YouSaid · the spoken record

Chris Brockmeyer

lines on the record: 71
first: 2018-04-09
most recent: 2018-04-09
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Hey, before you take off, I've started sending out a monthly email that shares a small selection of what caught my eye over the month. I get a lot of emails like this, and I'm sure you do too, so I'm only going to send no more than a handful of the very best things that caught my eye. If you'd like to receive that email, hop on my website at Capital Allocatorspodcast.com and join the mailing list.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“The band's visit is a wonderful show. In fact, actually I just saw Frozen last week and frozen in the band visit are probably going to be the two shows that a lot of people talk about, the Tony Awards. Interestingly, you have two shows, one that's small and intimate, one that's a big entertainment. They're both very entertaining, but they're very different shows, yet they're going to both be fighting for the Tony Award. So a lot of good stuff on Broadway this year, as always in lots of different variety for all sorts of different people. So that's what makes our business model work in this industry.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“A little late That's a perfect. I would look back. I hope that when I'm 100, I can look back and say that I had a very full life, well-lived that was as diverse as I wanted it to be and that I did not choose not to explore some aspect of life or part of the world because I thought that it just wasn't possible or couldn't do it. I like to see the world as something that everyone can enjoy, take advantage of in a good way and give back a little and live a whole and holistic life.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so it's your waning days you are sitting back in a comfortable chair about to take in the next great Tony Award-winning show. What advice would you give yourself today?”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“I wish when I was younger I had been less dogmatic, I guess, towards Physicians generally, you know, whether it's political or daily occurrence in my business life, I think I've become less dogmatic and more open to trying to understand other ideas and other people. And it's something, again, that I've had to work at in order to survive and succeed in what I do back to discussions we had earlier about working with the folks on the other side of the table.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“I love the outdoors, do a lot of mountaineering and rock climbing and ice climbing, and so I read a lot of outside magazine and other magazines that talk about the feats that individuals accomplish in the outdoors. And I think what I learn from that is perseverance, tenacity focus on the issue at hand. If you're Alex Honald, and maybe I should modify the first question you asked, maybe the most amazing sport, if you want to call it a sporting event, was Alex Honold climbing El Capitan without any protection, was just mind-boggling. So, you know, stories like that remind me that to succeed at whatever it is you're doing, you need to maintain an intense focus. You need to maintain discipline and just an absolute conviction that you can do it.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“My father would always tell me that if you're going to do something, do it right the first time, and I try to adhere to that basic principle and I try to get others to as well, that's probably one of the parental words of terms of wisdom that I have continued to stick with.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I love the Olympics. I'm always sad that we wait for four years. They're here for two weeks and they're three weeks and I'm sad to see them go. And of course we just came to the conclusion of this year's Olympics. I don't know that I have a favorite moment per se, but I'm a big skier and I find absolutely remarkable the success that Michaela Schiffrin has shown the world over the past four years, really, five years now between being a slolem skier and then getting better and downhill and it's just absolutely remarkable to see someone like that who is specialized in one area become a generalist in all areas to kind of use investment terms I guess.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's going to be pretty fascinating now that you've got, we won't call it a horse race, but now that you have different looking horses. Right. In the race will be interesting over the next couple years see how it plays out. All right. Well, I usually turned a couple closing questions and a bunch of people said to me these sound like inside the actor's studio type questions. This is the best place to do it. Chris, what was your favorite sports moment?”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“And they've been successful, and others have chosen not to. And so it's self-selecting because of that, whether that circumstance means that we are getting inferior returns, I don't know. I mean, again, this is one of the interesting aspects of the NOCO model with all these new managers coming in. Are we going to outperform? Because they're really better. But yeah, on a very localized individual level, when we're sitting down with in the traditional model and interviewing managers, we talk about capacity issues and we talk about whether or not they've just become too large.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Consultants rather tend to have the same group of investment managers that they select from. When we went to an OCIO that had not had any Taft Hartley experience before, the termination of existing managers and replacement was astonishing. I think there was maybe one manager out of 30 that they kept of the existing group and brought in a group of managers that many of which I knew of, heard of, many of which I never heard of before. So that would tell me that there is, and this isn't really a criticism, I guess, but within the Taft-Hartley investment landscape, there are certain firms that have chosen to focus on this part of the institutional investor market.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Less interested in spending the amount of time and energy it takes to To go there, some boards are more willing to just accept the basic social investing formula or overlay. And do you get concerned that whether it's through the consultants or through the OCIOs, they have scale businesses, obviously much bigger scale than your assets, which are substantial in and of themselves. Do you get concerned that everybody wants best-of-breed managers? By definition, everybody can't have them, that as those OCIOs or as those consultants have scaled their businesses, that you are left with just an average. That's a concern. Again, distinguishing between the OCIO and the traditional managers. Interestingly, a lot of the traditional Taft Hartley managers.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Investment strategy or someone's hyping up bank loans, which was, you know, that's probably a couple years old at this point when everyone was talking about it. I would go back to my boards, or I really go back to the consultants and ask the consultants to take a look at it. Sometimes it had to do with a particular manager in an asset class or just the asset class generally and have the discussion probably me with the consultant first and then if it seemed that it made sense then with the board. This sort of initial the genesis of an idea on boards could fall flat or it could be something. It's really even after doing this for 10 years it's impossible for me to know or to say. Another good example is social investing or there's some boards all boards like the idea that I sit on, but some boards are”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“But not that different you tend to have boards that are, they come from different walks of life, they're not investment professionals. And you may not have union politics, but you have even more complicated politics, which is municipal or state politics. And we've gotten, I think, a lot of good practices and good ideas from speaking with public plans in particular. On the single employer side, we probably don't share a lot in common with single employers, although I'm envious of their ability to do whatever they want as quickly as they can and not having to deal with the unwieldy boards at times. And what happens when you, in reading and talking to people come up with an investment idea? Trying to think of an example, bank loans. When I go to a conference and there's a panel talking about a particular”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hundreds of billions. They have similar difficulties with dealing with different boards, different investment committees, and I understand that they actually now have an Uber investment committee that is all the other investment committees combined where they are vetting managers. Each board makes its own decision, yet they still have sort of a vetting process that is a combined effort of all the boards. We don't have anything like that, maybe something like that makes sense someday. So from a governance perspective, I see some similarities locally right here in New York. More generally, as I talk to public plan, CIOs or CEOs throughout the country, I guess I'm surprised at how similar the stories are with Taft Hartley and public plans because the board structures are different.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“They just didn't have good managers, or whatever the reason, maybe we would look for another OCIO. So I guess simply put, I would be more inclined to select a new OCIO rather than going back to traditional manager if the underperforming OCIO underperformed for reasons not relating to the reason we brought them in the first place. And then as you look across peers, other pension funds, where do you see pockets that have similar governance challenges than what you do? Outside, just generally outside of Taft Hartley, anywhere. The New York City system has a similar issue to us in that there are multiple plans, obviously by degrees representing many more billions of dollars than we represent about $7 billion in our pension annuity plans combined. And I'm not even sure what the number is for the city of New York, but it's high.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“a regular consultant for that particular plan that's made the decision? Well, we'll see in four or five years, I guess. Yeah, but just if you're thinking about it, right? If the OCIO doesn't perform well, the tendency could be, well, like the governance structure, let's find a better OCIO as opposed to let's just take it back ourselves. I think if the reasons for which it probably would depend on the reasons for which the trustees thought the OCIO underperformed if they made bad decisions because of tactical positioning of asset classes, then yeah, we would probably say, you know what, we like our slow governance structure. We may not have gotten in and hit home runs and asset. Maybe we didn't get into hedge funds until they were six years old, but at least we avoided all these blow-ups. If on the other hand, the OCIO underperformed because”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“In many different market conditions and introduce different ideas that we had previously not really explored. And when we ended up with the final candidate, we were surprisingly not that we didn't care that much about the fact that the final candidate was not a Taft Hartley type consultant. I talk so much about consultants working well with boards. One would maybe assume that those that work best with Taft Hartley boards are those that have relationships with Taft Hartley boards to begin with. And we interestingly did not do that, our first foray into OCIO model, but we were confident that they would work well with us. Given that governance structure decision, can you ever envision a scenario where you decide to go from the OCIO back to”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“What were you looking for to differentiate one from the next? Well, initially the first plan that went toward the OCIO model, we were simply doing an RFP for consultants, and we decided to throw in a couple of consultants that were more known for their OCIO capabilities just to educate the trustees for the chance that we might do that in the future. And surprisingly, the trustees grabbed onto the idea thought it was a terrific idea, and so we focused on that more exclusively. What we were looking for was a consultant that had strong enough research to be able to rely on their own internal papers and their own internal data. We wanted a consultant that could have access to best in breed managers. We wanted a consultant. That we knew would be able to work with us in”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Streamline too much and you don't have proper due diligence and oversight, you could have Two to four people making really bad decisions, maybe even well-intentioned, maybe not well-intentioned, that could get the whole board in trouble. So that's the downside. How recently did the first plan switch to an OCIO? The final transaction, it was just over a year ago. About a year and a half. So it's relatively new. And so what was that process like once you made the decision to look at the OCIO”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the view of the consultant, those urgent decisions can be made. We had my favorite example is when we had the TARP program came about. Only one plan I sit on took advantage of TARP and it was, as we all know, it was hugely successful and rewarding for those of us that got into it. And the only reason, well, two reasons really, that one plan did that was that we had a consultant that was bold enough to come to the trustees and we had a governance structure and style that allowed for a quick decision to be made. None of the other plans I sit on went into TARP. I don't want to say it was just because of the governance, but that was a major role because we wouldn't have been able to get in if we had to wait three months for our next board meeting and discuss what it all meant and so on and so forth. So the downside is that if you quote”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Once we switch from a traditional consultant to an OCIO, we'll never know whether that traditional consultant would have outperformed the OCIO at a much lower fee either. But on those plans that have not gone to an outsourced model, governance issues, and I think generally speaking, in the multi-employer world, an outsourced model makes a lot of sense. It may not be right for some trustees, for some boards, but by and large My personal view is that it's a good fit if you can find the right consultant and trust that consultant. But those plans that have not and will not go in that direction, one of the most important governance decisions to make, if it can be made and if there's trust amongst the board and the board members, is to create a streamlined system where moments that require urgency.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Deliver alpha that far exceeds the fees you're paying them because you're right, relative to the traditional consultant, an OCIO could be four or five, six times more expensive, but it's based on beta returns, right? So one has to really believe in the consultant that you're hiring and believe that they're going to be able to deliver alpha by making tactical decisions and hiring best and breed managers. And how much of it is that and how much of it is the other side, which is at least you know that some of the more common aspects of human nature that work their way into the governance process can get out of the way. So yes, you hope they're going to do much better, but maybe the existing entity just won't do as badly. Possible. You just never know, right? And in fact,”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Structure of your kind of average Taft Hartley plan. Where we have gone toward an outsourced CIO model on three plans that I sit on two large plans, that's the, in a way, the one size fits all or the quick fix to the governance issues. Sure. We don't do it anymore. I mean, on both those plans, we still set asset allocation, but we're not interviewing managers. We're not making decisions about overweight, underweight, certain targets. The consultant does that. And how did you weigh, there's an incremental cost to that activity versus having a consultant? Well, that's a little bit, again, to use a philosophy. It's a little bit of a leap of faith as a certain existential philosopher once said, Schopenhauer. If you're going to go into that outsourced CIO relationship because it is more expensive, you better believe that that consultant is going to”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“without a lot of chaos, without a lot of Sturman drawing, without a lot of anger, by trying to understand the other side and talking it all through. And when I studied philosophy in graduate school, I was a big Hegelian and Hegelian dialectic, the thesis, antithesis synthesis is how it's always simply said is, I mean, in no small degree that's exactly what labor relations and what union manager relations are all about. One side puts something forth, the other side puts something that's the opposite forth, and you work it out. And in working that out, you get two superior levels and superior conclusions than otherwise you might have gotten to if one sided just said we're going to do this now. So that's, I think, a philosophical application of much of what I've done in my career. Are there paths that you see to improve the governance?”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Decision making working in your favor because things turn. Yeah, it's, I'm glad you asked that because I was thinking that as I was saying, so I guess one could argue that the upside to a slow governance structure is it didn't allow us to panic and say sell all of our equities and throw them in fixed income or go to cash or whatever. But I don't want to overstate that. I don't think that even if we had governance structures that allowed us to act that quickly, I don't believe we would have done that. It's hard to say. Now, to get more philosophical, you know, as I said earlier, one of the roles that I've always enjoyed, both in labor relations as well as in my current position and working with the other side, union or management, or the case may be, I appreciate and take pride in the fact that I typically am able to get to a place that we need to be.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Based on alarming data, alarming information. And none of the plans I sit on exited equities at any point in time, or we just sat there and bore it out and we were rewarded in the end because we've had the longest bull market and second longest in history, I guess. Now, was that also...”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“With that balance to educate yet not treat the trustees as though they're fools, I guess is a good relationship. But as I said before, it's not being an investment consultant on a Taft Hartley plan is, I'm sure, no easy task. Unfortunately, it's not something I've had to do in my career. So if you take your philosophy hat on from your training, how much money? Are you able to impart the beliefs that you have about investing onto these plans? And what are those core beliefs? Well, one core belief and one thing I've gotten better at as I get older is many of us do, I guess, is to practice patience and not get alarmed at events that seem alarming at the time. And it seems that these days we live in an era where everything seems alarming. In the 2008-2009 financial crisis taught us that We should not act”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Outside of being able to navigate this complex constituent of each board, what are the strengths that you've seen in the successful consultant relationships? Those that are successful, the consultants, the individual that's actually consulting and not necessarily the firm establishes a good sense of what hot points exist for certain trustees and the board generally knows how to balance between alienating trustees by pushing something or pushing something too hard yet still being brave enough if you will to bring new ideas to a board that could get shot down the investment consulting relationships that Tend to Treat the trustees as professionals in their own right if not professional investment people, as professional labor leaders or labor relations people, and come to the table with”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“And even if the long term return still is eight percent over a twenty or thirty year period with that sort of portfolio, we need to accept the consequences of a six or six and a half percent return average might be over the next 10 years when we're assuming 7.5 with the federal government. So those are all very complicated discussions that the board has that obviously affect every aspect of what a fund does and what the trustees do to operate that fund. Just circling back a little on the investing side.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's not going to be total harmony between those two camps and those are the two. It's the actuaries, the investment consultants that drive the discussions when it comes to asset allocation for the trustees to discuss. So the allocation discussion that takes place today is much more nuanced, I guess, because we have more tools, we have more data available to us. And so today when we talk about capital market assumptions, we break it down in what are the assumptions of the next five to ten years versus 20 years. It seems kind of obvious now, but we didn't do that 10 years ago. And when a diversified portfolio that is fairly aggressive, again, you know, 20% private equity and 15% emerging markets still shows that we're looking at a 6%, 6.5% return maybe over the next decade, that definitely changes our thinking on multiple levels.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is there a healthy dose of reality that maybe these seven and a half percent long term target aren't really achievable in the next stretch of time based on where bond yields are and stock market prices? It's interesting that investment consultants, again, pre-2008, if the trustees even really were presented with capital market assumptions, it was very, you know, the long-term capital market assumption over a 20-year period, 30-year period, and complicating that analysis is the fact that actuaries tend to use a longer time horizon than investment consultants and investment managers.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“allocation and other developed international, but certainly more like a 5% emerging market as opposed to a 15%. So what motivates asset allocation discussions has mostly to do with the funded status of the plan. And if the Pension Protection Act of 2008 established these zones, green zone, yellow zone, red zone, and of course everyone wants to avoid either the yellow is certainly the red zone. And as long as we have a plan in the green zone status, green zone plans tend to have a very similar investment profile. Just enough risk to hit that long-term return of seven half percent, which the actuaries certify, but not so much that we could get slaughtered in the market that we seem to be seeing over the past few weeks. That's the other question, right? When you have a board that has a Little bit less sophistication in the financial markets.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“On the asset allocation side, how wide is the range of the different structures of asset allocation across the 11 plants? In very broad terms, probably relative to what you might see in an endowment versus a cowpers or something like that, it's the 11 plans I sit on are remarkably similar. That said, I have one plan in particular that the board has decided it needs to try to really maximize returns and shoot for an eight plus percent return profile and that means that we have 20% invest in private equity and 15% in emerging markets and it's a very aggressive especially for the Taft Harleywell, a very aggressive portfolio. And I guess on the other end of the spectrum we have a plan that looks closer to 60-40, although it might have an emerging market.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“That from either the union or the employer's side foremost on their mind is oh we have to juice return so we can give benefit increases but somewhere that is influencing”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Certifies the federal government will say we want to use a 7% return assumption because we want to be more conservative in our approach. Now there is some tension when we discuss that because the union trustees obviously it lowers the probability of us being able to quote afford our benefit increase at a future time. So on the one hand Union trustees want to try to maximize return, but just like every other investor in the world they also want to minimize risk because a riskier portfolio is going to suffer in down markets and that's going to have a negative impact on them as well. So that balancing act is when we're talking about asset allocation and the risk return profile, I'm not so sure”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“LDI type strategy, you are basically saying, these are my liabilities, they're not going to change. And we're not going to increase benefits any longer. And a union isn't going to do that. And understandably, they're not going to want to do that. And that's an extreme example where, you know, for that and other reasons, we will never adopt in any full way sort of a risk parity strategy or anything like that. So on a softer level, we're constantly discussing what our investment return assumption should be by law the actaries determine what it is based on our asset allocation. So the trustees can't certify with the government and say, well, we're going to have an 8% investment return assumption. So that's established by law. However, a number of funds I sit on, we've established what we consider sort of an internal assumption that we, notwithstanding whatever the actuary,”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“At least be asked to come out of the plan. If you're underfunded, that has implications for how you take risk and what kind of drawdowns you can tolerate. Walk through how that plays out. Well, that's a very complicated dance because on a certain level, it would be nice as an employer, not necessarily as an employer trustee, but maybe as an employer trustee. It would be nice as an employer to say, okay, we are working toward being fully funded based on the current contribution structure and we want to implement an LDI strategy. LDI strategies don't work in Taft Hartley for a lot of different reasons, but one of which one major, I would say, political reason is that once you adopt”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“To pay out versus the union trustees. And, you know, again, fortunately, I don't. Experience very often a situation where union trustees come in and look for benefit increases at politically convenient times, which I think might happen another in other industries and other planets. How does that translate over into investment risk? I'm imagining a scenario where if you do really well. Money”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Human beings being what they are, it's very easy for interpretations to go one way or another. Is there sort of a repeated topic where the union reps and the employee reps fracture? Again, that question will be uniquely answered to each board for the most part the boards I sit on do not suffer that problem very often. The most obvious time where it does is when the union a plan is really well funded, the union trustees come in and say we want to increase benefits. Inevitably the increase being sought will make the employer trustees uncomfortable and so even if the employer trustees agree that there's some sort of benefit improvement warranted given the funding status of the plan, the employer trustees are probably going to be a little more conservative in assessing how much the fund can afford.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“To sit in that room and try to demonstrate to the union trustees and the employer trustees alike that they're not favoring one side or the other, that they are sitting there on behalf of the participants.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“The Union trustees and the employer trustees created an environment where one side wasn't trusting, the other side, and it might have been actually each side might have felt that the consultant was treating the other side special. And so it created something of a toxic environment where it wasn't the advice that was being given by the consultant was not fully trusted by one or both sides of trustees. And once you get to that point, it's just not possible for a consultant to be effective in giving advice. And so that resulted in an RFP, and we replaced that consultant ultimately. So I don't envy the role of investment consultants. I don't envy the role of any professional that works on a Taft Hartley board because there are politics involved inevitably. One of the most important functions of a consultant is”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“A number of trustees have turned against an investment consultant, and that investment consultant is not delivering in the eyes of the trustees you have a real problem. It sounds like you're saying that out of experience. Yeah, without using names, walk through that example. It's sort of what derailed the relationship? Well, in one instance, we had, again, it actually surrounded private equity in no small part. We had a consultant that we had asked to do a private equity search for us, and actually it took us probably nearly six months for them to actually start that education process even after we had asked. For some reason there was resistance, either because they didn't, they weren't experts in the asset class themselves or whatever the reason. So once we finally got to the point where we had gotten the education, the RFP process and the discussions that went on between the consultant”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“No matter what it is, and not so much anymore, but every now and then one does run into philosophical objection to a particular type of investing that you can't get past. What are the strengths and weaknesses of the various consulting relationships you've had? Well, first of all, with any consultant, and it's not just investment consultant, but that's who we're talking about today. With any consultant, it is critical that all of the trustees trust your consultant. You have to believe that they are competent, that they are doing what In the best interest of the funds and that they are serving the trustees toward that goal. If for some reason”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Minus twenty plus percent over that period of time. So obviously not nearly as bad as the S&P because we had fixed income diversification, but we suddenly realized there was not safety to be had in the fixed income arena. And so ever since then, I would say that at least the plans I sit on, I can't speak universally for multi-employer plans. I think it's a similar situation. Multi-employer plans have become far more sophisticated as investors and the consultants serving them have become more sophisticated as well. So now we're investing in private equity and private credit and bank loans. We're probably looking at it. Some boards will still have, I mean, hedge funds is probably the best example. Some boards will just have this, I don't want to call it irrational, but this objection to hedge funds, no matter.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Reason, but nonetheless, those are some of the politics that one deals with in a Taft Hartley boardroom. So post-2008-2009, trustees realized and investment consultants helped them to realize that Funds needed to have a far more diversified portfolio than the 6040 or the sort of traditional domestic equity. At the time a diversified portfolio was you don't have just large cap, but you have some small and mid as well in your domestic equity and that was it. And then, you know, for your fixed income side, you might have a core plus manager to kind of give a little juice to your fixed income. That was viewed as being a diversified portfolio pre two thousand eight. And after that, when we saw all asset classes just collapse and Our investment returns were, I'd say, consistently”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Due diligence process that is adequate so that we can demonstrate that we understand the asset class, that we've chosen, we've made the best selection based on the information that we have. And so as a result, historically Taft Hartley, multi-employer plans have been a bit nervous about getting into some more exotic asset classes. What's considered exotic? Well, before 2008, 2009 financial crisis, you would be hard-pressed to find a Taft Hartley plan invested in private equity, invested in emerging markets. It just didn't exist. In fact, in some industries, you would not even see plans invested in developed international equity because they objected to the basic idea of giving money to a company that might compete against American union labor. Not a very good investment.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think not unique to the multi employer environment. I speak to colleagues in the public funds as well and other arenas of institutional investing where there are over heavy governance structures that are well intentioned, but in today's dynamic market makes us kind of flat-footed as investors. And your board structures for Taft Hartley plans are regulated in the structure. Is that right? Yes. I mean, we're governed by ERISA, the Employee Retirement Income Security Act, federal law, and our fiduciary duties are defined in Arissa, and they are very, vexorous, I guess. Let me put it that way. And so when we enter into investment relationships and introduce new asset classes, we need to be very, very careful and very prudent in how we do that. We need to demonstrate that we have gone through”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Consultant to come to us with an education program so that we understood what the asset class was. We then went to an RFP process. After that RFP process, we went through a long discussion about how to narrow that down. We then started interviewing the finalists and then interviewed the finalists some more. And by the end of the process, it took us north of two years to actually go from the idea of investing in private equity to actually engaging the manager. And then of course it takes years to actually fund private equity. So, you know, as a result, we missed at least one arguably two of the most fertile years private equities had in decades. And so those are the kind of perils that we face in the multi-employer environment. It is”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some caution and exercise patience when it comes to terminating managers, but you're probably right. If you rely on the investment consultant's advice all the time, you're probably in a better position. But the problem is we don't rely on investment consultants' advice all the time. We do and we do and then we don't when we don't. And another problem with the governance structure really, and I think the bigger problem is the inability to act quickly in any given circumstance. We meet quarterly every now and then we have meetings in between our quarterly meetings. But by and large, if we are interested in going into private equity and a plan, and this is an actual true story on one plan that was introduced to private equity about four years ago, four or five years ago, we first started discussing the idea, asked the investment.”
2018-04-09 · Capital Allocators · Chris Brockmeyer – On Broadway (Capital Allocators, EP.47) · IDENTIFIED FROM THE TRANSCRIPT · source