FROM: Don Pierce, Chief Investment Officer
SUBJECT: Informational: Partnership Change at Kreischer Miller
RECOMMENDATION:
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Consent to transfer existing Investment Compliance Services Agreement with Kreischer Miller to Kreischer Miller Advisors.
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BACKGROUND:
Since 2003, SBCERA has contracted with Kreischer Miller, Certified Public Accountants (“KM”), to perform Investment Compliance Services and operational due diligence. In 2019, the Board approved an evergreen agreement with KM as part of a mosaic of portfolio monitoring. KM collects manager data and policy documents, and independently tests the veracity of processes and procedures (onsite and remotely). KM’s business model for investment compliance services is to make use of senior professionals. It is important to have senior professionals on our operational due diligence assignment teams because effective due diligence requires having a team that can have difficult conversations with managers and use judgement to understand how a proposed policy or procedure will work in an investment manager’s business. We believe KM continues to stand in a unique competitive spot within the operational due diligence environment.
Overall, SBCERA and KM have grown the Investment Compliance Services from the services provided in 2003 to today. Just as our portfolio has changed, so too have the services KM provides pursuant to the needs of SBCERA. For example, today SBCERA’s contracts, MCAs, side-letters, and fees are reviewed along with the managers’ compliance with these documents and processes. More recently, we’ve added background checks as part of the suite of services KM provides. In short, we believe that our experience with KM has been a successful comprehensive operational due diligence program and one that has grown with SBCERA’s needs over time.
KM notified us that they are undertaking a transaction at the partnership level; effective July 1, 2026, consulting services will be provided under the moniker of Kreischer Miller Advisors (“KMA”). A confidential memorandum from KM that outlines the pending transaction is attached as Exhibit A.
After legal review, SBCERA may consent to the transfer of the contract from KM to KMA, and the Chief Executive Officer is authorized to executive such a consent. In addition, staff has requested that KMA incorporate two additional addenda to the existing agreement: (a) a provision restating KMA’s professional standards and requirements to avoid conflicts of interest; and (b) a provision allowing SBCERA to use an AI Notetaker in its meetings with KMA professionals. Such addendum will be memorialized by SBCERA’s Chief Counsel.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Don Pierce
ATTACHMENTS:
Exhibit A: Kreischer Miller Memo (confidential)