Item 5 – Fees and Compensation
Mercer does not have a standardized or uniform fee schedule across its service offerings. Mercer’s fees
are negotiated on a per-client basis and vary based on, for example, the amount of assets under
management, the nature and complexity of the client’s circumstances, the services to be provided, and
other factors. The manner in which fees are charged by Mercer is established in a client’s written
agreement with Mercer. Mercer generally bills its fees monthly or quarterly in arrears, although a client’s
written agreement with Mercer may provide for fees to be billed in advance.
In most cases, Mercer sends an invoice to each client and does not directly deduct fees from client
accounts. Certain clients, however, may prefer that Mercer deduct its fees from client accounts. Mercer will
consider such arrangements on a case-by-case basis.
Unless otherwise specified in a client’s agreement with Mercer, Mercer and its clients typically have the
right to terminate an investment advisory contract without penalty by giving at least ninety (90) days written
notice to the other party prior to the date of termination. If a client terminates its relationship with Mercer,
Mercer will accrue its fee through the termination date. In the event of termination, any fee paid to Mercer
by the client in advance, where associated services have not yet been provided, will be refunded.
For investment consulting services, clients are billed according to one of the following options:
Flat fee/retainer;
Time and expense; or
Basis of fees calculated as a percentage of assets advised.
Hourly rates will typically range from $125 per hour to $1,000 per hour, depending upon the service
rendered and the skill level of the particular personnel involved. Mercer and a client may agree to fees
which can fluctuate based upon Mercer’s level of service to the client (not investment performance- based).
Mercer’s investment consulting fees do not include trustee fees, custody fees, subadvisory fees, brokerage
commissions or transaction costs and mutual fund expenses.
For investment management services, Mercer’s fees typically:
are calculated as a percentage of assets under management;
are based upon the market value (which may be daily, month-end or quarter-end market value, as
agreed with the client) of the client’s account during the relevant quarter or month, as the case may
be; and
do not include trustee fees, custody fees, brokerage commissions or transaction costs, and mutual
fund expenses.
Mercer’s investment management fee may be structured to include fees charged by subadvisors engaged
by Mercer to manage client assets (a “bundled fee”). Alternatively, Mercer’s investment management fee
may be structured to be separate from, and in addition to, such subadvisor fees (an “unbundled fee”).
ADV Part 2A
December 18, 2018
Typically, Mercer’s clients will select the form of Mercer’s fee structure (bundled or unbundled), based on
their own requirements or preferences. Mercer, or affiliates of Mercer, may negotiate a fee schedule with a
subadvisor pursuant to which the subadvisor fee increases or decreases based on the overall amount of
assets managed by the subadvisor for clients of Mercer and Mercer’s affiliates, including Affiliated Funds.
In some cases, Mercer and/or its affiliates may benefit financially from such arrangements. As a result,
Mercer may have an incentive to allocate client assets to such subadvisors. Mercer has taken steps to
manage the conflicts of interest such arrangements may create and discloses this to clients in the client
agreement fee schedule.
The fees Mercer’s affiliates earn from Affiliated Funds, if any, are described in the Affiliated Funds’ offering
documents. While any such fee arrangements could raise a conflict of interest for Mercer, fees (and
waivers as necessary) are structured to avoid such conflicts and to comply with applicable law, including
regulations and guidance applicable to client portfolios subject to the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”).
Operational risk assessment reports on investment managers prepared by Mercer Sentinel® are made
available to subscribers of MercerInsight and through direct sales. In certain limited cases, the investment
managers being assessed may arrange to pay Mercer Sentinel® the fee for delivery of the report to parties
considering investing with such investment manager instead of having the potential investors pay the fee
themselves.
Through MercerInsight, the standalone ‘Analyze’ component of MercerInsight, and Mercer MAP (as
described in Item 4 above), Mercer sells manager data and research to clients. Clients pay subscription
fees for MercerInsight, the standalone ‘Analyze’ component of MercerInsight, and Mercer MAP, ranging up
to $585,000 per year. The subscription fees charged for services and products are dependent upon the
level of data, research and service for which a client wishes to engage Mercer.
There are typically no fees to Mercer clients for attending Mercer Forums. Financial institutions, including
investment managers, and other attendees pay fees which range from $10,000 to $14,000 and up based
upon content, location and other factors, including how many tickets are purchased to attend the Forum.
Mercer does not charge investment managers a fee to be included in Mercer’s Global Investment Manager
Database (GIMD™). Furthermore, investment managers do not compensate Mercer or its affiliates to be
recommended or selected by Mercer or its affiliates for clients. From time to time, an investment manager
or its affiliates may engage Mercer or its affiliates to provide certain services. For example, Mercer or its
...