S2 Ep. 44 - Invest Like a DC scheme with Mark Thompson Investment Uncut

In this sixth episode of our "Invest like a..." mini series we speak to Mark Thompson, investment committee member at multiple DC schemes.  

We discuss –
Investment philosophy
Providing options for a vast DC pension membership base
The structure of a good DC scheme
o Well constructed default
o Lifestyle plans
o Freestyle options (up to around 20)
For DC schemes, the mark of success is often getting members to save and contribute enough rather than focusing on picking the best investment
The importance of comms & engagement in DC
The only 3 questions that Mark asks fund managers
Focus on the right timeframes - not quarterly performance
Get your governance right
Decision making: learning from doing (from what’s worked)
Why governance needs a rebrand
The importance of getting beliefs straight as a foundation for everything else
The role of a devil’s advocate – not arguing with each other but arguing the point
Key trends that Mark’s seen
Freedom & choice and three headed dogs
Value vs values
Biggest risks on the horizon in DC
Avoiding good actions becoming compliance check boxes
Widening the narrative around impact investing: many things provide a return and have an impact. You could consider more widely about the impact of all investment.
The most underappreciated thing in investing
There are lots of people that think about investing as a science but it’s as much an art as a science. There is false comfort in numbers and a need for a big dose of common sense. All models are wrong but some are useful.
Stewardship – it’s much wider than how your equity managers have voted. It’s about acting as an asset owner and being on top of your agents. This needs more development to move it beyond the compliance level.

Recommendations
Malcolm Gladwell Tipping Point
Give n Take (Adam Grant)
The delusion of crowds – why people go mad in groups