Poole takes on oversight of research activity across Deutsche’s
global investment platform. In leading macro research, he will collaborate with
other investment experts in the firm’s chief investment office. He will also
run micro research, providing portfolio managers with investable ideas across
all asset classes.
In addition, Poole will play a prominent role in presenting investment
views to clients and the media.
Based in London, Poole has also been named a managing director.
He reports to the firm’s co-chief investment officers, Randy Brown and Asoka
Wöhrmann.
Poole
worked most recently as global head of macro and investment strategy at HSBC
Global Asset Management. Before that, he served as global head of research and
chief economist for emerging markets for the HSBC Group across asset classes.
In earlier roles at ING Barings and Barclays, he was closely involved in
sovereign debt restructurings in Ukraine and Poland, respectively.
Should You Offer Special Education for Sector or Specialty Funds?
Every plan and every employee population is somewhat unique, so the decision about special education should be considered by fiduciaries on a plan-by-plan basis.
Demographics, menu composition
and allocation patterns are important determinants of education needs.
What types of funds are we
talking about? Primarily, we’re thinking
of investments with concentration risk, such as real estate, technology,
high-yield, emerging markets (EM), metals, or other funds exposed to
non-systematic risk. These sorts of
funds can be beneficial building blocks in portfolio construction, but can
present undesirable levels of risk when over utilized.
How do you know if you have a
problem? Most plan recordkeepers can
provide reports showing allocation patterns.
A plan with high utilization of asset allocation models or with a high
average number of funds per participant may be less in need of special
education than one with a high number of participants concentrated in the
plan’s high-volatility funds.
One of the tools we provide to
plan participants is a table showing the available menu options, ranked by
volatility (we use three-year standard deviation for this purpose)—the higher
on the page, the higher the historic volatility. It’s a quick visual that helps
self-allocators get an idea of where their picks lie on the risk scale. Naturally, volatility is just one of the
risks investors face, but it’s an important one because of the propensity of
individual investors to make emotionally-driven decision errors.
While general education about
diversification is important, we don’t want a participant to think they have
successfully managed their risk by spreading their balance equally between a
gold fund, a real estate fund and a technology fund.
Another area where special
education may be beneficial is with target-date funds. It’s true they are diversified,
self-adjusting and designed to be age-appropriate, but how well are their risks
understood? Ranking target-date funds on
a simple, visual risk scale could be valuable educational content.
Many people would consider a
well-diversified 60/40 allocation to be of “moderate” risk, and that
corresponds generally with the composition of a 2020 to 2025 target-date
fund. Longer-dated funds are more
aggressive, and vice versa. A 25-year-old
being defaulted into a 2055 fund might find it useful to know it may consist of
85% to 100% equities, which would be considered an “aggressive” investment
mix.
A pre-retiree might find it
useful to know a typical 2015 fund might contain 35% to 50% stocks. For today’s retirees, longevity risk may be more troublesome than a bit of market
volatility, and specialized education can help them make their allocation
decisions with their eyes open.
If a menu contains
longer-duration bond funds, special education might be appropriate to show
employees the amount of risk to their principal rising interest rates may
pose. By extension, shorter-dated target-retirement
funds have duration risk that could be covered in an education initiative.
All employee education should be
thoughtful, targeted and needs-based. Special
education based upon a plan’s investment menu is no exception. Employee Retirement Income Security Act (ERISA)
attorneys would probably tell you there is a liability management aspect to
investment education. We don’t disagree,
but more importantly, better retirement outcomes will be achieved as the result
of employees being equipped to make better-educated decisions.
Jim Phillips, President of Retirement
Resources, has been in the investment industry for more than 35 years, the past
18 of which have been focused in the area of qualified retirement plans. Jim worked for major national investment
firms for 14 years before “going independent” in 1990. Jim is an Accredited Investment Fiduciary,
has contributed to two books on 401(k), and his articles have been published in
Defined Contribution Insights, PLANSPONSOR’s (b)lines and ASPPA’s 403(b)
Advisor, and Jim is a RetireMentor on MarketWatch.com. His work has been
acknowledged with multiple Signature Awards from the PSCA, he has been named to
the 2012 and 2013 list of Top 100 Retirement Plan Advisers, by PLANADVISER
Magazine, and he was a finalist in 2012 for the Morningstar/ASPPA 401(k)
Leadership Award. Jim has been a frequent speaker at national conferences,
including SPARK, ASPPA, AAO and the PLANSPONSOR and PLANADVISER National
Conferences.
Patrick McGinn, CFA, Vice President of
Retirement Resources, is a CFA charterholder and has been in the securities
industry since 1993. In addition to the Chartered Financial Analyst designation,
he is an Accredited Investment Fiduciary and a member of the Boston Security
Analyst Society. Together with Jim, Patrick has co-authored a number of
articles which have been published in industry publications on topics about
managing successful 401(k) and 403(b) plans. His work has been acknowledged
with multiple Signature Awards from the PSCA, and he has been named to the 2012
and 2013 list of Top 100 Retirement Plan Advisors, by PLANADVISER Magazine. He
was a finalist in 2012 for the Morningstar/ASPPA 401(k) Leadership Award.
NOTE: This feature is to provide general
information only, does not constitute legal advice, and cannot be used or
substituted for legal or tax advice.
