we do the same of ourselves at Marquette in serving our clients, and we revisit these subjects often! 

Our clients’ needs are always evolving, as are their related investment requirements, and, of course, they evolved during the pandemic. So, on an ongoing basis, but with the added pressure of having not been able to meet face-to-face recently with the staff and investment committees we serve, we have pushed our managers (and ourselves) even harder to ensure we are following our time-tested procedures in manager research, including:

  • An investment manager must be able to accomplish the return expectations of the client without assuming an unacceptable level of risk;
  • Accordingly, we gain a basic understanding of the firm’s process and investment philosophy, and, of course, any potential impacts the pandemic might have had on staff (both in portfolio management and support). Basic product data, detailed marketing materials and/or a private placement memorandum (PPM) are collected (or updated, should we have a standing relationship with a manager). Notable is that Marquette conducted more than 3,600 meetings in 2020 (albeit most of these have been in virtual form, of course);
  • The manager is further evaluated on a quantitative and qualitative level for relevance to the client. For alternative asset classes, we track records of previous funds and compare current offerings against a universe of peers; 
  • Firm and product data and documentation are gathered via a request for information (RFI). The product is evaluated and scrutinized on a qualitative basis by our analyst(s) for potential problems. Following the review of the RFI and documents, any concerns are addressed with a representative of the manager’s firm in an interview or series of interviews; and
  • The manager is thoroughly evaluated for remaining operational, investment, and personnel concerns, and the manager’s processes are verified and validated. During this phase, the product will be subjected to a uniform set of reference questions, as well as a potential on-site meeting covering compliance, culture, technology, the product team, and trading; but this step has been challenged during the pandemic and has been completed more virtually over the past year. Then, the manager is compared against its peers and other “search eligible” products for evaluation by our investment manager committees (at Marquette) prior to any information actually being delivered to our client.

But, again, these procedures have been in place prior to the pandemic at Marquette. The pandemic has made us more sensitive to ensuring the data we receive, and therefore intel we present to our clients, is of the highest level as the pandemic has forced us to delay on-site visits, a function on which we have always depended heavily.

CIO: What changes are you making to your asset allocation advice?

Ross: Asset allocation advice is always a fluid process as investing conditions change. However, we’ve always strived to be strategic in nature of our advice, including how we deliver our asset allocation studies and stress tests under which we place our expectational assumptions and responses to the investment committees we serve. In concert with this principle is strong corporate governance practices, which are a critical component to the success of any investment portfolio.

As such, Marquette regularly works with clients to educate them on best practices as part of our initial systems review, through ongoing investment program monitoring, and through dedicated fiduciary training sessions, and this continued through the pandemic. An investment policy statement (IPS) provides a broad governance framework for the portfolio. The purpose of developing an IPS is to create succinct yet comprehensive agreements between an organization and its investment professionals (e.g., the investment consultant, investment managers, and custodian). An IPS is designed to explicitly address issues such as the designation of responsibilities, investment objectives, risk tolerance, liquidity needs, permissible investments, proxy voting, fiduciary responsibilities, benchmarks, evaluation time frames, and reporting requirements, and, specifically, asset allocation for a strategically designed, long-term road map; this did not change throughout the pandemic. However, a thorough asset allocation road map will also provide flexibility to account for changes in the investing environment.

In general, however, these are some of the focus points over the past year of the pandemic as we operate within those policy governance guidelines defined for the investment committees we serve:

  • We rebalanced portfolios to take advantage of near all-time highs in our clients’ equity allocations. Due to performance, equity allocations have outpaced policy guidelines;
  • We allocated within the fixed income asset classes to insulate against oncoming inflation pressures and interest rate sensitivity;
  • Interest rate sensitivity poses one of the greater threats;
  • Some clients, especially hospitals, are struggling to remain fully staffed, so revisiting enterprise risk management initiatives has remained a priority, as has ensuring days cash on hand remains at adequate levels;
  • While the impacts of spending remain a focus, cash inflows have exceeded spending, thus highlighting the importance of adhering to long-term strategic allocation initiatives;
  • Private investments have received higher focus and allocation commitments, despite recent times showing high levels of private investment commitments across the industry; and
  • Diversity of manager alignment is gaining higher scrutiny and diversity/environmental, social, and governance (ESG) initiatives remain a priority. Fortunately, at Marquette, we have been fulfilling these initiatives for many, many years for our clients and have deep resources and proprietary databases to address these efforts for our clients quickly and efficiently. In fact, our research team formally adopted the “Rooney Rule” for our manager search process—we will include at least one diverse candidate in every traditional equity and fixed income manager search that meets client investment objectives in an effort to promote added diversity within our client portfolios. Additionally, place-based impact investing is important to many of our clients. In making recommendations and decisions to invest in this space, we assess opportunities and investment managers by subjecting each to the robust due diligence framework described earlier. We maintain active internal and individual committees addressing diversity, socially responsible investing (SRI), ESG, and impact initiatives.

CIO: What do you think will be the biggest innovation in your industry in the next 10 years?

Ross: As it has been for the 40 years I have been fortunate enough to serve in this industry, the most significant innovations will be centered on technology and how we use new technologies to serve our clients and make them, and us, more efficient. Technology will continue to impact such investment- and service-related subjects as:

  • How our meetings in serving staff and investment committees are conducted. We’ve learned in the past year that due to computer-driven video applications, we can conduct meetings (and more of them) in an efficient manner and deliver meeting materials quickly and efficiently;
  • For asset allocation decisions, the pandemic dramatically impacted real estate investment exposures in portfolios. As I’ve noted earlier, we’ve already become accustomed to using video meeting technology for investment committee meetings; however, companies throughout the world are changing requirements for employees working physically in the office versus their homes, and employee requests are driving these considerations for the workplace already. Accordingly, companies will also be re-visiting their physical footprint needs for leasing space. This development in turn is already shifting attitudes toward real estate investing within portfolios, and we haven’t yet really seen the full impact on portfolios;
  • Our industry will continue to build new interfacing technology allowing us greater speed in vetting new manager opportunities for our clients. The review process for Marquette considering new managers has accelerated a great deal over the years, but gaining access to financial information will continue to gain speed and transparency; and
  • When I started in this industry years ago, the number of asset classes were far more limited versus today. And, over the years, technology has allowed the formation of, and investment in, more diversified and complicated asset classes (both in types and geographically). As investment assets continue to grow, so will the demand for greater diversification of assets, which I believe will continue to drive that innovation of the types of investments our clients might consider.

I remain excited to dream of all the changes technology will continue to drive in the investment industry as well as our everyday lives.

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