Heels Pinch the Feet - Lessons for Pension Funds

As a big advocate of yoga pants and sneakers, wearing high heels is typically a "must do" versus a "want to do" item. I imagine that most men feel the same way about wearing ties. A recent article caught my eye wherein Wall Street Journal reporter Christina Binkley writes that "high-heeled pumps are the feminine equivalent of wingtips." Does that mean that penny loafers and ballet shoes put one on the slow track for promotions? (See "High and Mighty: Seeking Comfort in the Power Heel," April 10, 2008.)

So what does this have to do with pension funds? Allow me to explain.

In a literal battle of the fashionistas versus the style-challenged, my keynote presentation at Pension Bridge was followed by a public plan trustee who urged service providers to clearly explain investment concepts. Getting the audience to laugh about asset allocation and risk control is no small feat but that's what he did with his "plain folks" request. To paraphrase, "We say 'get out' as opposed to waxing poetic about contagion and geometric drift and so on.

Don't get me wrong. Math has its place for sure just as high heels add a note of perfection to that special outfit. However, do we want to start with number crunching and rocket science or focus first on fundamentals? I'd much rather start a discussion with plan sponsors that focuses on big picture risk drivers. Getting a feel for qualitatively what keeps people up at night is a great start to hunkering down to solve problems, improve practices and keep promises to participants.

What might service providers learn from Mr. Trustee's commentary? Here's a thought. Replace the fancy multi-colored slide decks (or at least augment) with some "101" conceptual illustrations BEFORE the quantitative heavy lifting begins. After all, if an investment decision-maker is uncomfortable with topics such as correlation, stochastic modeling and portable alpha, no sale is likely to occur and neither side brings closure to what could be a win-win.

There is a lot to be said for comfort and practicality some of the time.

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