I make no secret of the fact that I dislike investment consultants. But I probably will never write what I really think about them here because if I ever lose my job and move back to the asset management world, I might have to work with them again. And if they know what I think about them, I probably would be black balled by pension funds and their investment consultants everywhere.
I have long had concerns that Solvency II is driving insurance companies to allocate too much to private equity and other "alternatives" rather than liquid equities to balance their perpetual overweight position in bonds, and perhaps pension funds are falling into the same trap for different reasons.
Pension funds have one fiduciary duty: Pay the promised pensions to their plan participants. When did benchmark or peer-relative performance become important at all? Perhaps it's a bit like the endowment size race at elite US universities; bragging rights on growing the pile have taken on more importantance than actually using the funds for education.
I have long had concerns that Solvency II is driving insurance companies to allocate too much to private equity and other "alternatives" rather than liquid equities to balance their perpetual overweight position in bonds, and perhaps pension funds are falling into the same trap for different reasons.
Pension funds have one fiduciary duty: Pay the promised pensions to their plan participants. When did benchmark or peer-relative performance become important at all? Perhaps it's a bit like the endowment size race at elite US universities; bragging rights on growing the pile have taken on more importantance than actually using the funds for education.