Return Of The Pension Investment Fiduciary

THE CHALLENGES:

With the globalization of capital markets over the last few decades, there has been a marked increase in the range and complexity of investment opportunities available to investors. In fact, the array of investment options available today is virtually limitless: stocks, bonds, mutual funds, pool funds, hedge products, structured products, private equity, income trusts, real estate, master limited partnerships and commodities. The result of this trend has been an increase in the number of investment related participants, which has ironically led to increased levels of complexity for Pension Plans.

THE CAUSE:

Additionally, with the increased marketing and product focus touted by an expanding marketplace, Sponsor focus has been led away from the real need to meet “consumption goals” (ie: current and future pension disbursements/benefits) to that of relative performance, based upon market or peer indices. This has resulted in managers being traded like commodities, and Corporate Sponsors and their Advisors attempting to maximize relative performance. It is our view that the focus on superior relative performance, instead of the future consumption requirements of each plan, has been a major contributor (beyond the general rise in liabilities due to declining interest rates) to underfunded Pension Plans.

THE SOLUTION:

All of these issues, in combination with the ongoing challenging capital market conditions of the past decade, are causing many Pension Sponsors and their Boards to increasingly search for true professional support in the management and oversight of the wealth entrusted to them. Informed Sponsors are more and more realizing that their Pension Plans are more than simply ‘pools of capital’ but actual ‘Asset Management Businesses.’ As such, they need to be operated in a disciplined manner where assets, liabilities, revenues and expenses are all managed in a prudent manner.

The attached article provides a review of how the asset management principles of true Investment Fiduciaries, can help Plan Sponsors address & solve their pension plan challenges.  To read this article, click here.