Choose to Fail Conventionally

I was organising some old files and came across this anonymous article in ICPM published in the fall of 2010.

?Hide in the crowd and dodge responsibility: Make sure

that the Board of Trustees is responsible for asset liability

management (ALM). Hire well known consultants to justify

your ALM. but in reality, simply recommend the average

asset allocation of your peers. In this way everyone has their

back covered and if things go badly for the plan's balance

sheet, you will not be alone.

?

? Don't rock the boat: Avoid taking tactical asset allocation

decisions since they can have a large impact on the return

in relation to the ALM portfolio. Persuade the Board that

many small bets within the asset classes are better than a

few large allocation bets. Everyone tells the same story.

so don't worry .

?

? Keep up appearances: For simple assets. such as stocks

and bonds. trade small positions around the benchmark

so that you keep up appearance of being an active investor.

This is necessary to justify a large internal organization to

your Board, without taking any significant career risk .

?

? Pass the ball to Beckham: Put all complex investment

strategies in external funds with well-known pedigrees.

If things blow up. you can always say "if the big guys

can't do it. no-one can". Augment this career insurance

with a consultancy-approved fund selection process. so

that you can show that you have done everything within

your power to ensure success.

?

? Smoke and mirrors: Hi re a public relations consultant

to build your own reputation. us in g your organization

as a platfom1. Tell everyone that you are honoured to be

given the responsibility to manage so much capital. The

large numbers will impress everyone. and maintain the

misconception that you are responsible for generating

the fund's total return. not just for buying the benchmarks.

?

Tick boxes: Make sure that your organizational chart is

Designed in accordance with what leading consultants call

best practice. By following best practice. no-one can argue

that you don't have the right structures and processes. The

quality of the functions doesn't really matter.

?

? Enjoy the free lunches: Cultivate your relationships ?with

the major investment banks by projecting the image of

being a very pro-change, dynamic, innovative person,

held back by an ignorant, incompetent Board of Trustees.

Don't use any creative ideas offered to you, however

good or relevant they may be. You can always blame

the Board.

?

? Be a good citizen: Be personally active in the media

debate around Corporate Governance and Sustainability

so that you can play the good citizen. This is perfectly

safe from a career perspective, since it will not impact

your investment return and who doesn't like a pension

fund CEO taking responsibility for the greater good?

?

? Feather your own nest: Use the voting power at your

disposal to put people from your personal network on

the boards of directors of the listed companies in which

your fund invests. This is a perfect base for your future

career as a corporate director yourself. because a lot of

people will owe you favours.

?

? Show leadership: Surround yourself with weak yes-people

who don't pose a threat to your position. The yes-people

offer absolute loyalty because they can 'I get an equivalent

position anywhere else. They are also convenient whenever

faced with negative consequences of your own bad strategic

decisions. Assume the position of a forceful leader let down

by incompetent colleagues and act swiftly.

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What, dear reader, does your checklist look like?

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