HomeMy WebLinkAbout9020 Investment Advisory Services - Scope of WorkCITY OF DENTON, TEXAS
REQUEST FOR PROPOSALS
INVESTMENT ADVISORY SERVICES
INTRODUCTION
The City of Denton (the “City”) is seeking proposals from investment advisors who are registered
with the Securities and Exchange Commission and the Texas State Securities Board to provide
non-discretionary portfolio management services for the City’s estimated $1 billion investment
portfolio including liquidity balances at TexPool and TexSTAR local government investment
pools ($265 million) and bank demand deposit accounts ($10 million). All figures are as of
February 13, 2026. Funds are managed in accordance with the City’s Investment Policy (Exhibit
A), the Public Funds Investment Act (Texas Government Code, Chapter 2256) and Collateral
for Public Funds Act (Texas Government Code, Chapter 2257). The City owns both electric and
water utilities for the Denton service area.
This Request for Proposals (“RFP”) is designed to present interested firms with a description
of the City’s current investment program, the services required, and a format for responding to its
request.
BACKGROUND
In accordance with the Texas Code and the Investment Policy of the City there are prioritized
objectives for managing the portfolio’s fixed income investments. In order of importance, these
priorities are suitability, safety of principal, liquidity, marketability, diversification, alignment with
cash flow, and yield. Since it is the City’s practice to hold securities until they mature, temporary
market value gains and losses are unlikely to be realized. The general investment strategy, while
considering the current interest rate environment, is to match maturities to cash flow needs. The
majority of the City’s funds are pooled for investment purposes and managed according to the
approved Investment Policy.
The City seeks advisors who demonstrate extensive experience, especially with fixed income
securities, to provide services related to the investment of the City’s funds, including the
execution of security purchases/sales for the investment pool, investment advice, and an annual
review of the City’s Investment Policy and procedures. The City has separately contracted for
securities clearing and safekeeping with its custodian and depository bank, currently Wells Fargo
(the “Custodian”). The depository bank could change at any time as their services are required to
be bid every five years. All securities will be held at the Custodian in the name of the City of
Denton.
The City produces its own investment reports using SymPro investment software to track all
investment purchases/sales and liquidity balances. Please see the City’s January 2026 investment
report (Exhibit B) for information concerning the portfolio’s securities. The City is considering, as
an additional service, the possibility of having the advisor produce the monthly investment report
and would like this option priced as a separate provision on the RFP.
The Chief Financial Officer/Director of Finance, Assistant Directors of Finance, and Treasury Manager are
designated as Investment Officers, pursuant to Tex. Gov’t Code Sec. 2256.005(f). The Treasury Manager,
as the primary investment officer, oversees the investment process. The advisor will receive
inquiries regarding securities purchases/sales needs from authorized treasury staff and provide
research, analysis, and market-related projects as requested. Only investment officers can
approve and sign the authorization of securities purchases/sales.
The City’s Investment Committee meets at least quarterly to review investment performance,
strategy, interest rates, and economic trends. The advisor is expected to attend these meetings
either personally or via teleconference and provide a market update with emphasis on economic
news, commentary, and trends as they relate to the performance, asset allocation, holdings, and
strategy of the City’s investment portfolio.
City prefers a fixed fee structure pricing. If Respondent offers both fixed and asset-based fee
structures, both must be provided on Exhibit C “Fee Schedule”. Respondents must use this exhibit
to provide fees and, if appropriate, identify other services not listed with their associated costs.
Any service not appearing, or which does not have a fee indicated on Exhibit C, will be considered
free of charge. Once selected as the City’s investment advisor, no additional or increased fees for
services in the fee schedule (Exhibit C) may be charged to the City during the contract term. New
services may be added, with pricing for such services to be negotiated at that time.
1. MINIMUM SERVICE REQUIREMENTS
The investment advisor shall:
a) Be a registered investment advisor as defined and regulated by the Securities and Exchange
Commission and be registered with the Texas State Securities Board.
b) Be either completely independent of any financial institution or securities brokerage firm;
or fully and continuously disclose any relationships with such financial institution(s)
and/or securities brokerage firm(s), and further disclose any commissions, bonuses, or soft-
dollar payments resulting from the firm’s relationship with the City.
c) Take no possession of City’s monies or investment securities, nor have access to or control
over such monies and/or securities, unless said firm has a securities clearing operation to
buy and sell financial instruments on behalf of its customers. If the latter is the case, the
advisor will be required to remit random broker/dealer tickets for review by the City on a
quarterly basis.
d) Comply with the City’s Investment Policy, the Public Funds Investment Act (Texas
Government Code, Chapter 2256), and the Collateral Act for Public Funds (Texas
Government Code, Chapter 2257).
e) Review and recommend changes to the City’s Investment Policy and ensure compliance.
f) Assist in developing and implementing investment strategies that will enhance portfolio
performance under current and anticipated changes in market conditions within the
parameters of the established Investment Policy and cash flow needs.
g) Provide non-discretionary management of the investment portfolio by acting in an advisory
and administrative capacity within the guidelines of the City’s Investment Policy.
h) Provide daily, timely assessments of the market as well as a sample broker/dealer inventory
pricing sheet for varying types of securities (e.g., commercial paper, U.S. federal agencies,
U.S. Treasuries, taxable & tax-exempt municipals, and investment pools) at different
maturity levels to aid City staff in planning purchases/sales.
i) Execute securities purchases/sales upon email or verbal instructions from authorized
investment officers. After a trade is executed, the advisor must confirm to the City by email all
details of the trade, including the three most competitive offers/bids received. All security
purchases and sales for the City must be conducted on a competitive basis. An official trade
confirmation must be emailed or accessible on a web-based portal within 5 days of the
transaction. The City is responsible for instructing the Custodian to either accept or deliver
securities transacted through the advisor.
j) Advise the City on current market conditions and other general information.
k) Attend quarterly investment committee meetings in person or via teleconference to discuss
portfolio performance, the economic environment, and market conditions. Attendance may be
required, from time to time, by other governing or committee bodies of the City when the subject
of investments is to be discussed.
l) Provide bank collateral pricing and review when necessary.
2. INVESTMENT MANAGEMENT APPROACH
a) Outline steps that will be taken to ensure the City’s objectives of safety, liquidity, and yield,
as well as to follow the parameters of the City’s Investment Policy.
b) Since the City occasionally invests in commercial paper, explain safeguards and procedures
that are employed regarding investment selection, any issuer due diligence performed, and
ongoing credit monitoring.
c) Explain the number and type of broker/dealers (primary, regional, minority, or veteran-
owned enterprise) your advisory firm works with.
d) Describe the primary strategies for adding value and return to investment portfolios.
e) Describe your access to timely market data, broker/dealer inventories, and availability to
Bloomberg terminals, as well as client contact procedures. Is daily market and security
pricing information provided?
f) From time to time, the City requires assistance with projects such as collateral valuation,
money market fund/pool comparisons, investment accounting questions, U.S. agency
security and commercial paper issuer research, as well as investment policy modifications.
What other special projects and assistance could your firm provide?
3. REPORTING (Separate Bid Option)
a) Provide a detailed monthly report, in a format acceptable to the City, which includes a
summary of portfolio activity and performance for the reporting period, comparisons to the
prior reporting period(s), and the following information on each security: par, book, and
market value, as well as yield to maturity/call/worst information, etc. Total return figures for
the portfolio are less relevant since the City is primarily a buy-and-hold investor with
unrealized security gains and losses unlikely to be realized. Performance should be measured
against an appropriate benchmark. See attached monthly report (Exhibit B). This option is
to be priced separately on the bid.
4. EVALUATION CRITERIA
Criteria Percent
Specifications:
Compliance with the stated specification(s) coupled with the
quality and reliability of the goods and services such as fitness
for use that meets or exceeds Owner’s expectations and the
characteristics of the product or service that bear on its ability
to meet the stated/implied needs.
25%
Price:
The price of items, to include total cost of ownership, such as
installation costs, life cycle costs, and warranty provisions.
30%
Key Project Personnel:
Individuals proposed by the Offeror who are critical to
delivering Investment Advisory Services, including those
responsible for portfolio management, research, client service,
compliance, and day-to-day account oversight. Evaluation will
consider their qualifications, relevant investment experience,
assigned roles, and availability to ensure they can effectively
support the advisory services required under the contract.
45%