Gov. Josh Stein signed into law Friday a bill that takes power away from State Treasurer Brad Briner, which is exactly as preferred by the longtime money manager and neophyte politician.
The legislation creates the N.C. Investment Authority, an independent agency that will be responsible for hiring the chief investment officer and have a five-member board of directors that oversees the state’s $132 billion in pension and other public funds.
Previously, North Carolina has been one of three states that made the treasurer the sole fiduciary in making investment decisions for the funds. State officials, including Briner’s predecessor Dale Folwell, historically preferred that strategy because the buck stopped with the elected treasurer, rather than an appointed board.
But Briner lobbied for the change as a candidate and after his election in November. He says having a board of experts can help improve the funds’ investment performance, which has lagged most other peer states over the past decade. His credibility after serving as a money manager for New York financial-data services billionaire Michael Bloomberg helped push the legislation over the top.
“New chief investment officers come in and scrap existing strategies, which is human nature,” Briner says. “This will withstand the four-year cycle of treasurers,” citing the length of their terms. “It needs to be permanent to matter.”
The other four authority board members will be selected by the governor, House Speaker, Senate President Pro Tem and the treasurer. Briner predicts that at least a few of the members of the Investment Advisory Council, which he named earlier this year, will be appointed to the authority board. The council members include Wilmington banker Warren Brewer; Robert Durden, the CEO of the University of Virginia Investment Management Co.;and Dan Ward, the chief investment officer of a family office based in Raleigh.
The authority’s key roles will be hiring or firing the treasurer’s chief investment officer, setting a budget for investment management and overseeing policies aimed at earning above-average returns without taking more risk than the average pension fund, Briner says. He said the department’s chief investment officer, Kevin SigRist, is doing a “fantastic” job.
The new law also takes power away from the General Assembly because the board, not lawmakers, will now have the authority to decide the type of financial assets that can be acquired.
North Carolina’s investment performance during Folwell’s eight-year tenure was influenced by his oft-stated preference for safer, liquid investments rather than a larger allocation for private-equity and other alternative assets. The state seeks a 6.5% annual investment return to meet its obligations to state employees, retirees and dependents.
Six months into his term after a career in the private sector, Briner, 48, says he’s finding his job “endlessly fascinating.” He says a key part of his work is educating others on key financial issues facing the state, including “important issues that are too scary or complicated not to care about.”