Facing Our Saviour Complex
Have you wondered why pensions industry takes on the burden of fixing everything that is wrong in this world? Are you wondering why most user experiences and basic services from pension funds feels like they are from the 20th century? Here is my attempt to try to understand this.
Saviour complex: According to Wikipedia, it refers to “a state of mind in which an individual believes that they are responsible for saving or assisting others” often to their own decrement.
Our Saviour complex
Most people are uninterested in the inner workings of pensions and long-term investing. So, for most of us in the industry it is really difficult to engage with our customers. On top of that, being a long-term successful active investor is not easy, so most of the pension money is tracking broad market indices covering stocks and bonds. The lack of engagement reminds me of the period in my life working on my PhD in non-linear time series analysis. Trust me – it was not a great party conversation, apart from a few dinners at academic conferences with likeminded.
As an industry, we have taken on being the champion for many commendable tasks in our society. Governments have noticed that and they’re happy to let the industry lead and appoint us as the drivers of change. That way, they don’t have to implement necessary and uncomfortable decisions. As an industry, we have swallowed the bait and fully embraced our saviour complex.
That is understandable. Playing the role of the ‘White Knight’ coming to the rescue is a boost to our self-image. Solving the world’s problems is a more engaging topic than actually talking about the uninteresting, but important, things we actually need to do on a daily basis. Such as finetuning self-service portals, develop new drawdown solutions and improving the overall customer experience. As an industry we must spend less time talking about the problems that we cannot solve, and focus our time and effort on what we can do for our customers.
When thinking about this it is good to start from first principles, thinking about who is best suited to solving the problem, rather than embracing our saviour complex. Especially since we know that politicians and others are playing on our saviour complex. Here are two examples:
Pension Adequacy
There is a pension adequacy problem since most people do not save enough for their retirement. The solution to this problem is straight forward: increase monthly contributions. The first principle solution is for governments to increase minimum contributions. Employers who care about pension adequacy can add matching contributions and default their people into the highest matching contribution.
The pensions industry is hired by the employer with a clear task: implementing the pension package that the employer has defined. In theory one would expect that we, as an industry, would focus our efforts on helping the savers to get the most mileage out of their employer’s pension package.
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The politicians are not willing to increase the minimum contributions and many employers only want to pay the minimum to fulfil their statutory duty. So as an industry, we willingly embraced our saviour complex by trying to solve the adequacy problem through member engagement. But most members are uninterested or don’t have the money to spare, so member engagement will not solve the problem and I think everybody knows that.
Climate Change
The biggest challenge we face, as a planet, is climate change. The solutions are relatively straight forward: reduce the emission of greenhouse gasses in a much more aggressive way than today. As a global society, we know what we need to do. The first principle is to address this from a political perspective by tilting the playing field to speed up the transition away from a carbon-based economy. Greta Thunberg, the environmental front figure, understands this and all her efforts target political decision makers and not asset owners.
Most of the industry is relentlessly talking about the problem and their efforts to save the planet. Again, we have embraced our saviour complex and governments applaud us for it. But a lot of this is green-washing; it’s more of a marketing effort rather than real world impact. Perhaps it is time for us to stop the marketing noise and actually put real economic pressure on governments?
The good news for asset owners, and the planet, is that the consumption patterns are changing which create interesting opportunites for long-term investors. It’s the right direction, but to speed up the transition to a more sustainable society, we need to go back to the first principle. Politics needs to tilt the rules and regulation in favour of a faster transition, then investments will happen at a higher pace. What we need is “a little less conversation and little more action”, to quote Elvis Presley.
Some final thoughts
Don’t get me wrong, I’m not saying that a strong passion for improving the world is a bad thing. As a society we need to address the adequacy problem. As a nation we need to boost inclusion and economic growth. As a planet we need to stop climate change.
All of us want to make the world a better place, but solving the world problem with friends in the pub, or on social media, will not create real world impact. The best way, as an individual, to create real world impact is probably to pursue a political career. I actually suggested that to someone at a pensions conference who was talking about solving the adequacy problem, but that did not go down well!
No matter what, the key responsibility of the pension industry, must be to help our savers to get the most out of what they already have. This requires us to exercise some self-control on our saviour complex and push the adequacy question back to the politicians. In investment portfolios, we need to focus on real world impact, rather than hunting for ‘likes’ in the various industry echo chambers. This requires us to step away from tracking benchmarks and start investing with impact. This would be a small step for the pension industry, but a giant leap for the planet.
Chairman at ROYC General Partner s.à r.l.
2 年A great thought piece, as usual, from Stefan. The Pension industry is not alone in moving its' goal posts. I think it is part of a bigger social change. The western world have become much less accepting of risks, which only decades ago were seen as part of everyday life. Covid was not the worst pandemic in modern times, but our reaction was very violent and totalitarian. This is new. Many societies have become atomized as we have become more individualistic and identify less as members of communities. This has led many to look for meaning and status in new contexts, such as the many hierarchies of victimhood. The robust hero with high agency has given way to the maltreated, helpless subject, as societal ideal. Hence we are more risk averse than ever before. Where there is a new social pattern, new products and services will be designed to open clients' wallets or hearts. Or both. If what savers want is to go Green/ESG, that will be the pension providers' new goal posts. What are the risks with such clientilism? Well, that, as they say, is a whole other story.
Voorzitter bij Stichting Calpam Pensioenfonds
2 年Hi Stefan how are you? Are you at IPE next week? Kind regards Karel van Cappelle
Head of DC Platform at NOW: Pensions Limited at NOW: Pensions
2 年Stefan, excellent points. we have a tendency as an industry to focus on what other people should do when there's so much we can do ourselves right now to improve matters for our customers. For example, as an industry we bang on about how schools aren't doing enough about financial education. How about us spending more time and effort on making our products and services more accessible and navigable so that customers can do the things they need to do. If we fix what we can then we'll be in a much better place to ask those who can fix the things that we can't - like adequacy.