The overlap between pensions consultants and managers at pension funds often leads to them switching roles as a progression of their career, thus giving them a fresh perspective of the pensions industry and pensions the chance to benefit from their wide knowledge.
Deborah Reidy, director of investment consulting at Hewitt and Becketts in Dublin, has already done something of a double-whammy. First, she went from being a consultant at Mercers in Ireland, before it merged with the Irish Pension Trust, to become head of manager selection for the National Treasury Management Agency (NTMA), the asset and liability management arm of the Irish government. Then she moved back to consultancy in her present role.
“I was recruited directly by the NTMA as Head of Investment Manager Selection and was happy to move on at the time,” she says. “I enjoyed my work at Mercer but I felt I had more to offer the NTMA at the time. The NTMA was the perfect challenge. Basically the Commissioners were given a blank piece of paper and e7bn so there was plenty of work to do to putting it to work”
The change in perspective and sheer scale of the project meant the experience she gained was immeasurable. “The project gave me fantastic experience and the chance to work with many of my former competitors in the consultancy market, which was very interesting.”
“Other than that, and perhaps not having to worry about billing pressure because before I was charging by the hour, there was no real change in my work,” she says. “Nonetheless, as part of a small team, I saw the initial NTMA manager selection exercises through from inception to completion, which was very rewarding, as I would have had to step out of the frame at some point had I been involved solely as an external consultant”.
Reidy claims the pensions market in Ireland, as elsewhere, is opening up and investment consultancy is becoming ever more popular. She believes the merger between Hewitt and Beckett in Ireland means the new company, soon to be rebranded as just Hewitt, is able to offer fresh investment solutions and opportunities by combining their respective defined benefit actuarial and defined contribution administration operations and this is a challenge she is looking forward to.
She says the moves were effortless, especially as part of her work at the NTMA could be considered as in-house consulting anyway.
Philip Menco was an independent investment consultant running his own company, Fortunis, in the Netherlands before he was headhunted to join the e800m De Eendragt pension fund, a former client, as manager. “I was a consultant for four years, specialising in restructuring the assets side of pension funds before my predecessor here at De Eendragt approached me about replacing him,” he says.
Menco says he weighed the pros and cons of being a consultant and the opportunities at De Eendragt before moving. “Fundamentally the attraction lies in the fact I not only now offer the solution but actively see it through its implementation stage to watch it develop and grow. As a consultant, you give the advice and sometimes implement the ideas, but then usually say goodbye and move on, whilst other people take care of ‘your work’. This was always frustrating to me.”
Menco says he also loves working in a team and says the mix at De Eendragt is ideal. “There are 11 us and all contribute fully with our individual expertise. The chairman is very entrepreneurial and stimulates the development of new plans for the pension fund.”
De Eendragt also offers Menco the chance to diversify and learn about all aspects of pensions management. “De Eendragt, though relatively small, is unique in the Netherlands, as it offers the complete range of pension fund services – financial, administration and insurance – as a corporate fund serving 16 different companies across the Dutch paper and packaging industry,” he says.
The new role gives him a different perspective on pensions since it is now more varied and there is a distinct political factor involved. “I no longer just concentrate on one or two aspects at a time and I am now responsible directly to the trustees, not the managing director. In addition I manage 11 people rather than just having to think of myself.”
He says co-operation and his relationship with the trustees are very positive and this helped make the transition easy. Furthermore he is happy to see the back of the more mundane side of running his own company, such as accounting and bookkeeping. “In some respects, the difference is managing an organisation rather than your own company. Making the switch wasn’t that dramatic. I was already working more or less full-time with pension funds, so I knew what to expect.”
Menco says he has no intention of giving up his new position, despite the fact he no longer gets involved in any consultancy work. “It is actually somewhat unusual for an independent consultant to move into pensions management, though we see the opposite quite often or consultants at established firms make the switch. Nonetheless, I see it as a natural progression of my career and I intend to stay put.”
Keith Jecks, originally an actuary, spent three years with Watson Wyatt in Reigate as an investment consultant before becoming global head of pension strategy at ABN Amro in London in 2004. “I was headhunted but pretty much receptive to the move,” he says. “At Watson’s I felt a little detached from the action. I missed the buzz of the City and being surrounded by people that understand what is happening in the market. Moving to ABN Amro was perfect for me,” he says. As with Menco, Jecks was also keen to take a more hands-on approach to his work. “As a consultant, you eventually feel frustrated that you are able to comment on a lot of stuff but actually do very little. In this respect moving from investment consultancy to pensions management is a natural career progression.”
Jecks was equally keen to avoid moving into asset management. “Working in investment banking offers a fresh perspective,” he says. “Had I gone into asset management, it would probably have been heading up a marketing team. There is a real sense of ‘been there, done that’. Working for an investment bank gives me the opportunity now to discuss and help institutionals like pension funds with their deficits.”
He says on this side of the fence he no longer feels restrained within given parameters as he did as an investment consultant. This means discussions with pension funds about their asset liability positions are increasingly far-reaching. “I am much more involved now in working out how pension funds arrived at their asset liability positions and how they can best go forward. This is a much more rewarding and proactive approach towards solving problems. I now not only look at the symptoms but offer the cure.”
Jecks says the transition was easy for him but recognises this is not always the case and that switching roles does not suit everybody. “There are two types of actuary: the academic, who is happy to consult, and the ‘go-getters’, who want to be more involved and are at the sharp end of their work. I think I fit into the latter category and that’s why moving was very smooth for me.”
Nonetheless, the switch offers challenges and Jecks relished taking these on. “The change in perspective means I have to learn about the technical side of pensions management. But this is not an obstacle. I take pride in my work and am glad to be able to broaden my horizons.”
The only other main issue Jecks sees as a potential problem is teamwork, as the aggressive nature of investment banking in the City means it can be a dog-eat-dog world. “There is no point making the switch if you are not a natural team player and you can’t handle the high-flying banking world,” he says.
Jecks does not see himself moving back into consultancy but the nature of his work means he often finds himself offering advice as he used to. “There are a lot of common threads between my old role and my new position. It depends largely on the country, as different countries have different relationships between pension funds, their consultants and managers.”