It’s been quite a week!
This time last week we were lucky enough to have Lord Hutton – former Secretary of State for the Department of Work and Pensions – officially open our new offices for us at Austin Friars House.
We invited our closest clients and friends to spend the evening with us, and tour our new offices over drinks and canapés. The evening was a great success, and we were able to announce the exciting news that Lord Hutton is joining us at Redington as an advisor, helping us to design and deliver Defined Contribution pensions solutions, as well as helping us to take our financial education program for young people, RedStart, to the next level.
I gave a brief history of Redington, on the night, and explained why we exist as a firm at all. Here, I’m briefly summarising that speech so as to mark it down and share it with those who couldn’t make it.
“In 2003 I was fortunate enough to be hired by Dawid Konotey-Ahulu, who was running Merrill Lynch‘s Pensions and Insurance group. He was pulling together an amazing team to analyse, understand and hedge pension fund liabilities. On joining Merrill Lynch I met Philip Rose – the Merrill Lynch ALM structurer and chief architect of Merrill Lynch’s pensions analytic tool RedAlpha.
On arriving at Merrill Lynch I never thought that, six months later, we would be implementing a pioneering new way of managing risk in pension funds. Or that, five years later, Dawid would be Best Man at my wedding.
Or, indeed, that, ten years later, Dawid, Phil and I would all be working together running Redington, trying to solve the long term savings and investment challenges of the UK and beyond.
It was December 2003 when Friends Provident Pension Scheme implemented the first holistic interest rate and inflation hedge to protect its liabilities and reduce the volatility of the funding level. This is when, consciously or unconsciously, we picked a road to try and help solve the pensions challenge.
However, it would take us another few years before we left to become entrepreneurs. And during those years, we met with hundreds of pension funds, sponsors, trustees, actuaries, investment consultants and lawyers. Many of whom, in fact, are in this room today. What was fascinating about those 10,000 encounters was that a common theme emerged. And out of the myriad different issues and challenges we discussed, five in particular kept coming up:
- The size of their pension deficit
- The volatility of the deficit
- The uncertainty of financial markets
- The complexity of funding and repairing the pension deficit. The interaction of contributions, investment performance, time horizon and risk budget, and
- The ambiguity of decision making as a result of these
It was in this context that Dawid and I decided to leave Merrill Lynch and build, Redington, an investment consultancy that was specifically designed to address these five key issues by;
- Helping clients develop a vision of success, where? when? and why?
- Delivering education and understanding of the emerging investment solutions
- Providing clarity on how to repair and protect the pension deficit using a pension risk management framework to define clear goals and objectives
- Helping clients to become agile enough to make decisions quickly in response to changing market conditions, such as increasing the liability hedge ratio or reducing the equity allocation.
Starting Redington, we faced the challenge every start-up faces.
“How can we win our first client?”
Luckily, in October 2006, shortly after obtaining our FSA approval (Now FCA), we were appointed by Royal Mail the sponsor to advise them on their latest valuation and implications for their investment strategy. Every year since then we have grown our clients on a slow and steady basis until, today, we have over 50 clients that we have had the privilege to work alongside with, over the last year.
The second challenge we faced was attracting a Super Team. Seven years ago, our ALM team looked like this:
Just as our number of clients has grown, every year our team has grown until, today, we are a team of just over 50 striving to help our clients reach their goals of repairing their deficit and improving member security in an affordable and sustainable way.
Many of you will know what we do and how we do it. We are the same as the big three consultancies, Aon Hewitt, Mercer and Towers Watson, in that we offer Strategic Asset Allocation, Asset & Liability Modeling, Portfolio Construction, Manager Research and Monitoring;
But we are different in that we are highly outcomes-focused, and we take clients through a clear 7 Step framework to full funding, which takes them from where they are now to where they want to get to.
However, why we do this is just as important.
We want to be known for leaving people feeling confident and in control of their financial future. In whatever way we can.
And in order to meet the challenges of tomorrow, today, we decided to set up RedStart, which is a financial literacy and entrepreneurship programme. The team at Redington go out and teach young people about the importance of saving and investing for their future financial wellbeing. In 2013, we were able to run ten RedStart programmes as a proof of concept. In fact today, we have Rahemi, 14 years old, from Sarah Bonnell School who is currently doing one weeks work experience with us, following our RedStart day with BlackRock in July 2013.
The students at Sarah Bonnell School seemed to like and appreciate this effort:
“I now want to aim higher and I now know how to work towards achieving my goals.”
“Entertaining, funny and still interesting and educational.”
My request is for participation and introductions, if any of you would like to help us this year reach over twenty schools or can introduce us to schools who would be interested, please get in touch!
On this momentous day in which we officially open our new offices, I want to thank those who are sharing the occasion with us, and thank those who helped us along the way. The path certainly hasn’t run smooth for us, by any means, but it seems that it really is the rocky roads that are the ones worth taking. To many more relationships to be built, futures to improve, and shared ambitions to help solve the pensions crisis.
Finally I would like to announce some exciting news, Lord Hutton, has joined Redington as an advisor. He will be working with us to design more resilient and sustainable Defined Contribution pension solutions and help us to grow RedStart. Lord Hutton has kindly agreed to say a few words on the future of pensions policy.
Welcome Lord Hutton.