…in the world!€¦ · trust barometer & uk supplement methodology informed public • 500...
TRANSCRIPT
A very warm welcome to the first
Andy Agathangelou, Founding Chair, Transparency Task Force7th October 2015Dimensional, 20 Triton Street, Regent’s Place, London.
…in the World!
The Programme1. About the Transparency Task Force & the Transparency Symposium
2. Sunlight is the best disinfectant – David Pitt-Watson
3. The correlation between transparency & trust – Gurpreet Brar
4. About the TTF Teams
5. Cost transparency, the Dutch experience – Tomas Wijffels
6. Reflections - Gregg McClymont
7. About the United Nations Global Compact – Steve Kenzie
8. Why transparency? Why now? – Steve Conley
9. The dynamite debate!
10. If I had a few minutes to say what I really, really think…
11. What does the media make of all this? – John Greenwood & Jack Jones
12. Close
13. Optional networking until 17:30, then to the Union Bar for the thirsty!
But first!
Let’s all show our appreciation please to Jonathan Parker plus his colleagues at Dimensional for sponsoring the first Transparency Symposium in the world!
About the Transparency Task Force
Andy Agathangelou, Founding Chair,Transparency Task Force
About the Transparency Task Force
• We are an informal but increasingly influential forum dedicated to encouraging greater transparency in financial services, right around the world
• We believe that high levels of transparency are a prerequisite for fairer, safer and more efficient financial services markets that deliver better value for money
• We’re a “one agenda organisation”, we’re neutral and un-conflicted. Our members have joined because of our cause – we’re unrestrained
• It is perfectly clear we’ll make a difference!
Our initial focus• The UK’s workplace pensions and institutional market
• But in the future well cater for other areas of financial services such as:-
• Foreign exchange
• Retail banking
• We are actively seeking contacts overseas to help internationalise our activities because opacity is a global issue!
If you have good contacts overseas please talk to me today!
About the Transparency Symposium
• It’s the first one in the world!
• It represents a milestone for the pro-transparency movement
• It’s a chance to “discuss the key issues in a safe environment”
• Rapid progress has been made since we started, 6th May
• All we’ve achieved is down to:-• The members of our 5 teams• The Team Leaders• Our Ambassadors
If you are not yet a member of a team or a TTF Ambassador please talk to me today!
In keeping with similar initiatives, being an active member of the TTF will mean:
• Working to the principle of Enlightened Self Interest:• A philosophy in ethics which states that “Persons who act to further the
interests of others (or the interests of the group or groups to which they belong), ultimately serve their own self interest”
• It has often been simply expressed by the belief that an individual, group, or even a commercial entity will "do well by doing good”
• Being neither naïve nor combative
• Sharing knowledge, experience, insight and best practice
• Making progress through “political pragmatism”
• Succeeding through collaboration, co-operation and collegiality
Sunlight is the best disinfectant
David Pitt-Watson, Executive Fellow at the London Business School
The correlation between transparency & trust
Gurpreet Brar,Managing Director, UK Public Affairs, Edelman
October 2015
EDELMAN TRUST BAROMETER
Edelman’s 15th Annual Trust Barometer & UK Supplement Methodology
Informed Public
• 500 respondents in U.S.
and China, and 200 in
other countries
• Ages 25-64
• College-educated
• In top 25% of household
income per age group in
each country
• Report significant media
consumption and
engagement in business
news and public policy
• 15 years of data
General Online Population
• 1,000 respondents per
country surveyed
• Ages 18+
• 4 years in 25+ markets
Online Survey in 27 Countries
• 33,000 respondents
• 7 years in 20+ markets
• 10 years in 10+ markets
UK Supplement
• 1,000 respondents*
• Ages 18+
• 2 years of data
*Includes a natural fallout of
Informed Publics
ONE | Trust in institutions
TRUST IN THE FOUR INSTITUTIONS OF GOVERNMENT, BUSINESS,
MEDIA AND NGOS IN UK, 2014 VS. 2015
TRUST IN INSTITUTIONS
BUSINESS
56% 52%
2014 2015
#1
42% 43%
2014 2015
#3
67%51%
2014 2015
#2
41% 38%
2014 2015
#4GOVERNMENT MEDIA
NGOS
Informed
Public
Q11-14. [TRACKING] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a nine-point scale,
where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” (Top 4 Box, Trust) Informed Publics in U.K.
OCT
China 79
UAE 79
Singapore 73
Indonesia 72
India 69
Malaysia 65
Canada 60
Netherlands 60
Hong Kong 59
Mexico 59
Australia 58
Brazil 57
Germany 57
Argentina 53
U.K. 52
S. Korea 51
Sweden 51
S. Africa 50
U.S. 49
France 46
Japan 44
Italy 43
Turkey 41
Ireland 39
Spain 39
Russia 37
Poland 35
TRU
STER
SN
EUTR
AL
DIS
TRU
STER
S
2014
TRUSTERS from 30% to 22% in 2015
GLOBAL 56
Italy 48
S. Africa 48
Hong Kong 47
S. Korea 47
U.K. 46
Argentina 45
Poland 45
Russia 45
Spain 45
Sweden 45
Turkey 40
Ireland 37
Japan 37
2015
UAE 84
India 79
Indonesia 78
China 75
Singapore 65
Netherlands 64
Brazil 59
Mexico 59
Malaysia 56
Canada 53
Australia 52
France 52
U.S. 52
Germany 50
GLOBAL 55
DISTRUSTERS from 33% to 48% in 2015
The Trust Index is an average of a country’s trust
in the institutions of government, business,
media and NGOs. 27-country global total.
Informed
Public
OCT
NUMBER OF TRUSTER COUNTRIES
AT AN ALL-TIME LOW
THE TRUST INDEX:
Informed
Public
OCT
TRACKING TRUST IN UK INSTITUTIONS SINCE THE GLOBAL FINANCIAL CRISIS
TRUST IN INSTITUTIONS 2008-2015
Q11-14. [TRACKING] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a nine-point scale,
where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” (Top 4 Box, Trust) Informed Publics in U.K.
48%46%
49%44%
38%
56%56%
52%
35%40%
38%
43%38%
47%
42%43%
54%5…
51% 51%54%
61%
67%
51%
36%
30%
31%
22%
37%
47%
41% 38%
20%
30%
40%
50%
60%
70%
2008 2009 2010 2011 2012 2013 2014 2015
BUSINESS GOVERNMENT
NGOS MEDIA
TWO | Trust in financial services
18
50%
80%77%
72%66% 67% 66%
63% 64%61% 61% 61%
57%53% 54% 52%
78%75%
71%67% 67% 66%
63% 63% 61% 60% 60%57%
54% 53% 51%
TRUST IN INDUSTRIES 2014 VS 2015, DECLINES COMPARED TO 2014
INDUSTRY SECTORS: LOW TRUST IN FINANCIAL SERVICES
Informed
Public
Q43-60. [TRACKING] Please indicate how much you trust businesses in each of the following industries to do what is right. Again please use the same nine-
point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” (Top 4 Box, Trust) Informed Publics, 27-
country global total.
2014 2015
More Trust Less Trust
*% of countries in which trust decreased
19
50%
79% 77%
64%69% 70% 71% 69%
64% 62%59%
49%43%
44%
32% 32%
75%70% 70% 69% 67% 65%
62% 62%57%
54%51%
40% 39% 38%32%
TRUST IN INDUSTRIES 2014 VS 2015, DECLINES COMPARED TO 2014
INDUSTRY SECTORS: LOW TRUST IN FINANCIAL SERVICES
Informed
Public
Q43-60. [TRACKING] Please indicate how much you trust businesses in each of the following industries to do what is right. Again please use the same nine-
point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” (Top 4 Box, Trust) Informed Publics, 27-
country global total.
2014 2015
More Trust Less Trust
*% of countries in which trust decreased
20
TRUST IN FINANCIAL SERVICES SECTOR VS. TRUST IN BUSINESS, 2009 – 2015,
GENERAL ONLINE POPULATION VS. INFORMED PUBLIC
LONG-TERM TREND: RECOVERY HAS STALLEDInformed
Public
Q11-14. [TRACKING] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a nine-point scale, where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” (Top 4 Box, Trust) Informed Publics 20-country global total and General Population, 25-country global total.Q43-60. [TRACKING] Please indicate how much you trust businesses in each of the following industries to do what is right. Again, please use the same 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust) Informed Publics 20-country global total and General Population, 25-country global total.
General
Population
4…47% 48% 48%
48%45%
50% 50%52%
2009 2010 2011 2012 2013 2014 2015
Trust in Financial Services
50%
47%
50% 49% 49%
50%
54% 56% 53%
58% 58% 57%
2009 2010 2011 2012 2013 2014 2015
Trust in Business
+8 +4
21
2…35% 37% 36%
20%
34% 34%
44%39%
2009 2010 2011 2012 2013 2014 2015
Trust in Financial Services
50%
TRUST IN FINANCIAL SERVICES SECTOR VS. TRUST IN BUSINESS, 2009 – 2015,
GENERAL ONLINE POPULATION VS. INFORMED PUBLIC
LONG-TERM TREND: RECOVERY HAS STALLEDInformed
Public
38%
49%
45% 44%
46%49%
44%38%
56% 56%
52%
2009 2010 2011 2012 2013 2014 2015
Trust in Business
Q11-14. [TRACKING] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a nine-point scale, where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” (Top 4 Box, Trust) Informed Publics 20-country global total and General Population, 25-country global total.Q43-60. [TRACKING] Please indicate how much you trust businesses in each of the following industries to do what is right. Again, please use the same 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust) Informed Publics 20-country global total and General Population, 25-country global total.
General
Population
+8
+3
22
TRUST IN THE FINANCIAL SERVICES SECTOR
INFORMED PUBLIC VS. GENERAL ONLINE
POPULATION
TR
US
TE
RS
2015
General
Population
Informed
PublicGLOBAL 48
Q43-60. [TRACKING] Please indicate how much you trust businesses in each of the following industries to do what is right. Again, please use the same 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust) Informed Publics, 27-country global total and General Population, 27-country global total.
India 77
China 72
Indonesia 72
UAE 69
Malaysia 67
Singapore 62
Hong Kong 61
S. Africa 59
Mexico 57
Brazil 56
Canada 55
U.S. 51
S. Korea 45
Australia 43
Argentina 41
Russia 40
Japan 39
Turkey 37
UK 36
Italy 36
Poland 36
Netherlands 35
Sweden 34
France 33
Ireland 29
Germany 25
Spain 22
NE
UTR
AL
2015
GLOBAL 54
India 86
Indonesia 81
China 80
UAE 79
Malaysia 73
Mexico 68
Brazil 65
Hong Kong 65
S. Africa 63
Singapore 59
U.S. 53
Canada 51
S. Korea 51
Australia 48
Japan 46
Russia 43
Turkey 43
Italy 41
Poland 40
UK 39
Netherlands 39
France 36
Argentina 35
Sweden 35
Spain 33
Ireland 30
Germany 27
DIS
TR
US
TE
RS
GLOBAL FINANCIAL SERVICES
CENTERS HIGHLIGHTED:
1. HONG KONG
2. UK
3. U.S.
4. SINGAPORE
FINANCIAL SERVICES DISTRUSTED IN HALF OF COUNTRIES
THREE | Trust in business
innovation
TRUST IN BUSINESS INNOVATION
Q349-351. Below are a number of statements. For each, please think about the pace of development and change in business and industry today and select the
response that most accurately represents your opinion. (Not Enough, Too Much) Informed Publics in U.K.
Informed
Public
THE PACE OF DEVELOPMENT AND CHANGE IN BUSINESS AND INDUSTRY IN U.K. TODAY IS …
49% Too Fast19% Too Slow 26% Just Right
BUSINESS INNOVATION
Q355-359. Below is a number of recent developments in business and industry. To what degree do you trust each of
these recent developments? Informed Publics, in U.K. and 27 country global.
Informed
Public
TRUST IN RECENT DEVELOPMENTS IN BUSINESS AND INDUSTRY, U.K. VS.
GLOBAL
50%
U.K.
GLOBAL
42%
53% 50%
39% 38%
69%
59%55%
47%
32%
Electronic and Mobile
Payments
Electronic and Personal
Health Trackers
Cloud Computing Hydraulic Fracturing Genetically Modified
Foods
BUSINESS INNOVATION
Q360-364: Now thinking specifically about each of the following industries, how much do you trust them to responsibly develop and release each of these
recent developments? (Showing % who trust, rated 6-9). Informed Publics, in U.K.
Q43-60. Please indicate how much you trust businesses in each of the following industries to do what is right. Again, please use the same nine-point scale,
where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” Informed Publics, in U.K.
Informed
Public
TRUST IN INDUSTRIES’ ABILITIES TO RESPONSIBLY DEVELOP AND RELEASE
INDUSTRY-SPECIFIC DEVELOPMENTS, COMPARED TO TRUST IN INDUSTRIES IN U.K.
TRUST INDUSTRY SECTOR TRUST INDUSTRY TO IMPLEMENT EACH DEVELOPMENT
34%
37%
44%
58%
64%
67%
39%
38%
75%
62%
Financial Services
Electronic Payments
Health
Personal Health Trackers
Technology
Cloud Computing
Energy
Hydraulic Fracturing
Food & Beverage
Genetically Modified Foods
+2
-17
+6
-2
-33
GapTrust in Industry Sector
vs. Trust in Industry to Innovate
FOUR | What we should do
about it?
28
16 KEY ATTRIBUTES TO BUILDING TRUST
INTEGRITY
Has ethical business practices
Takes responsible actions to address an issue or crisis
Has transparent and open business practices
ENGAGEMENT
Listens to customer needs and feedback
Treats employees well
Places customers ahead of profits
Communicates frequently and honestly on the state of its business
PRODUCTS & SERVICES
Offers high-quality products or services
Is an innovator of new products, services or ideas
PURPOSE
Works to protect and improve the environment
Addresses society’s needs in its everyday business
Creates programs that positively impact the local community
Partners with NGOs, government and 3rd parties to address societal needs
OPERATIONS
Has highly-regarded and widely-admired top leadership
Ranks on a global list of top companies
Delivers consistent financial returns to investors
Edelman Trust Barometer
research reveals 16 specific
attributes that build trust.
These can be grouped into five
performance clusters listed
here
in rank order of importance.
Q80-Q95. [TRACKING] How important is each of the following actions to building your trust in a company? Use a
nine-point scale where one means that action is “not at all important to building your trust” and nine means it is
“extremely important to building your trust” in a company. (Top 2 Box, Very/Extremely Important) Informed Public,
27-country global total.
29
STATED IMPORTANCE VS. STATED PERFORMANCE ON 16 TRUST ATTRIBUTES - GLOBAL
ENGAGEMENT AND INTEGRITY: PRIORITY AREAS FOR COMPANIES TO BUILD TRUST
TRUST-BUILDING OPPORTUNITY QUADRANT
UNDER-PERFORMING ON HIGH PRIORITIES HIGH-PERFORMING ON HIGH PRIORITIES
UNDER-PERFORMING ON LOWER EXPECTATIONS HIGH-PERFORMING ON LOWER PRIORITIES
ENGAGEMENT
INTEGRITY
OPERATIONS
PRODUCTS & SERVICES
Sta
ted
Im
po
rta
nce
Stated Performance
PURPOSE
OPERATIONS in 2008
Informed
Public
Q80-Q95. [TRACKING] How important is each of the following actions to building your trust in a company? Use a nine-point scale where one
means that action is “not at all important to building your trust” and nine means it is “extremely important to building your trust” in a company.
(Top 2 Box, Very/Extremely Important) Informed Public, 27-country global total. Q114-129. Please rate businesses in general on how well you
think they are performing on each of the following attributes. Use a nine-point scale, where one means they are "performing extremely poorly"
and nine means they are "performing extremely well." (Top 2 Box, Performing Extremely Well) Informed Public, 27-country global total.
pg 30
IMPORTANCE OF BEHAVIORS IN BUILDING TRUST VS. PERCENT WHO AGREE THE
FINANCIAL SERVICES INDUSTRY IS PERFORMING WELL AGAINST THESE BEHAVIORS
TRUST-BUILDING BEHAVIORS: FINANCIAL SERVICES FALLING SHORT ACROSS THE BOARD
Q335-343. How important is each of the following factors to building your TRUST in a company? Use a 9-point scale where one means that action is “not at all
important to building your trust” and nine means it is “extremely important to building your trust” in a company. (Top 4 Box, Trust) Informed Publics, 27-country
global total.
Q344-348. How well do you think the [INSERT SECTOR BEING RATED] industry is performing on the behaviors listed below. Use a 9-point scale where one
means they are “performing extremely poorly” and nine means they are “performing extremely well”. Informed Publics, 27-country global total.
Gap
Importance of Behavior
vs. Industry Performance
-26
-24
-27
-26
-19
-27
-20
-21
-1852%
54%
56%
55%
63%
57%
56%
63%
61%
70%
75%
76%
82%
82%
83%
83%
87%
87%
Makes me feel connected to…
Develops intellectual property
Supports local charities and good…
Is transparent in reporting…
Makes my life easier
Embraces sustainable business…
Keeps me and my family safe
Protects customer data
Ensures quality control
Importance Performance
Informed
Public
31
BUILDING AND DEFENDING TRUST: CLEAR PERSONAL AND SOCIETAL BENEFITS ARE KEY
53% 39% 32%
Fails to Contribute
to the Greater Good
Lacks Economic
Growth
Does Not Help Me
and My Family Live
a Fulfilling Life
57% 51% 47%
Produces
Economic Growth
Allows Me to Be a
Productive
Member of Society
Contributes to
Greater Good
Reasons Trust in Business Has Increased
Informed
Public
Q328-329. For which of the following reasons, if any, has your trust in each institution listed below increased over the past year? (Top 4 Box, Trust) Informed Publics, in [INSERT
COUNTRY] and Q330-331. For which of the following reasons, if any, has your trust in each institution listed below decreased over the past year? (Top 4 Box, Trust) Informed
Publics, in [INSERT COUNTRY].
Q249-252. Please indicate how much you agree or disagree with the following statements? (Top 4 Box, Trust) Informed Publics, 27-country global total.
Reasons Trust in Business Has Decreased
47% 53%
81%agree
“A company can take specific actions that
both increase profits and improve the
economic and social conditions in the
community where it operates.”
32
ACTIONS THAT INCREASE TRUST IN INDUSTRY TO IMPLEMENT TECHNOLOGY-LED CHANGES
Make test results available publicly for review 80%
Partner with an academic institution 75%
Run a clinical trial or beta test 71%
Partner with an NGO 63%
Partner with government 55%
55% AGREE:
New developments are not tested
enough
TRUST IN INNOVATION:TRANSPARENCY AND 3RD-PARTY VALIDATION ARE ESSENTIAL
Informed
Public
Q365-369. Below are a number of actions that could impact your trust in business and industry to develop and implement technology-
led changes such as those you just evaluated. What impact would each of these actions have on your trust? Informed Publics, in
[INSERT COUNTRY]. Q349-351. Below are a number of statements. For each, please think about the pace of development and change
in business and industry today, and select the response that most accurately represents your opinion. (Not Enough, Too much)
Informed Publics, in [INSERT COUNTRY].
OPPORTUNITIES TO INCREASE TRUST IN BUSINESS IN 2015
PAYING EXPECTED LEVELS OF TAX AND RESPONSIBLE BEHAVIOUR WILL MAKE BRITS TRUST BUSINESS MORE IN 2015
TRUST IN BUSINESS General
Population
JAN
Q7. Which of the following, if any, do you think will make you trust business in general more in 2015? General Publics. NB: Don’t know / other not included
42%
42%
34%
32%
30%
24%
18%
Paying expected levels of tax
Responsible behaviour
Increased transparency about operations and business practices
Putting customers at heart of business
Consistent level of service and quality
Driving growth in the economy
Addressing society’s needs
INCREASE IN TRUST
Refreshments & networking
Please reconvene by 10:35
Updates from the TTF Teams
About the TTF’s Data team
Steve Conley, Leader, the TTF Data Team,Business Development Director/ Workplace Pensions [email protected]
Who’s in the TTF Data Team?
First name Last name Job title Organisation
Con Keating Principal Brighton Rock Group
James Meenan Principal JNM Investment Governance
Stewart Bevan Product Manager - Benchmarking KAS BANK
Iain Cowell Head of Inv. Solutions, UK & Ireland Allianz Global Investors
Andy Agathangelou Founding Chair Transparency Task Force
Shaul David Fin Tech Sector Specialist UKTI Financial Services Organisation
Andrew Evans Chief Executive Officer Smart Pension
Nils Johnson Director Spence Johnson
Markus Krebsz Interim Chief Risk Officer UNECE GRM
James Monk Head of DC Investments Aon Employee Benefits
Henrik Pedersen Co-Founder Clerus
James Singer Senior Associate P-Solve
Gerry Wright Partner Smith & Williamson Investment Mgt LLP
John Simmonds Principal CEM Benchmarking Inc
Steve Conley Business Development Director Workplace Pensions Direct
= Team Leaders
What’s the problem?• Information imbalance between market participants (all commercial entities
active in the market) and Trustees/ investors. DC and DB. Asset holders and administrators.
• Trustees and investors are unable to access clear, simple and actionable data ahead of/ during/ after dialogue.
• Data reported untimely, lacks quality, and without consistency/standardisation.
• Important relevant data is not reported.
• Data is verified by the market participants. It can be difficult and challenging for the end user to verify data.
• Spin on data presented, e.g., hides lacklustre returns, excessive risk/ charges.
• There are no well developed independent open resources for sharing or comparing data for trustees and investors to access.
• No commercial imperative for market participants to change the status quo.
• Communication of data can be challenging; Investor disengagement and understanding is low.
Important considerations• Transparency - whilst revealing hidden returns/ fees/ risks - highlights
and promotes good industry practice.
• It will enable better data evaluation and benchmarking by Trustees/ investors, thereby enabling better-informed decision-making and improved understanding.
• Which in turn will lead to better public engagement and increased demand for investments.
• Critical for success is to create a data framework that won’t simply be “gamed” by the industry.
• Data set should incorporate all relevant market participant data.
• Standardised data set; which is relatively simple to collate yet sufficient to consistently and reliably monitor.
Ideas under development• A new comprehensive reporting standard: new data
set/template/schedule/matrix that defines minimum requirements for analysis and comparison.
• “Data Transparency Statement” (DTS): whereby suppliers warrant that they are providing data to a specified standard.
• Full cost disclosure statement in standard published report and accounts. Encourage development of public database.
• Enables the market to develop relevant benchmarks.
• Educate decision makers on the value of the DTS.
Likely outputsQ4 2015/ Q1 2016
• Articulate the challenge for the industry and highlight industry best practice.
• Capture market response to the initiative, liaising with trade bodies, market participants, DWP and regulators etc.
Q2 2016 onwards
• Identify the optimal data set, and propose a presentation standard.
• Consensus on what data is fair, useful and effective.
• Facilitate proofs of concept for data collection, collation and representation.
• Ongoing awareness and education programme.
Any comments and questions?
Steve Conley, Leader, the Data Team,Business Development Director/ Workplace Pensions [email protected]
About the TTF’s Transaction cost & charges team
Jonathan Parker Leader, TTF Transaction costs & charges teamHead of DC / Dimensional Fund [email protected]
Who’s in the Tr’n costs & charges team?First name Last name Job title Organisation
Con Keating Principal Brighton Rock Group
Iain CowellHead of Investment Solutions, UK &
IrelandAllianz Global Investors
Andy Agathangelou Founding Chair Transparency Task ForceAndrew Evans Chief Executive Officer Smart Pension
Nils Johnson Director Spence JohnsonJames Monk Head of DC Investments Aon Employee BenefitsHenrik Pedersen Co-Founder ClerusJames Singer Senior Associate P-Solve
Iain ClacherAssociate Professor in Accounting &
FinanceLeeds University Business School
Nick Gannon Policy Manager B&CE, The People's Pension
Stephen BowlesHead of Institutional Defined
ContributionsSchroders
Niall FergusonBusiness Development Director, DC
Investment ConsultingBarclays Corporate & Employer Solutions
Ben Ford UK Institutional Janus Capital InternationalLucy Forgie Policy Adviser ABI
Sarah Hutchinson Consultant SJ Hutchinson LtdPaul Lee Head of Corporate Governance Aberdeen Asset Management
Imran Razvi Public Policy Adviser Investment Association
Tim SharpEconomic and Social Affairs
DepartmentTUC
Henry Tapper Founder Pension PlayPenChris Sier Managing Director KAS BANK
Jonathan Parker Head of Defined Contribution Dimensional Fund AdvisorsGraham Cook Portfolio Solutions Macquarie Securities
Ralph Frank CEO Charlton FrankShyam Moorjani Director, Risk Advisory Deloitte LLP
Neil Morgan Senior Pension Trustee Capita Asset Services
What’s the problem?
• The opacity / lack of transparency / lack of meaningful disclosure of transaction costs, particularly implicit (e.g. bid/offer spread, market impact).
• There is a poor understanding of what should be included in a 'total cost' or 'near total cost' calculation, for example in workplace pensions this would need to include all non-investment costs.
• It is difficult to consistently capture, measure and benchmark costs/charges in a way that is meaningful to all stakeholders in a standardised format.
Important considerations
• Who are the audiences for this output? Trustees / IGCs
• Need to achieve a broad consensus across all stakeholders – have we got the right people on the bus?
• We seek to create a positive, inclusive process to deliver useful, pragmatic solutions.
• We seek to work with regulators to help them achieve their objectives, but recognise that adding more regulation may not resolve the problems and can have unintended consequences.
• There is already a significant amount of work being done in this area (particularly around investment transactions costs). How do we ensure we add value to the debate?
• Other costs within the pensions system need to be considered (e.g. platform, record-keeping)
Ideas under development
• Gap analysis:• Create a short summary of other work that is being carried out in this area (to be
verified with each organisation);
• Identify any areas that are not currently being covered by these existing projects (e.g. non-investment charges within workplace DC pensions);
• Bring together the various groups for a discussion on how the TTF could help fill any gaps
• To get formal representation from TTF on industry working groups (noting that Chris Sier is already involved in the FCA group).
Likely outputs• Gap analysis and identification of specific areas where TTF can add
value
• Engaging 3rd party organisations already involved in this area and encouraging cross-group dialogue and debate
• Possible development of a cost analysis framework for the non-investment charges within workplace DC pensions
Any comments and questions?
Jonathan Parker Leader, Transactions cost & chargesHead of DC / Dimensional Fund [email protected]
“The purpose of the team is to work in a positive, inclusive manner to deliver useable, pragmatic solutions to the issues around costs and charges within workplace pensions.
The team will initially seek to deliver outputs to a trustee / IGC audience, with a particular focus on the non-investment costs.”
About the TTF’s Rationale for Decision-Making Team
Henrik Pedersen, Leader, the Rationale for Decision-Making Team,Managing Partner & Co-founder, CLERUS [email protected]
Who’s in the TTF’sRationle for decision-making team?
First name Last name Job title Organisation
Con Keating Principal Brighton Rock Group
Iain CowellHead of Investment Solutions, UK
& IrelandAllianz Global Investors
Andy Agathangelou Founding Chair Transparency Task Force
Iain ClacherAssociate Professor in Accounting
& FinanceLeeds University Business School
Henry Tapper Founder Pension PlayPenJonathan Parker Head of Defined Contribution Dimensional Fund Advisors
Neil Morgan Senior Pension Trustee Capita Asset ServicesStewart Bevan Product Manager - Benchmarking KAS BANK
Shaul David Fin Tech Sector Specialist UKTI Financial Services OrganisationMarkus Krebsz Interim Chief Risk Officer UK Municipal Bonds Agency & UNECE GRM
John Simmonds Principal CEM Benchmarking IncPaul Hewitt Business Development Manager ManifestAlan Salamon Managing Director CorpiasSteve Cave Associate Director Smith & WilliamsonTim Middleton Technical Consultant Pensions Management Institute
Andy Palmer Director - Financial Advisory Alix PartnersJeremy Williams Director Holbrook Pensions LimitedJames Meenan Principal JNM Investment GovernanceHenrik Pedersen Co-Founder ClerusSteve Conley Business Development Director Workplace Pensions DirectGirish Menezes
What’s the problem?
• The long-term interests of all stakeholders, including Trustees, Sponsors, Members, Asset Managers, Advisors and Regulators not always aligned
• General lack of transparency and accountability around the decision-making process in workplace pensions
• Decisions are taken with other people’s money, but
• Members/principals do typically not have the information required to hold decision-makers accountable for the impact on their pensions
• Decision-makers do often not have full information required to enable informed decision-making
• Accounting rules, regulation and sales pressure can lead to unintended consequences
• Misaligned interests, inertia and a desire to justify previous decisions prohibit optimal decision-making
• Evaluation of effectiveness of advisers is not happening – mind your Myners?
• Advisers are not required to fully document the rationale for decision-making, are not held accountable for recommendations and are not required to report the output in a balanced way – unlevel playing field, asymmetry of information
Important considerations• Adding more regulation has not and will not resolve the problem
• Short-term profit vs. long term cost
• Fairness, doing the ‘right thing’ for the right reasons
• Must be common sense principles that everyone can agree on
• By requiring increased transparency of decision-makers they in turn will have the incentive to require increased transparency from their service providers…
• Particular emphasis needed on decision-makers having the requisite skills and knowledge in small to medium size workplace pensions
Ideas under development• Seek to align long-term interests of all stakeholders utilising appropriate
objectives, benchmarks, reporting mechanisms and incentive structures
• Guideline/Behaviour: Reset and define the norms against which decision-making can be transparently and easily assessed by all stakeholders
• Empower trustees to adopt protocols to challenge the effectiveness of advice given
• Interaction/Investigation with stakeholders
• Provision of intelligible data/information to facilitate ‘fully informed’ decisions (link to other TTF groups)
• Regulatory reform favouring transparency as better principle,
• For example, “The right to scrutiny” / “Disclosure requirements”
• Require consultants to report more fully on the impact of their recommendations
Likely outputs• Papers to increase transparency and acceptance of ‘problems’
• Guidelines on good stewardship, opportunities, methods to better represent interests of members / principals
• Encourage stakeholders to adapt and support good examples of transparency and accountability by the industry leaders
• Help influence some sensible regulatory reform that put transparency above ‘box-ticking’
• Promote the relevant parts of Myners principle on performance assessment
Any comments and questions?
Henrik Pedersen, Leader, the Rationale for Decision-Making Team,Managing Partner & Co-founder, CLERUS [email protected]
About the TTF’s Stewardship Team
Sarah Wilson,
Leader, Stewardship Team,
CEO, Manifest
Barry Mack,
Leader, Stewardship Team,
Partner, Head of Governance
Who’s in the Stewardship Team?
First name Last name Job title Organisation
Con Keating Principal Brighton Rock Group
Andy Agathangelou Founding Chair Transparency Task Force
Andrew Evans Chief Executive Officer Smart Pension
Sarah Hutchinson Consultant SJ Hutchinson Ltd
Paul Lee Head of Corporate Governance Aberdeen Asset Management
Will PomroyPolicy Lead: Stewardship &
Corporate Governance at NAPF
National Association of Pension Funds
(NAPF)
Anna TilbaLecturer in Strategy and Corporate
GovernanceNewcastle University Business School
Paul Hewitt Business Development Manager Manifest
Emma Craig Marketing Specialist UK KAS BANK
Barry Mack Partner, Head of Governance Hymans Robertson
David Weeks MNT Lovells, AMNT
Sarah Wilson Chief Executive Manifest
What’s the problem?
• Asymmetry of information between companies, their shareholders, principals and their agents on sustainability and corresponding stewardship issues
• Sustainability considerations are not evidently integrated into investment processes
• Trustees (and IGCs) and their advisers need to be better equipped to properly challenge their fund managers about sustainable investment activity
• It is difficult to get meaningful information in relation to sustainability issues; better disclosure by fund managers is needed for accountability and stewardship of clients’ assets
• Market approach to stewardship in investment is fragmented and inconsistent at all levels in the chain
Important considerations
• This is not a sustainability outcomes lobby; this is about promoting transparency for investors to make their own judgements
• How do we make this doable, meaningful and affordable i.e. the norm at all levels (fund managers, advisers, trustees and IGCs)?
• Will better transparency on stewardship issues foster more sustainable investment?
• Identify the gaps that others aren’t doing but work with them in a complementary fashion without compromising the cohesion and efficacy of our own work
Ideas under development
• Identify key sustainability considerations that contribute to long term investment performance
• Set out example questions that trustees and IGCs can engage on with their fund managers
• Provide tools and make recommendations for trustees/IGCso Policy guidance for trustees/IGCs
o Clarification and understanding of existing projects and work
• Develop a standard transparency framework for meaningful disclosure of sustainability and stewardship information
Likely outputs
• Conduct gap analysis
• Guide for trustees and IGCs to meaningfully hold fund managers to account for stewardship work
• Suggested profile for reporting of sustainability considerations in the investment process
• Best practice suggestions for greater clarity in client reporting of stewardship in the investment process
• List the commendable work of others
Any comments and questions?
Sarah Wilson,
Leader, Stewardship Team,
CEO, Manifest
Barry Mack,
Leader, Stewardship Team,
Partner, Head of Governance
Refreshments & networking
Please reconvene by 12:05
Cost transparency of pension funds - The Dutch experience
Tomas WijffelsPolicy AdvisorFederation of Dutch Pension Funds
Risk
employer
DBCost transparency of pension
funds
Dutch experience
Tomas WijffelsLondon, October 7th 2015
Federation of the Dutch Pension Funds
68
Cost transparency of pension funds
Presentation about the process and ourexperiences to become transparent on administrative costs.
I present no specific information on how costsare to be calculated. You may find thisinformation in our recommendations which are available on our website: www.pensioenfederatie.nl
69
Overview Dutch pension funds
70
Our goals with self regulation (1)
To prevent new legislation
AFM (= Dutch FCA) published report stating that costs were much higher than reported
Dutch MP’s demanded legislation on cost transparency
Conviction of pension funds that we are obliged to our members to be fully transparent and accountable regarding our spending of their money.
71
Our goals with self regulation (2)
Our goal was not to lower cost of pension funds
Improve discussions: All policy decisions have cost aspects. High costs may be preferable, but board members should be aware of them.
Costs are the result of policy, investment beliefs, size, risk appetite, etc.
cost
riskreturn
72
Recommendations
Report the costs related to pension management in euros per member. The number of
members is the sum of active members and pensioners.
Report the asset management costs as a percentage of the average invested capital. In addition, review these costs in relation to: The investment mix selected and the associated benchmark
costs
Long term return
On a separate basis, report the transaction fees as a percentage of the average invested capital
73
Our experiences (1), success factors
In the Netherlands we had a concrete threat of undesirable legislation. We had to do something!
The three largest pension funds supported the initiative from the beginning.
Do not reach for the impossible. We knew that transparency of transaction costs would be difficult to achieve. We started with defaults and a simplified model. Compy or explain.
We put a lot of effort in talking to all stakeholders (auditors, supervisors, asset managers, journalists).
74
Our experiences (2), difficulties
First, we faced resistance, from within the pension sector. After a few months almost everybody was convinced of our objectives.
Early adopters show higher costs than slow movers. Penalty on doing a good job.
Our message is difficult. High asset management costs may be positive for the participants in case of performance related fees.
75
Self regulation and legislation
76
What did we achieve?
The number is the % of total assets over which costs are transparently reported
77
Level of costs
2011 2012 2013
pension mnt costs (per member) 103 euro 107 euro 120 euro
asset mnt costs (% AuM) 0,40% 0,53% 0,54%
transaction costs (% AuM) 0,13% 0,10% 0,09%
These figures are indicative, showing the average of a
series of pension funds. The number of funds differs from
year to year and funds are improving their systems
78
Example of annual report (1)
Some pension
funds choose to
give extensive
information of
costs per asset
class
79
Example of annual report (2)
Other pension funds choose to give only the
three key figures
80
How to proceed?
All pension funds report the key numbers - that’s a fine result!
Next step is to improve recommendations in such a way the numbers are easier to compare.
The story behind the numbers should be explained more intensively. Why are the level of costs as they are?
Pension funds are struggling with reviewing costs in relation to benchmark costs and long term return on investment.
What about cost transparency in other countries?
81
Contact information
Federation of the Dutch Pension FundsOn behalf of approximately 250 Dutch pension funds, the Federation of the Dutch pension funds represents the interest of 5.8 million members, 2.7 million pensioners and 8.6 million deferred members.
Roughly 90% of all employees in the Netherlands are member of a collective pension fund. The pension funds in the Netherlands collectively manage approximately 1200 billion assets (Q1 2015).
Tomas J. Wijffels
Reflections on this morning’s proceedings
Gregg McClymontHead of Retirement Savings at Aberdeen Asset Management& Former Shadow Minister of Pensions
Lunch & networking
Please reconvene by 14:00
About the United Nations Global Compact
Steve KenzieUK Representative of the United Nations Global Compact
The United Nations Global Compact
Steve Kenzie
Global Compact Network UK
“The Global Compact asks companies to embrace universal principles and to partner with the United Nations.
It has grown to become a critical platform for the UN to engage effectively with enlightened global business.”
UN Secretary-General Ban Ki-moon
Overview
Human Rights
Principle 1: Businesses should support and respect the
protection of internationally proclaimed human rights;
Principle 2: Make sure that they are not complicit in human
rights abuses.
Labour Standards
Principle 3: Businesses should uphold the freedom of association
and the effective recognition of the right to collective bargaining;
Principle 4: The elimination of all forms of forced and compulsory
labour;
Principle 5: The effective abolition of child labour;
Principle 6: The elimination of discrimination in respect of
employment and occupation.
Environment
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: Undertake initiatives to promote greater environmental responsibility; and
Principle 9: Encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption
Principle 10: Businesses should work against all forms of corruption, including extortion and bribery.
Vision and Mission
Take action in support of UN goals and initiatives
Make the ten principles part of business strategy, operations and culture
everywhere.
Internalization
Contribution to Development
“A more sustainable and inclusive global economy.”
VISION
TWO COMPLEMENTARY OBJECTIVES
SDG 16
• Substantially reduce
corruption and bribery in
all their forms.
• Develop effective,
accountable and
transparent institutions
at all levels.
Leadership Commitment (CEO and Board)
Commitment to transparency, accountability & public disclosure.
Openness to dialogue and learning around critical issues
Willingness to engage in continuous performance improvement
Letter from Chief Executive to UN Secretary-
General Ban Ki-moon
Setting strategic and operational goals, measuring
results, communicating internally and externally
Participate in events at local (and global), engage
in stakeholder dialogue
Annual Communication on Progress (COP)
The Corporate Commitment
Global Engagement Opportunities
Platforms & Principles• Caring for Climate• CEO Water Mandate• Women’s Empowerment Principles• Children’s Rights & Business
Principles• Business for Peace• Business & Education• Sustainable Agriculture Business
Principles• Business for the Rule of Law
Sister Initiatives• Principles for Responsible
Investment (PRI)• Principles for Responsible
Management Education (PRME)
Global Working Groups
• Human Rights & Labour
• Anti-Corruption
• Supply Chain Sustainability
Business Partnership Hub
• Water Action Hub
• Anti-Corruption Collective Action Hub
• Climate and Energy Action Hub
• Social Enterprise Action Hub
• UN-Business Partnership Hub
Benefits of Participation
• Leveraging the UN's global reach and convening power with government, business, civil society, and other stakeholders
• Sharing good practices and learning's
• Accessing the UN's broad knowledge in development, environmental, humans rights and labour issues.
• Improving corporate/brand management, employee morale and productivity, and operational efficiencies.
• Linkages with other UN initiatives as well as other enlightened companies from around the world.
• Resources for SMEs to become signatories to the UNGC with the opportunity to demonstrate leadership by advancing responsible corporate citizenship.
The Global Compact Clarified
The Global Compact is...
…a voluntary initiative to promote and advance responsible business.
…a universal value framework to help business get organised.
…a global network of like-minded businesses and other stakeholders.
…a platform for innovation and collective action.
…a regulatory body.
…a substitute for regulation at the national or international level.
…a public relations exercise.
The Global Compact is not...
To conclude...
• The UNGC provides the worlds largest and most credible
platform for CSR & sustainability
• The framework supports companies to address the most
pressing concerns affecting business right now and in the
future.
• Participation allows companies to stay ahead of the game, get
their house in order, and communicate clearly and
transparently when they choose to, or are required to by law.
• It promotes the emergence of outstanding leadership practices
within organisations.
• Involvement is a clear demonstration of brand values.
Thanks
www.unglobalcompact.org
www.unglobalcompact.org.uk
Questions?
Why transparency? Why now?
Steve Conley,Business Development Director, Workplace Pensions Direct
Why Transparency? Why Now?Consumer insights which contribute to the debate and inform policy.
Steve ConleyTTF AmbassadorBusiness Development Director/Workplace Pensions [email protected]
Definition
Transparency noun (OPEN)
• the quality of being done in an open way without secrets
Definition
Corrupt adjective (BAD)
• dishonestly using your position or power to get an advantage, especially for money
• Transparency International (TI): ‘the abuse of entrusted power for private gain’.
What’s hidden?
• Costs and losses of making unnecessary changes to investment strategy
• Rewarding managers vs cash benchmarks
• Other expenses
• Consultants spin their story very eloquently.
Why it remains a secret
The gatekeeper realises he/she has been conned
- but has been party to the signing of the agreement w/o proper due diligence –
now faces the choice of:
- letting the con continue and keep quiet, or
- owning up to the problem
How big a problem?
• 24% of senior individuals within FS admit that they: “believe that the rules may have to be broken in order to be successful.” (Labaton Sucharow)
• Britain loses £85.3bn a year to fraud (BDO LLP)
• Hidden cost to DB est. £15bn a year for UK.
Consumer outcome?
1) Missing money from pension pots
2) Distrust of FS industry. Consumers buy financial products, wisely or not, when they trust the salesperson. No trust, no sales!
Advisers
Trustees/ Sponsors
Consumers
Shareholders
Investment Company
• Look at big brands and product companies that claim to give ‘advice’
• Their ‘advice’ has been directed at sales, not advice at all, but they dominate the market
• They also dominate the media, and they have the greatest influence in politics
• Message: “Make FS compulsory”
Behind closed doors
26m people across the UK are living on the edge financially.
Many suffer because of poor financial skills and tight family budgets following the economic downturn.
This encouraged a "live for now" culture dragging down the consumer’s commitment to save enough for their future.(Money Advice Service)
Blame the economy
Encourage materialism
• #1 stress
• #1 divorce
• #1 abuse and violence
• Depression, anxiety, insomnia, suicide
• Drug/ alcohol abuse and crime
• Shame, isolation, vulnerability
• Distraction, anger, irritability, mistakes, accidents
Creating a bigger cost to society
The most dangerous risk of all –
The risk of spending your life not doing what you want on the bet you can buy yourself the freedom to do it later.
With transparency comes truth
82 Seconds
Old-school ‘advisers’
Old-school ‘advisers’
Think Win-Win
New World Advisers
Win
Family
Creativity
Spirituality
Contribution to society
Travel experience
Win
Win/Win
Investment Company
Shareholders
Consumers
Trustees/ Sponsors
Advisers
What would happen if the ethos of brands, companies, media and politics was transparent
and
treated the client as the customer instead of the money?
Imagine
• Lives of people are significantly improved
• Health of our institutions is enhanced
• Trust the integrity of those in authority
• No impunity for the corrupt
Transparency has the power to redeem the reputation of the FS industry.
Which in turn is critical to the sustainability of democracy and capitalism.
Why transparency?
Why Now?
Because we’ve just made the
FS industry …
Compulsory.
Thanks for Listening!
The Dynamite Debate!The motion is:
“We do not need Government regulation to achieve high levels of transparency in the UK pensions market”
The team for: Henrik Pedersen, Founder, Clerus Barry Mack, Partner & Head of Governance, Hymans Robertson Con Keating, Principal, Brighton Rock Group
The team against: Colin Meech, National Officer, Capital Stewardship Programme, UNISON Anna Tilba, Lecturer in Strategy & Corp Gov’ce, New. Uni Bus, School Jessica Clark, Campaigns & Policy Intern, Share Action Ralph Frank, CEO, Charlton Frank
Refreshments & networking
Please reconvene by 16:05
If I had a few minutes to say what I really, really think, this is what I’d say:
Come on down!
So, what does the media think of all this?
John Greenwood, Editor, Corporate Adviser MagazineJack Jones, News Editor, Professional Pensions
Thank you!
Key conclusions, wrap-up & close to the first
Andy Agathangelou, Founding Chair, Transparency Task Force7th October 2015Dimensional, 20 Triton Street, Regent’s Place, London.
…in the World!
And finally
• Thank you very much for your attendance and input
• Networking here until 17:30
• Then to the Union Bar for the thirsty!
• For further information:Landline: 0207 55 88 77 3
Mobile: 07501 460308
Email: [email protected]