Five years ago almost to the day a good friend was caught up in the merger of two global asset management organisations, let’s call them AM1 and AM2. A key and valued employee at AM1, she was offered an identical role at the merged entity, which it was clear would be dominated by AM2. Much to my surprise, she turned down the offer. The rationale for her decision was interesting - “If I had wanted to pursue a career at AM2 I would have accepted a role that had been offered to me there three years ago.”
In the good old days when people hosted what used to be known as dinner parties there was one topic of conversation guaranteed to bring silence to the room – pensions! Regarded as a subject that only actuaries can get excited about, most people still perceive the pensions industry as trundling along year after year, doing what it does i.e. paying pensions to old, retired people, without ever experiencing much in the way of change.
But those of us who have spent a large part of our lifetime in the pensions industry understand how wrong this perception is. As if the normal uncertainties presented by the likes of fluctuating asset values, longevity and shifting regulatory sands aren’t enough to keep us excited, there is COVID and now a huge industry merger to contend with. The latter is especially relevant for pension funds who are clients of either Aon or Willis Towers Watson, the subjects of this merger, a topic we shall discuss with a cross section of them at an upcoming roundtable.
Like all of you I hate spam. So, recently I decided to take action to reduce the amount of it that comes my way. My plan was to attack my inbox, to unsubscribe to all those organisations I don’t ever recall asking to receive “unmissable deals” from.
Before doing so I took the predictable detour, putting this action off for a few weeks because it was going to be too much trouble and I had loads of other more important tasks to attend to. So, amongst other things I walked the dog a bit more than usual! Finally, I knuckled down and carried through on this promise to myself. What a joy now to be receiving so much less junk email and to feel in control of my inbox. And it turns out the process wasn’t nearly as painful as I feared it might be.
Synergy is a favourite word amongst those who practice 'corporatespeak' in relation to mergers – Synergy, or rather its plural form, Synergies.
Normally presented as a positive, it is anything but should you be on the receiving end of it. It’s all about (although not exclusively so) job cuts and re-evaluating the commercial outlook for joint businesses.
This was an issue my Avida International colleagues and I discussed with a number of the larger pension funds. We found some of the feedback particularly interesting. There was consensus on the view that in an industry dominated by the requirements of insurance companies, cost pressures are significant and increasing. So potential synergies will be relentlessly sought. In that context, some of the main observations from our discussions were:
What would you get if you merged every independent advisory organisation into one body? A huge increase in industry systemic risk.
While I have a keen sense of humour, this is not intended as a joke.
The maturing UK pension fund industry is currently being shunted in this direction with the proposed merger of industry advisory giants AON and Willis Towers Watson. Two of the biggest consultants becoming one and the consequent shrinking of advice options for funds, has consequences.
Ever since this announcement my Avida International colleagues and I have been exploring the potential implications with a number of the larger pension funds. Some of the feedback provides interesting food for thought.
A pinch of salt!
Perhaps it’s because I’ve worked in the financial industry for all of my career?
There comes a time when an event occurs and one needs to speak out.
When a merger or acquisition occurs in our industry it’s typically because “it’s in the best interest of clients”. To be fair, this tends to be a principal rationale used to justify such corporate activity regardless of sector.
Recently it was announced that AON and Willis Towers Watson had agreed to merge their business globally and a key element of the justification was, yes you've guessed it, that it would benefit their clients.
Immediately my colleagues and I decided to do a little bit of investigative work, by hosting a roundtable discussion with a number of large potentially impacted UK pension funds to elicit their opinions.
Earlier this week I was given responsibility for a vitally important delivery to my daughter’s home – my grandson’s most cherished toy that he would “need” to play with that evening. Whilst driving off having completed my mission, I reflected on the fact that this house is currently the location where important company audit and national policy decisions are being worked on. As I continued to drive back towards home, observing how many cars were parked outside residential properties on a weekday, it struck me that these are doubtless the principal locations of the likes of corporate finance teams, pension fund boards and a whole plethora of key economic functions. A very different nationwide industry picture to that which had existed just 6 short months ago.
As recently as March of this year it was the expression on everyone's lips: ‘The New Normal’. It was the subject that largely dominated discussion forums everywhere, giving us plenty to talk about on Zoom, Teams and the plethora of other online communication forums we have come to depend upon. We just couldn't get enough of New Normal discussions.
During the past two weeks I enjoyed one of the experiences we have COVID to “thank” for – a staycation. Mine involved a mixture of enjoying the (occasionally) nice Scottish weather, playing a bit of tennis (badly) and considerable walking of my sometimes uncooperative dog. All of this and more within a 20km radius of my home in Fife.
I was taken with by how much evidence there was on display of our ability to get used to significant change. How for example many of us seem to have adapted relatively easily to life behind face masks. Embracing the abnormal? The new normal? Call it what you like, it’s reality.
What’s in a name?
An awful lot, judging by the effort and time devoted to choosing the “right” one. Most parents will empathise, as will many pet owners.
The same applies in the world of business. Doubtless you have heard the argument: “Our organisation needs a name that tells the world what we do and what we stand for”.
I have often wondered about how the industry I am most familiar with arrived at its name, Asset Management? Can this title be said to adequately address the 'what we do and stand for' test?