S2 Ep. 44 - Invest Like a DC scheme with Mark Thompson

Investment Uncut

In this sixth episode of our "Invest like a..." mini series we speak to Mark Thompson, investment committee member at multiple DC schemes. We discuss – Investment philosophy Providing options for a vast DC pension membership base The structure of a good DC scheme o Well constructed default o Lifestyle plans o Freestyle options (up to around 20) For DC schemes, the mark of success is often getting members to save and contribute enough rather than focusing on picking the best investment The importance of comms & engagement in DC The only 3 questions that Mark asks fund managers Focus on the right timeframes - not quarterly performance Get your governance right Decision making: learning from doing (from what’s worked) Why governance needs a rebrand The importance of getting beliefs straight as a foundation for everything else The role of a devil’s advocate – not arguing with each other but arguing the point Key trends that Mark’s seen Freedom & choice and three headed dogs Value vs values Biggest risks on the horizon in DC Avoiding good actions becoming compliance check boxes Widening the narrative around impact investing: many things provide a return and have an impact. You could consider more widely about the impact of all investment. The most underappreciated thing in investing There are lots of people that think about investing as a science but it’s as much an art as a science. There is false comfort in numbers and a need for a big dose of common sense. All models are wrong but some are useful. Stewardship – it’s much wider than how your equity managers have voted. It’s about acting as an asset owner and being on top of your agents. This needs more development to move it beyond the compliance level. Recommendations Malcolm Gladwell Tipping Point Give n Take (Adam Grant) The delusion of crowds – why people go mad in groups