Robin Pond, CFA
CAREER HIGHLIGHTS

• Works as an independent investment consultant to institutional investors
• 35 years in financial services in investment consulting, pension fund management, insurance, banking, and accounting
• Member of the Canadian Advocacy Committee and the External Relations and Advocacy Committee of CFA Society Toronto
• Wrote a satirical play, The Retirement Plan, performed at the Toronto Fringe Festival in 2013

How has the CFA designation helped you in your career?

There are certainly non-CFA charterholders who have had more successful careers than I have had, but for me personally, the knowledge gained through the CFA program provided legitimacy. I would never feel comfortable trying to fake it or appear more knowledgeable than I actually am. The CFA body of knowledge provided me with confidence that I, at least on a theoretical level, understood the investment issues.

Did you find your MBA to be complementary to the CFA designation?

I completed the MBA earlier than the CFA, and I think that having the background in finance and accounting from the MBA greatly helped with assimilating the CFA material and with passing the CFA exams. My employer had a rule that it would only pay once for any level of CFA exam. Having the knowledge gained through the MBA helped me make sure I could pass on the first attempt and not have to pay for any of the exams personally.

Why did you decide to pursue the CFA designation?

Pursuing the CFA designation was a job requirement when I was hired as an investment consultant with Towers Perrin, so the decision was made for me. That being said, I was very happy to pursue the designation. I have always been a bit of an academic at heart. I love learning. I spent nine years as a full-time university student and only started studying “practical” subjects such as business and investment after I was working full-time. Then I got an MBA, an accounting designation (CMA), and finally the CFA charter.

Can you share some of the best or worst advice you have received in your career?

I can’t recall ever receiving much career advice, good or bad. My career was not really planned. I basically just followed where opportunities led me. My first full-time job was technical support for an auditing firm. This job was relatively easy to get, since computer literacy was still relatively rare back in 1980. The initial computer audit position led naturally to opportunities at a bank, an insurance company, and then a pension fund. Once at the pension fund, I found that the most interesting part of the business was investments, so I naturally gravitated to pension investments.

I have sympathy for younger workers starting out today, because it is much harder to get established in a career than it was when I was starting out. Perhaps more planning is now required, although I think a major determining factor for where anyone ends up is still going to be what opportunities are available.

The advice I have given my children is just to pursue whatever they really love to do. Time will tell whether this turns out to be the best advice they receive, or the worst.

What are some of the key regulatory changes currently being made (or contemplated) in the investment consultancy business?

There is actually surprisingly little regulation of institutional investment consultants in Canada. While investment consultants do need to be registered or listed in other jurisdictions such as the US and UK, anyone in Canada can offer their services as a pension investment consultant without any requisite credentials or registration requirements. Because pension funds are considered accredited investors, the securities regulators appear to believe that they can fend for themselves. So while the retail investment environment in Canada is heavily regulated, there is not the same level of protection for institutional investors.

It may be obviously self-serving, since I am a CFA charterholder, but I do believe there should be regulation of investment consultants to pension funds and other institutional investment funds. I believe the institutional investors, while possibly more sophisticated, would still benefit from having advisors who are required to have attained a certain level of investment education and who are governed by a code of ethics and professional standards.

However, as far as I am aware, this regulatory change is not being contemplated at present. This is somewhat surprising since there have been a few notable cases where pension funds, with the assistance of unregistered advisors, have made some disastrously bad investment decisions.

Do you think pension consultants exert too much influence on how pension funds manage their assets? Is there a conflict of interest?

The amount of influence that pension or investment consultants exert over pension plan sponsors varies from plan sponsor to plan sponsor. The best governance model is one in which the key decision-makers are still the pension board or committee and in which the consultant’s role is to do a lot of the legwork around the committee meetings, due diligence, and providing information to support the decision-making, as well as assisting in implementation and monitoring.

Of course, an investment consultant who provides the information that serves as the basis for a decision is in a position to greatly influence that decision. So there is still a need for the pension fiduciaries—the board or committee—to properly manage the consultant in the same way as all the other service providers need to be managed. Conflicts of interest always exist whenever a decision might lead to greater or lesser revenue for the individuals involved. In the case of a consultant who is paid on a time charge basis, some decisions might result in more work and therefore more revenue. For this reason, I know some larger pension plan sponsors that segregate performance evaluation from investment manager search work, so that if the consultant doing the performance evaluation recommends that an investment manager be replaced, that consultant will not benefit from the decision because it will be a different consultant who will do the investment search work. The general principle is that conflicts of interest will always exist and will always need to be managed.

A good investment consultant should always provide a balanced analysis rather than just a recommendation. There are pros and cons to every non-trivial decision. And pension fiduciaries need to be actively involved in the decision-making rather than just blindly following a consultant’s recommendations.

There has been a declining trend in defined benefit (DB) plans in Canada and a preference for defined contribution (DC) plans. As the assets in DB plans decline, how does this impact the role of pension consultants?

Typically, when a company closes its DB plan and shifts to DC, the DB plan still remains as a closed plan, so there will still be a need to manage these assets for a number of years. Eventually, the closed plan will likely be wound up and annuities will be purchased for the remaining beneficiaries. But this often does not happen for a number of years. In the interim, there is still a lot of work for pension and investment consultants. The investment approach often shifts over time to a greater emphasis on risk control, using dynamic asset allocation and asset/liability management techniques.

The increase in DC plans represents a growth area for investment consultants, although the nature of the work is somewhat different. Rather than assisting pension clients in determining the best investment policy, with DC plans the investment consultant is typically helping the plan sponsor provide individual members with the tools required for each of them to establish their own investment approaches. With DC plans, investor education and communication therefore become a much bigger part of the investment consultant’s role.

You wrote a satirical play called The Retirement Plan. What made you decide to write it?

I have been dabbling with playwriting now for a number of years. I have had numerous short plays produced in various venues throughout Canada, the US, the UK, and one in Panama, including restaurants, coffee shops, libraries, community theatres, retirement homes, a quilt festival in Berea, Kentucky, and numerous bars, including recent performances in a pub (The Horse and Stables) in London. My first full-length play was produced in New York in 2010. In 2013, I produced The Retirement Plan at the Toronto Fringe Festival, and at the same time, my Mamet parody, Gwen and Mary at Glenn Ross, was being produced at the Minnesota Fringe Festival.

I write mainly comedies, and I have always considered the pension and investment businesses to be fertile ground for comedy. Satire allows the writer to explore serious issues in an entertaining manner, and the intent with The Retirement Plan was to explore some of the less sensible aspects of financial planning, including the desire to be able to predict the future with certainty, giving the retirement plan greater priority than the welfare of one’s family, and the concern with longevity. Most people outside of our business would not consider living longer to be a bad thing.

In The Retirement Plan, a fictional company, Certainty Assurance, takes care of the longevity problem for its clients with a product called TLC—Terminal Life Certainty. With TLC, the clients are simply killed when they run out of money, ensuring with certainty that longevity is never a problem.