I don’t think that I’d get too much of an argument for making the claim that experience matters in all industries. One should want to work with an individual or team that has experienced a variety of markets and environments. To be able to recall how one reacted previously to similar events should provide a level of confidence relative to someone experiencing a situation for the first time.
Because the financial industry produces many cycles, having the ability to draw on one’s knowledge of how those cycles played out is extremely important. I once heard that the investment management industry was a young man’s (or woman’s) game. I’m sorry, but I totally disagree with that thought.
At KCS we’ve built a team of 8 senior consultants that has a combined 285 years of industry experience, which equates to 35.6 years of average service per consultant. That means that the “average” consultant has been in the investment/pension industry since 1981’s bear market. How many of you remember the bear market from 1980 through July 1982? In fact, both Larry Zielinski (48 years) and Ivory Day (45 years) have been working with their clients’ issues since before ERISA. Wow!
The good thing about the years of experience that we’ve accumulated is the fact we’ve already made a lot of mistakes and have learned from those. For instance, we, too, were focused on the return on asset assumption (ROA) as being the primary objective for managing a pension plan, only to realize many years into the game that achieving the ROA didn’t guarantee funding success. As a result, we’ve built KCS with the knowledge that a plan’s primary objective is to fund the promise (benefits) at the lowest cost possible.
In order to accomplish this objective, sponsors must have greater knowledge of what that liability looks like on a more frequent basis. We’d appreciate the opportunity to share with you some of what we have collectively learned during our 285 of managing pension issues. I think that you’ll find we have a lot to offer.