UK - Investment banks should sell pension funds products that are acceptable, and use language that scheme trustees can understand, according to CarnaudMetalBox Group UK pensions manager Philip Read.
Speaking at the NAPF Investment Conference 2006 in Edinburgh, Read said: "If things can be explained easily and sensibly, and in a way that my trustees who might run a paint line in a can manufacturing factory can understand, you investment_bankers might have more success in getting us to accept your charges."
He was responding to a question on why the fact that investment banks get remunerated on a transaction basis is regarded as so terrible, and also what alternative there is which could still give trustees access to investment banking services.
According to Read, it is "very difficult" to assess the value of the worth proposition. He also told delegates that the services - often packaged as ‘miracle solutions' – raise questions about what the investment bank is getting out of the deal.
"The answer appears to be shifting risk to the pension fund and charging a whacking fee," he said to loud applause.
Read and Hymans Robertson partner George Henshilwood were both talking on what the PPF means for pension fund investment strategies.
According to both, regulation is driving a wedge between pension fund trustees and companies.
"The power of regulations, in my view, destroys intellectual integrity, entrepreneurial flair, and makes it very difficult to take sensible risks," said Read. "And if you don't take sensible risk, you don't deserve to get the rewards you are looking for."
There was also a concern about whether the Pensions Regulator would have the courage to be hands off, long-term and pragmatic in accordance with its 'referee' as apposed to 'player' status in debates between pension fund trustees and companies.
"I'm afraid I don't know," said Read. "But perhaps I should say I don't know and I am a little afraid."
According to Henshilwood, the regulator is seen as "trustee-friendly" and "sponsor hostile".