Wednesday 28 May 2014

In Modest Praise of the Active Manager

There’s no doubt active managers are under the cosh right now. The Hymans Robertson findings show that active management, after paying fees, has achieved little or nothing for the Local Government funds. Michael Johnson of the Centre for Policy Studies sees no on-going active role in listed assets.

The problem is the solution. The solution seems to be passive management and passive management follows the herd. Down as well as up. The herd aren’t always right.

But it’s a hard job to convince the investor of that. In the age of defined contributions, it’s the member that needs convincing, not so much the company. And the individual investor is cautious. State Street research shows young investors, often new to pensions via auto-enrolment, are averse to risk. They don’t want to see decreases on their benefit statements -and they find it hard to rationalise that they should save at all if they can’t get the money until retirement.

Back to communications here. If the State Street conclusion was to be followed in practice, you end up with extreme caution, cash and bonds, lack of growth and potentially, a lack of pension. The long term investor needs to accept a degree of risk. Not to do so is to live in poverty in retirement. How we need that pension advice and education aimed at the member!

There is a role for the active investor in both defined benefit and defined contribution plans. They can add value, especially when everyone else is doing the same thing. Hymans results are disappointing but not conclusive to the demise of the active manager. Fees can be an issue. And communicating risk positively; even more so. But the demise of the active manger? Not while investment tactics can still produce superior returns when compared to a tracking computer.

Monday 26 May 2014

Communicating the Brand

Well done to Brafton for coming up with this search engine optimisation infographic. There's a clear need for companies to work with social media if they are serious about growth. And a clear need for that to be driven through blogs and information based articles, not just adverts.




 

Wednesday 7 May 2014

A Long Road


It’s pleasing to see the views in the press that the new DC flexibility could increase member savings (Pensions Expert). I agree. There is room for optimism. Fewer restrictions on the pension should result in more willingness to save.
Another article, this time in Professional Pensions, records the latest LV survey. The income of the average retiree is almost 24% less than the minimum wage. There’s a lot of stats behind that statement of course, but one thing is clear, the new flexibility HAS to increase member savings. The savings gap is growing. We’re on the right track, it’s a good start, but (to retain the track analogy), it’s a long road.