By: Russ Kamp, Managing Director, Ryan ALM, Inc.

P&I recently interviewed Ronald Peyton, Executive Chairman, on his nearly 50 years at Callan, where he also served as CEO from 1990-2017. First, congratulations, Ron, on an impressive career. Your influence within the retirement industry will be felt forever. Second, thank you for sharing your thoughts with us through the P&I interview. It was refreshing to read many of your comments. Here is one exchange that had me applauding:

Q: Have clients changed much over the years in terms of what they are seeking?

A: Clients have always focused on generating maximized returns at an acceptable level of risk. Our job is to keep them focused on a longer-term perspective of achieving the returns they need with the least risk and to avoid focusing on short-term gains. We consistently advise clients that one of the most important elements of investing is minimizing risk in achieving the returns needed to fund their objectives, not always seeking the highest returns. When all you do is chase returns, you expose yourself to almost unlimited risks.

Yes, yes, and YES!

Our industry has migrated through the years from focusing on the promise and managing to that promise to trying to generate the greatest return. All we’ve done in the process is guarantee volatility in the funded status and contribution expenses and not success. Isn’t it time to get off the asset allocation rollercoaster? Isn’t it time to bring certainty to a very uncertain process due to the focus on return? The US interest rate environment is providing a wonderful opportunity through a cash flow matching (CFM) strategy to do what Mr. Peyton has suggested: Achieve the returns necessary to fund their objective, while not seeking the highest return! We couldn’t agree more.