UK – The future of actuaries and the role of alternative investments were among the hot topics that emerged at a conference on asset allocation in London today.
Discussing actuaries was consultant John Ralfe, while Royal London Asset Management chief investment officer Robert Talbut explored alternatives.
Speaking on the sidelines of the ‘Asset Allocation Summit’, Talbut told IPE that pension schemes would continue to diversify their assets over the long-term.
However, he added, “In the short-term, it may not be the best time to invest in some of the alternatives. Traditional assets may be better value.”
Speaking during a panel discussion on the outlook for global investment markets, Talbut told delegates “there seems to be a bit of a bandwagon going on“ regarding investing in alternatives.
He also warned that the returns investors believe they’ll be getting from alternatives may not be as high as when they were first encouraged to invest.
“A question you need to ask is whether you are being asked to join the party relatively early or relatively late,” he said, adding that late-comers may not enjoy the level of benefits they think they will be getting.
According to Talbut, “The whole area of private equity is a bandwagon”. He stated that while he was not against the asset class forever, he believed that for the amount of money currently flowing into private equity, some people’s returns may not be what they are being lead to believe.
He also urged pension funds to be more “picky” in their selection of hedge funds.
According to independent pensions consultant John Ralfe, “Any investor should only invest in assets which they understand, where they’re clear on the risks, the rewards and the costs.”
Speaking separately to IPE, he said: “I question whether pension schemes that are currently investing in alternates such as hedge funds and private equity understand the risks, the rewards and the costs.”
Also presenting at the asset summit on the changing face of pension schemes, Ralfe told delegates that defined benefit actuaries would be a thing of the past in approximately 30 years’ time due largely to the closure of DB schemes.
However, he added: “The slightly subtler point is that the work that has been done by actuaries as a sort of secret cabal is now increasingly been done by other people and, in particular, investment banks.
“So even before you get to a stage where there aren’t any more defined benefit schemes left and no defined benefit scheme actuaries, we’ll be having a situation where the idea that actuaries are the only people who can understand, and explain, and opine on pensions – that’s being increasingly challenged.
Ralfe also stated that actuaries would continue to be under public scrutiny, and a profession under pressure.
“The actuaries are trying to carve out a new role for themselves. And it’s not clear whether that will be successful or not because there are lots of other people with the same sorts of skills, who have a much more market-orientated focus,” he told IPE.
“They are certainly trying. Whether they will be successful or not remains to be seen.”