16th May 2019 - Transparency Task Force · the Trust Deficit? Key Insights from the 2108 Edelman Trust Barometer: • An annual global study in its 18th year; 28 countries; 33,000

16th May 2019

Newgate Communications, Sky Light City Tower,

50 Basinghall Street, London EC2V 5DE

Welcome to

Alistair Kellie,Managing Partner,Newgate Communications

on

“How can we accelerate the rebuilding of trust and confidence in Financial

Services?”

Welcome to

Andy Agathangelou, Founding Chair,Transparency Task Force

on

“How can we accelerate the rebuilding of trust and confidence in Financial

Services?”

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mailto:[email protected]

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Today’s programme:

10:30 Registration, refreshments and networking

11:00Welcome to the symposium by Alistair Kellie, Managing Partner, Newgate Communications; and presentation of the White Paper specially produced by Newgate Communications and the Transparency Task Force on "How can we accelerate the rebuilding of trust and confidence in financial services?" by Alistair Kellie, Managing Partner; and James Watson, Executive Consultant; at Newgate Communications

11:10Andy Agathangelou, Founding Chair of the Transparency Task Force to introduce the Transparency Task Force and set the scene for the event, explaining the overall rationale for the major international project we have embarked on; and how we plan to make it work

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Today’s programme continued:

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11:55Presentation by Matthew Taylor, Chief Executive, the RSA; on leadership

12:15Presentation by Janette Weir, Managing Director at Ignition House; on the state of distrust in the pensions sector and why we need to act with urgency


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Today’s Power Panel continued:

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12:35

Power Panel, with panellists talking about the importance they place on

having a trustworthy financial services sector:

- John Howard, former Chair of the Financial Conduct Authority's Financial Services Consumer Panel; and presenter of BBC Radio 4's "You and Yours" consumer programme; Chair of the TTF Advisory Board, TTF Ambassador and a whole lot more!

- Sue Lewis, immediate past Chair of the Financial Conduct Authority's Financial Services Consumer Panel; member of the TTF Advisory Board and a whole lot more!

- Sue Flood, Leader of the Ark Pension Scam Victims Group; member of the TTF Advisory Board and TTF Ambassador

- Antony Elliott OBE FCIB, Founder, the Fairbanking Foundation


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13:00Presentation of the Transparency Trophy; a special trophy is awarded to a champion of transparency and finance reform at each of our symposia around the world

13:05Lunch and networking; followed by Team Photo

14:00Presentation delivered by Sander Eijkenduijn, Co-Founder at Scorpeo; a case study that will show the desperate need for culture reform and better alignment of interests in the financial services sector; as well as how technology is a friend of transparency

14:20Presentation delivered by Dan Brocklebank, UK Director, Orbis Investments; a case study on the importance of alignment of interests in relation to fee structures


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14:30"Short Speaking Slots"

“If I had just 5 minutes to comment on how we can accelerate the rebuilding of trust and confidence in financial services, this is what I’d say…”

- Dr Anna Tilba, Associate Professor in Strategy and Governance, Durham University Business School

- Professor John Wilson, Pro Vice-Chancellor for the Faculty of Business and Law at Northumbria University, Newcastle

- Mark Turner, Managing Director, Duff & Phelps

- Dr Scarlett Brown, Head of Research and Policy, Tomorrow's Company

- Professor Michael Mainelli, Executive Chairman, Z/Yen Group


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Short speaking slots continued:

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- Corinne Carr, Responsible Pay Consultant, PeopleNet

- Sunil Chadda, Director, Cairn Consulting

- Henry Tapper, CEO, AgeWage

15:30Refreshments and further networking


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Short speaking slots continued:

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- Jennifer Tankard, Chief Executive, Responsible Finance

- Heather Buchanan, Director of Policy, All Party Parliamentary Group on Fairer Business Banking

- Tony Greenham, Executive Director, South West Mutual

- Graham Boyd, Founder, evolutesix

- David Stripp, Principal, David Stripp Consulting

- Brandon Horwitz, Principal Consultant, NomBon Consulting Limited

- Colin Baines, Investment Engagement Manager, Friends Provident Foundation


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16:50Baroness Altmann, former Pensions Minister, to reflect on the afternoon's discussions and debates and to share her thoughts on the major international project we have undertaken.

Baroness Altmann will then formally close the symposium.

17:00Further networking over drinks and nibbles.

18:30Final close


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Let’s please show our appreciation to today’s host and sponsors:

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But before we go any further…

Fundraising ideas to Tina Kenyon please!


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About

• We are the collaborative, campaigning community, dedicated to driving up the levels of transparency in financial services, right around the world

• We believe that higher levels of transparency are a pre-requisite for fairer, safer, more stable and more efficient markets that will deliver better value for money and better outcomes

• Furthermore, because of the correlation between transparency, truthfulness and trustworthiness, we expect our work will help to repair the reputational damage the sector has been suffering for decades


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About mission

• We are an informal but increasingly influential forum of ethically-minded people that care about the financial services sector and the people it serves

• We are collaborative, collegiate and consensus-building; focusing on solutions not blame

• We believe the financial ecosystem is profoundly important to the wellbeing of society, the global economy and political stability; but there’s a great deal wrong with it that needs reforming

➢ Our mission: “To drive positive, progressive and purposeful finance reform by harnessing the transformational power of transparency"


• Hidden and excessive costs

• Hidden and excessive risks

• Opportunistic opacity

• Opportunistic obfuscation

• Short-termism

• Insufficient client-centricity

• Scams and scandals

• Regulatory capture

• Irresponsible reward systems

• Malpractice, Malfeasance, Misconduct, Miss-selling

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What is

• A ‘profit before principles’ mindset

• A ‘money before morals’ mindset

• Conflicts and misalignment of interest

• Excessive lending and gearing

• Disingenuous communications

• Financial instability

• Weak governance

• A lack of market integrity

• Lightweight leadership

helping to reform?


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Why isso concerned about the Trust Deficit?

Key Insights from the 2108 Edelman Trust Barometer:

• An annual global study in its 18th year; 28 countries; 33,000 respondents

• Bad news: The Financial Services sector scores a very poor 15th out of 15 (i.e. last) in terms of general levels of trust

• This is a systemic problem for a sector that needs to be trusted to function successfully

• “If you take trust out of financial services, what do you have left?”

• The problem manifests in many ways; for example the UK’s Savings Ratio is the lowest since records began, way back in 1963 – is that partly because people are predisposed to distrust the sector?

➢ What does the worst case scenario look like if low levels of trust in financial services persists?

➢Something needs to change!


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strategy for driving change:

Our Strategy for Driving Change is all about bringing togethor two groups of people:

#1, those with a sense of passion & purpose about what needs to be changed; such as the members of our SIGs

#2, those with the power & position to make change happen; such as the financial regulators

We do this in many ways, for example through our Transparency Symposia; and through our Special Events

Here are three good examples of our Special Events:


‘The First Transparency Strategy Summit in the World’

‘The primary purpose of the first Transparency Strategy Summit in the world is to begin to build consensus on the best way to protect the interests of the UK’s pensions-saving public through full disclosure on all the costs and charges they are paying but not being told about’.

• 12th September 2016 at the Houses of Parliament

……which may have led to the opening of the Work & Pensions Select Committee’s Enquiry on Pensions Costs Transparency

5th Sept 2018 at the Commons:

x 110 (99 in the UK+ 11 overseas)13th Jan 2017

‘Launch of the TTF Banking Team’s White Paper on Current Accounts’

• 26th June 2017 at the Houses of Parliament

‘Sensible recommendations about the lack of transparency around charges for Free-If-In-Credit personal current accounts’

“Ideas to help reduce the chance of another Global Financial Crisis”

• 7th February 2018 at the Houses of Parliament

‘A special meeting at which we presented our White Paper on the topic and initiated the launch of a new All Party Parliamentary Group on Financial Stability’; the inaugural meeting is on 23rd May

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About today…1. We have run 29 Transparency Symposia

2. The Transparency Times goes to many thousands of people, monthly

3. We have awarded 28 Transparency Trophies

4. We have held 3 special meetings at the House of Commons

5. We have over 650 volunteers; organised and mobilised into 21 Teams

6. We have responded to 13 formal Government/Industry Consultations

7. Have had dozens of meetings & calls with Regulators & Government Officials

8. We have produced 8 Thought Leadership White Papers

9. We have gathered over 100 Transparency Statements

10. Have had 100’s of articles/comments published; on Radio 4 three times

11. Spoken at dozens of conferences and events

12. We are growing our presence in 18 countries

➢ We have the support of a global network of Ambassadors; many of whom have extensive subject matter expertise


TTF Ambassadors: UK

David Pitt-WatsonExecutive Fellow

London Business School

Daniel GodfreyCo-Founder

The People’s Trust

Catherine HowarthChief Executive Officer

ShareAction

Con KeatingHead of Research

Brighton Rock Group

Ralph FrankCEO DC (UK)

Cardano

Steve ConleyFounder

Values Based Adviser

Henry Tapper, Founder, Pension PlayPen;

Director, First Actuarial Markus Krebsz,The United Nations Group

of Experts on Risk Management

in Regulatory Systems

TTF Ambassadors: UK continued

Philip MeadowcroftIndependent Shareholder

Activist

Rory MaguireCEO

FundhouseIan Peacock

Chief Client OfficerIG Group

Dr. Anna TilbaAssociate Professor in Strategy and

Governance, Durham University Business School

JB BeckettUK Lead, Association of

Professional Fund Investors

Robin PowellFounder

Evidence-Based Investor

Jackie BeardDirector of Manager Research, EMEA

Morningstar

Mark PolsonFounder and Principal

the lang cat


Mike BarrettConsulting Director

the lang cat

Julia DreblowFounder SRI Services & Fund EcoMarket

Helen Scott,Chief Executive Officer,

Eris FX

Andrew Parry,Head of Sustainable Investing

Hermes Investment Management

James DaleyManaging Director

Fairer Finance

Will PriceGlobal Pensions Consultant

The World Bank

David StrippProposition Manager

David Stripp Ltd

Jon SpainTreasurer

Law for Life


Sunil ChaddaAdvisory Board Member

Association of Professional Fund Investors

Ruston Smith,Chairman,

Tesco Pension Fund Trustee Board, Tesco DC Governance

Committee, Tesco Pension Investment Limited

Mark Falcon,Founder and Director,

Zephyre

Bob ComptonManaging Director

ARC Benefits LimitedWendy Addison

CEO SpeakOut SpeakUp

Andrew MillsFounder and Director,

Insight Financial Research

Joe St Clair UK Director

World Sustainability Development Forum

Professor Michael MainelliExecutive Chairman

Z/Yen Group


Johan CrasManaging Director

Kempen Capital Management

Terry WebsterProfessional Trustee

Lindis Consulting

Sital CheemaSustainability Investment

ConsultantJaanu Consulting

Peter UhlenbruchAODP Investor Engagement

OfficerShareAction

Romi Savova,Chief Executive Officer,

PensionBee

John Howard,Former Chair,

Financial Services Consumer Panel

Annemarie BorgFounder and Director,

Antara Project

Mark Turner,Managing Director,

Duff & Phelps


Mark Evans,Group Business Development

Director,Tavistock Investments

Tom Levitt,Consultant,

Sector 4 Focus

Rory Ridley-Duff,Co-Founder,

FairShares Association

Cliff Southcombe,Managing Director,

Social Enterprise International

Joss Tantram,Director,WBCSD &

Founding Partner,Terrafiniti

Sue Flood,Leader,

Ark pension Scam Group

Adrian Tupper,Counsellor,

Bobby Riddaway,Senior Investment Consultant

CAPITA


Ian Ashleigh,Risk and Compliance

Consultant,Compliance Matters

Tom BaigrieCEO,

LifeSearch

Gareth Morgan,CEO,

Ferret Information Systems

Cliff Southcombe,Managing Director,

Social Enterprise International

Laurence Wormald,Investment Manager,Random performance

Liz Murphy,Steering Group Member,

UK Values Alliance

Rick Adkinson,Managing Director,

Private Capital

Paul Moxey,Visiting Professor in Corporate

Governance,London South Bank University

TTF Ambassadors: Italy

Francesco Briganti,Secretary General,

Cross Border Benefits Alliance - Europe

TTF Ambassadors: Belgium

Benoît Lallemand,Secretary General,

Finance Watch

TTF Ambassadors: Netherlands

Tomas Wijffels,Senior Policy Advisor,

Pensioen Federatie

Eric Veldpaus,Founder, Institutional

Benchmarking Institute

Peter Kolthof, Partner and Head of the Netherlands,

Avida International

Pascal Hogenboom,Associate Director,

Strategia Worldwide

Marlon SahetapyHead of Delegated

SolutionsAon

Guus Warringa,Institutional Investor

Relations, Grant & Eisenhofer

TTF Ambassadors: USA

Paul Secunda, Professor of Law and Director,

Labor and Employment Law Program

Marquette University

Bernie Nelson,President,

Style Research,North America

Dr. Kara Tan Bhala,President and Founder,

Seven Pillars Institute for Global Finance and Ethics

Matthew Murray,Co-founder,

The Center for Business Ethics andCorporate Governance

George Kinder,Founder,

The Kinder Instituteof Life Planning

Stephen DavisAssociate Director and Senior Fellow,

Programs on Corporate Governance and Institutional Investors,

Harvard Law SchoolJon Lukomnik,Executive Director,

Investor Responsibility Research Institute

Richard Field,Founder, The Institute for

Financial Transparency

TTF Ambassadors: USA continued

Darby HobbsFounderSocial 3

Chris TobeFounder

Stable Value Investments

Lorelei GrayeFounder

Leodoran Financial

Adam ChoppinInvestment Director

FIS Group

Greg RogersCo-founder

Eratosthenes

Charlie AtkinsCo-founder

Envonet

John Spoto,President and Founder,

Sentry Financial Planning

Helene Spoto,Co-Owner,

Sentry Financial Planning


David Rowe,President,

David M. Rowe Risk Advisory

Michael Erlanger,Founder and Managing Principal,

Marketcore.com

Joseph Hosler CFAManaging PrincipalAuour Investments

Erik ConleyCEO

Conley Investment Group, Inc.

Aivars LodeChairmanIT Capital

Aaron Bernstein,Editor

Global Proxywatch &Senior Research Fellow,

Harvard Law School Pensions Project

Thom YoungPresident

FARCapital

Rohanna WiseFounder & CEO

Wise Trading Technologies


Sander EijkenduijnCOO

SCORPEO US LLC

William JannaceSenior Counsel,

Ross PLLC

Stefan PagacikCo-Founder,AI4Impact

Jonny RuckCEO,

SCORPEO US LLC

TTF Ambassadors: Canada

Larry ElfordFounder,

Investor Advocates

Larry BatesFounder,

The Wealth Game

Paul Bates,Senior Counsel,

Paul Bates Barrister

John DegoeyPortfolio ManagerWellington Altus

TTF Ambassadors: Australia

Ian Fryer, Head of Research,

Chant West, Sydney David Knox,

Senior Partner, Mercer Melbourne

Dr. Nicholas Morris,Adjunct Professor,

University of New South Wales,Sydney

Gordon Noble,Director,

GNBK Advisory

John Hewson,Professor,

Crawford School of Public Policy

TTF Ambassadors: Ireland

Paddy Delaney,Founder,

Informed Decisions Blog and Podcast

John NolanChief Commercial Officer

Visible Thread

TTF Ambassadors: Poland

Krzysztof Grabowski Ph.DSecurities Broker

TTF Ambassadors: Switzerland

Guy Spier,CEO,

Aquamarine Capital

TTF Ambassadors: India

Prabhu Guptara,Executive Director,Relational Analytics

TTF Ambassadors: Spain

Marcos Eguiguren,Executive Director,

Global Alliance for Banking on Values

TTF Ambassadors: Luxembourg

Edouard Bokuetenge,Co-Founder,

Xprience

TTF Ambassadors: Germany

Paolo SironiIndustry Academy and Author,

Watson Financial ServicesIBM

• Asset Management• Pensions Team• Communications• Financial Planning• PISCES • Fintech• APAC• Americas• EMEA• GTI• Banking• Market Integrity• Costs & Charges• Financial Stability• Investment Consulting & Fiduciary Management• Governance, Compliance, Risk, Legal & Regulatory

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➢ For more information including a list of all our volunteers see: https://www.transparencytaskforce.org/teams-of-volunteers/

AboutSpecial Interest Groups

✓ 650+ valiant volunteers✓ Organised & mobilised into 21 Special Interest Groups✓ Small groups of people working together✓ Subject-matter experts ‘that want to stand up, not stand by’✓ Building consensus on how to solve known problems✓ Not just ‘a talking shop’✓ One or more campaign objectives per Special Interest Group

• Foreign Exchange• Anti-Scams• Hedge Funds• Private Equity• Whistleblowing


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The TTF community has awesome potential as a force for good in financial services• We are collaboratively-minded• We have a “stand-up, not stand-by” mindset• We are willing and able to help drive positive, progressive and

purposeful finance reform


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Through thousands of conversations over the last 4 years, an idea started to come to life…

• The superb work of our Market Integrity SIG got us thinking about reforming the financial ecosystem as a whole

• That led to a memorable conversation with Newgate Communications about producing a White Paper on the trust deficit

• The White Paper progressed to become a call to action• The call to action is for for all stakeholders around the world to work

together to develop an over-arching, all-embracing, big-picture plan• We realised that a plan about the trust deficit would naturally evolve

into a plan to fix the underlying issues that cause the trust deficit• Maybe the first part of the plan should be to facilitate a global

conversation?• Maybe we can find a question to kick things and draw key

stakeholders into dialogue?


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“How can we accelerate the rebuilding of trust and confidence in financial services?”

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Test run #1: Boston 12th March 2016

Test run #2: New York 14th March 2016

• …to develop a plan • …designed to drive positive,

progressive and purposeful finance reform

• …through The Finance Development Goals

• Bringing together all the key stakeholders - policymakers, politicians, regulators, thought-leaders, subject-matter experts, progressive market participants, trade bodies and professional associations and so on…


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About The Finance Development Goals (FDGs)

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• A very memorable conversation on 15th March; coffee and bagels in New York with Georg Kell, founder of the United Nations Global Compact; SDGs

• I explained the overall objective is to deal with the trust deficit, knowing that will open up the opportunity to deal with the underlying causes

• I explained that want the approach to be truly curative; we want to cure the underlying issues not just the symptoms; “system change”

• After the conversation with Georg Kell, the idea of framing our approach as the FDGs started to materialise, whereby:• Each FDG will relate to an underlying cause of the trust deficit• Each FDG is inherently goal-orientated, creating a positive, progressive,

purposeful, aspirational and future-orientated roadmap for reform• Each FDG is asking: “Where are we now? Where do we want to get to? How

are we going to get there (The Broad Theorem) • Each FDG will have its own visual icon; just like the SDGs (competition, design)• The development if each FDG will have a gravitational pull on subject-matter

experts and relevant stakeholders right around the world; growing our community even further; a virtuous spiral


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The early beginnings of the FDGs; listing the topics

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Culture: Ethics, Values, Professionalism, “Principle Before Profit”, “Morals before Money,” Values-Based Leadership, MQ, Leadership Development and Community-BuildingGovernance: Market Integrity, Compliance, Regulatory Master Plan, Audit, Custodianship, Risk Management, Stewardship, Revision of the Credit Rating Agencies, Litigation and WhistleblowingTechnology: Fintech, Online Data Integrity & Privacy, Cyber SecurityTransparency: Clear and intelligible information to enable well-informed decision-making, transparency on costs & charges; standardisation of reporting on performance and risk, removal of information asymmetries, Data Analytics, Data Reporting, Data Benchmarking, Index Development, the Global Transparency IndexProduct Design: Product Accreditation, Asymmetries of Information Audits, Transparency AccreditationCommunications: Consumer Engagement, Simple Benefit Statements, Reputation Management, Positive PR Communicating with integrity, credibility and authenticityMetrics: to measure, monitor and manage trustHR Strategy: Incentive Design, Responsible Reward, Cultural Transfusion, Inclusion and DiversityPurposefulness: Impact Investing, Sustainability, Climate Change, ESG, Socially Responsible Investing, Social Finance, Social/Responsible Stock ExchangesOaths: The positive use of Codes of Conduct, Professional Oaths and Pledges of Trade Bodies, Professional Associations, Standard Boards and organisationsRegulatory Reform: Duty of Care, Fiduciary Duty and Best InterestsFinancial Consumers' Bill of Rights: FairnessAlignment of Interests: The 'Principal-Agent Problem." Progressive Fee Structures, alignment of goals, returns, and risksThe Economic System: Shareholder Primacy evolving into Stakeholder Primacy; diversity of ownership structuresPolicymaking: making sure serious mistakes are not madeFinancial Stability:Education: for the public and people in the sectorOperational and administrative excellence

• We’re just “getting the clay on the wheel” • What’s missing?• 25 FDGs x 4 = 100 topics?


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About the book on the FDGs

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• “Why we need to accelerate the rebuilding of trust and confidence in financial services; and how we can do it”

• Writing the book will help to develop the FDGs• Chapter 1 - about our strategy for driving change and who the book has

been specifically written for; 1,000 named individuals that have “the power and position to make change possible” - the politicians policymakers, regulators, leaders of global organisations etc.

• Chapter 2 - the problem statement• Each of the rest of the chapters will be dedicated to a FDG• Each FDG chapter will be a collection of essays written by relevant subject-

matter experts from around the world• Each FDG chapter will also have an action plan written by the subject-

matter experts plus members of the Scientific Committee• The Scientific Committee will be made up of highly credible academics and

researchers from around the world including Oxford, Cambridge, Harvard, Stanford etc. but not just academics

• Altogether, the people involved will be a collaborative dream-team of expertise + motivation + a high propensity to collaborate



Matthew Taylor, Chief Executive, RSA

Until 11:55 including Q&A


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What do you see?



Janette Weir, Managing Director,Ignition House



INSIGHTFUL, ACTIONABLE RESEARCH WWW.IGNITIONHOUSE.COMACTIONABLE, INSIGHTFUL RESEARCH

Rebuilding Trust in Long-Term SavingsQualitative consumer research with the over 50’s

Sponsored by:

57

01 OBJECTIVES & METHODOLOGYKey objectives and qualitative methodology adopted

02 EXPLORING TRUSTWhat does trust mean to the over 50s?

03DRIVERS OF MISTRUST OF PENSIONSWhy do consumers mistrust pensions, and what aspects of ‘pensions’ do they mistrust?

04REBUILDING TRUSTWhat factors are important to consumers when building trust?

OUTLINE

Mistrust of pensions is a primary reason for early encashment…

58

Over £10.8 billion has been withdrawn by consumers since the

pension freedoms… Over half (52%) of the fully withdrawn pots were

not spent but were transferred into other savings or investments.

Some of this is due to mistrust of pensions. Mistrust is an issue in

itself, but can also give rise to direct harm if consumers pay too much

tax, or miss out on investment growth or other benefits.

FCA’s Retirement Outcome Review, 2017

RESEARCH OBJECTIVES

…but, there has been little work done to understand trust in pensions

Specifically, in the field of pensions there is perhaps a surprising

lack of literature... and little on the impact that different features of

pension design, for example, defined benefit or defined

contribution, voluntary versus mandatory enrolment, have on

people’s trust in a pension.

Trust and confidence in pensions: A literature review, DWP Working Paper 108, 2012

RESEARCH OBJECTIVES

59

We conducted exploratory in-depth discussions with 45 people over 50 to burrow beneath the headline figures

RESEARCH METHODOLOGY

60

35 of our 45 reported mistrust of pensions at the recruitment stage based on

responses to a set of screener questions and a short telephone discussion with

Ignition House

45 people aged 50 to 60 whose main pension will be their DC pot - half were

under 55, half were over 55.

WHO’S IN?

We included a small number of people (10 of the 45) who were more trusting or

neutral towards pensions for comparison

61





OUTLINE

EXPLORING TRUST

62

Characteristics that are important for trust

INTEGRITY

BENEVOLENCE

COMPETENCE

TRANSPARENCY

STABILITY

SOCIAL

RESPONSIBILTY

❑ Acting in my best interests

❑ Watching my back

❑ Doing the best for me, not themselves

❑ Putting my needs first

❑ Not taking advantage of me for personal gain

❑ Delivering on their promises/ not promising what can’t be delivered

❑ Able to do their job properly

❑ Experienced

❑ Credible

❑ Proven track record❑ Being open

❑ Straight talking

❑ Clear

❑ No jargon

❑ No ambiguity

❑ Accountable

❑ Big

❑ Financially sound

❑ Reliable

❑ Have longevity

❑ Well respected

❑ Honest

❑ Fair

❑ Truthful

❑ Impartial

❑ Value their staff

❑ Care for society & wellbeing of others

❑ Ethical values

EXPLORING TRUST

63

64

EXPLORING TRUST

Propensity to mistrust is quite pervasive… and is perceived to get worse as people get older

6 in 10Who trust pensions say

you “cant’ be too careful”

8 in 10Who mistrust pensions say

you “can’t be too careful”

2 in 10Who work in pensions say

you “can’t be too careful”

Well, it is only in the last 10 years trust has all gone… you can’t trust TV, the news,

Government, the Police. They are all up to it.

Q. Generally speaking, would you say that most people can be trusted or that you can’t be too careful in dealing with people? Source: World Values Survey

EXPLORING TRUST

Mistrustful respondents feel very different about other financial products

Note: Only includes respondents who mistrust pensions (n = 34). Figure shows number of mentions given, but should be treated with caution given the qualitative nature of the research

66





OUTLINE

DRIVERS OF MISTRUST OF PENSIONS

67

68

DRIVERS OF MISTRUST OF PENSIONS

69





OUTLINE

70

REBUILDING TRUST

How can the industry demonstrate it is worthy of trust?

We need to think much less about trust, let alone about attitudes

to trust detected or mis-detected in opinion polls… much more

about being trustworthy, and how you give people adequate,

useful and simple evidence that you’re trustworthy

Onora O’Neill, FT magazine, 16/17 December 2017

71

REBUILDING TRUST

…but continuous negative reinforcement makes some feel that

they are the ‘lost generation’

INTEGRITYThe organisation is honest in the

way it treats you

BENEVOLENCE The organisation puts your interest on at least on an equal footing with

their own interest

TRANSPARENCYThe organisation is open and

communicates in a way which is understandable to you

SOCIAL RESPONSIBILITY

The organisation takes the perspective of society and not

merely its own interests into account

COMPETENCE The group of skills,

competencies, and characteristics that enable a pension provider to

offer a satisfactory level of services

STABILITY & PREDICTABILITYAbility to plan for the future with

high levels of certainty

72

REBUILDING TRUST

The industry must demonstrate integrity, benevolence and

transparency

INSIGHTFUL, ACTIONABLE RESEARCH WWW.IGNITIONHOUSE.COMACTIONABLE, INSIGHTFUL RESEARCH

If you would like to find out more, here’s the link to the full report:-

https://www.justgroupplc.co.uk/~/media/Files/J/JRMS-IR/news-

doc/Rebuilding%20Trust%20in%20Long-Term%20Savings.pdf


Power Panel

John Howard, Former Chair.Financial Conduct Authority's Financial Services Consumer Panel

Sue Lewis, Immediate Past Chair,Financial Conduct Authority's Financial Services Consumer Panel

Antony Elliott OBE FCIB, Founder, The Fairbanking Foundation

Sue Flood, Leader,Founder, Ark Pension Scam Victims Group

“How we can accelerate the rebuilding of trust and confidence in financial services?”


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• The TTF shines a light on problems; to help solve them

• The TTF also shines a light on transparency champions; to encourage others

• We do this by awarding a Transparency Trophy at each of our symposia

• The winner gets to keep it

• The star-shape is significant - people can navigate using the stars so the star shape has been chosen to symbolise the idea that the winners are helping to navigate the sector to a better place

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About


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• February 2016: Tomas Wijffels, Pensioen Federatie

• April 2016: Rachel Haworth, ShareAction

• June 2016: Jackie Beard, Morningstar

• September 2016: Gina & Alan Miller, the True & Fair Campaign

• October 2016: Robin Powell, Evidence-Based Investor

• November 2016: Daniel Godfrey, The People’s Trust

• December 2016: Ralph Frank, Cardano Risk Management

• February 2017: Con Keating, Brighton Rock Group

• May 2017: David Pitt-Watson, London Business School

• July 2017: Mike Barrett, The Lang Cat

• September 13th 2017: Steve Conley, Founder, Values Based Adviser

• September 28th 2017: George Kinder, Founder, The Kinder Institute

• November 15th 2017: Angela Brooks, Founder, Pension Life

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Previous winners of


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• November 23rd 2017: Dr. Chris Sier, Independent Chair, FCA’s IDWG

• November 30th 2017: Dan Brocklebank, Head of UK, Orbis Investments

• March 8th 2018; Henry Tapper, Pension PlayPen, First Actuarial & AgeWage

• March 14th 2018; Bob Compton, Director, ARC Benefits Ltd

• May 24th 2018: Susan Flood, Vice Chair, Ark Campaign Group

• May 24th 2018: Nicholas Morris, Adjunct Professor, Faculty of Law, UNSW

• July 11th 2018: John Howard, Director, Consumer Insights

• July 26th 2018: JB Beckett, UK Lead, Association of Professional Fund Investors

• September 20th 2018: Heather Buchanan, Dir. of Pol. APPG/Fairer Business Bk’g

• 6th November 2018: Lesley Curwen, Reporter, BBC Freelance

• 14th November 2018: Dr. Kara Tan Bhala, President and Founder, Seven Pillars Institute for Global Finance and Ethics

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Previous winners of continued


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• 17th December 2018: Julia Dreblow, Director, SRI Services & Founder, The Fund EcoMarket

• 16th January 2019: Norma Cohen, Former Financial Times Correspondent

• 12th March 2019: Darby Hobbs, CEO/Founder SOCIAL3, Co-Founder & Chairperson Conscious Capitalism Boston Chapter; and Professor Boston University

• 14th March 2019: Connie Erlanger, Co-Founder and Chief Executive Officer of Goknown; and Michael Erlanger, Co-Founder, Director and Chief Visionary, GoKnown.

• 20th March 2019: Mark Falcon, Director, Zephyre

➢16th May 2019: ?????????????????????????????????????

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Previous winners of continued


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Lunch & networking break We restart at 14:00 with a “team photo”




John Pierpont Morgan

“The first step towards getting somewhere is to decide that you are not going to stay where you are.”

“Go as far as you can see; when you get there, you'll be able to see farther”

“The wise man bridges the gap by laying out the path by means of which he can get from where he is to where he wants to go.”

“No problem can be solved until it is reduced to some simple form. The changing of a vague difficulty into a specific, concrete form is a very essential element in thinking”




Sander Eijkenduijn,

Co-Founder, Scorpeo


Corporate Actions: The Case of the Missing Billions

Jonny Ruck

Sander Eijkenduijn

Agenda

• Introduction

• Voluntary corporate actions

• Missed value in scrip dividends

• Why is this money being lost?

• White paper – Corporate Actions: The case of the missing billions

• Q&A

Introduction

• Scorpeo has been collecting data on voluntary corporate actions since 2011;

• Every year an average of $1.1 billion is being lost by sup-optimal elections in scrip dividends alone – over $9 billion since 2011!

• The problem is well known in the asset management industry;

• Problem is not well known by fund investors, pension funds and pension fund beneficiaries due to a lack of transparency;

• In November 2017 Greenberg Traurig and Berkeley Research in New York published a Scorpeo commissioned white paper concluding that the systematic failure by asset managers to optimize corporate actions decisions is a breach of their fiduciary responsibility.

Voluntary corporate actions

• Voluntary corporate actions require the controller of the asset to make a decision. These decisions will generally result in more or less value being added to the underlying asset.

• There are many types of voluntary corp actions, for example,

• Elective dividends (Scrips and Drips)

• Rights issue

• Tender Offers

• Dutch auctions

• Takeovers

• The easiest and most Vanilla of these is the Scrip Dividend.

• This is basically a cash dividend but allows the asset owner the opportunity to accept their dividend in the form of shares in lieu of their cash.

• The company will set a price that will allow for the value of the allocated shares to be equal to the cash dividend. After the announcement of this price the shareholder will generally then be given 30 days to decide what they would like to take. Whilst the cash dividend value will always remain static, if the value of the underlying shares increases during that 30 days then the value of the new shares received from the dividend will also increase. Therefore, at deadline for election if the stock dividend is worth more than the cash dividend then optimal decision is to take the shares (even if only to monetize them with immediate effect) so that the total cash is greater than the cash that would have been received by electing to take the cash dividend.

• In most cases there is a provision for a DEFAULT election (i.e. what you will basically receive if you make no election) and this is generally cash. Furthermore there are also provisions to have a standing instruction so that the shareholder always gives the same election irrespective of value.

• These are generally used when the asset control has no interest in maximizing the value or is looking to reduce workload.

• Either way they generally result in large amounts of missed value for portfolios.

Missed value in scrip dividends

Source: Scorpeo US LLC

Missed value in scrip dividends – How do the asset managers compare?

Source: Berkeley Research LLC

Cash 146 10% 114 2%

Stock 410 28% 3,322 54%

Total

Suboptimal556 38% 3,436 56%

Total Events 1,460 100% 6,124 100%

Global The Asset Managers in The Sample

Optimal Election

Number of Events

Majority was

Suboptimal

% of Events Majority

was Suboptimal

Number of Events

The Asset Managers

Were Suboptimal

% of Events The

Asset Managers

Were Suboptimal

• Elective corporate events require knowledge and understanding of the event. Mangers that are being paid by shareholders to manage portfolios often don’t have these and therefore take the easiest option.

• Also, it is not always large amounts of money per event but over a 12 month period it can add up.

• E.g. There are about 130 global scrips annually. If each manager misses $1,000 per event then that is $130,000. If there are 100 managers at a particular Asset management firm that is collectively $13,000,000 per annum being missed at just one Asset management firm, in just one type of Elective event.

• These numbers can add up very quickly to become huge sums of money.

• Without some form of regulation and automation these sums will continue to be lost on a regular basis, value that adds to the bottom-line for underlying investors.

Why is this money being lost?

How bad is it and why do we need more transparency

• Scorpeo has spoken to over 150 asset managers and done value analysis for 26 of them (all missing significant value). Their responses are shocking:

• “We are all over this so we do not need to check if we are missing value”

• “we are comfortable with this”

• “Our traders do not want to do anything about it”

• “The problem is that we cannot increase our fees and all the extra money will only benefit our investors”

• “$13 million is less than the CEO makes so will not get him interested. $13 million a year is not enough to do something about it”

• The value missed is often seen as too small to care about. However invest $13 million a year in the S&P 500 for 40 years (pension build up period from the age of 25 to 65) and you would have made over $4.4 billion.

• With most public pension funds being massively underfunded, they should check their asset managers are taking this serious and do not simply dismiss the amounts lost as too small.

• Given the responses from asset managers, the regulator should step in and demand asset managers set up proper controls and procedures to capture this lost value and report their performance on an annual basis.

Q&A

Stefan Pagacik, Founder & Principal, AI 4Impact



Dan Brocklebank,

UK Director, Orbis Investments


"How can we accelerate the

rebuilding of trust and confidence in

Financial Services?”

Dan Brocklebank, CFA

Transparency Task Force

16th May 2019

Delhi

Source: Wikimedia Commons.

Source: Shutterstock.

“Never, ever, think about something else when you

should be thinking about the power of incentives.”

Charles T. Munger

Revenues = AUM x Fee %1. Don’t lose existing clients

2. Multiple fund launches

3. Increase sales force

Assets under management (AUM).

Source: Gerhard Traschütz, National Guard photo by Master Sgt. Kurt Skoglund/Released

Source: Shutterstock.

10%

20%

30%

40%

50%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Asia Europe United States

31 Dec 2018 | Source: Morningstar Direct Asset Flows.

The latest mega-trend in investing: increasing flows into passive funds

Better alternative: transfer the fee risk to managers

Default response: push for ever lower fees

“Heads: we win. Tails: you lose.”

“We only win if you win.”

Big Prize: can we improve the deal for clients?

Now:

Future:

The solution has to include

results-based pricing

“It’s an obscene and usurious fee structure, but it’s

the industry standard…”

Whitney Tilson

Doesn’t that take us back to “2 & 20”?

Source: GPIF.

“GPIF fully appreciates that the new structure

will have a big impact on the asset

management sector as a whole”

Source: GPIF.

Source: GPIF.

Summary

The solution has to include

results-based pricing

Notices – Orbis Investments (U.K.) Limited

Legal Notices

Approved for use in the United Kingdom by Orbis Investments (U.K.) Limited, 28 Dorset

Square, London, England NW1 6QG which is authorised and regulated by the Financial

Conduct Authority (“FCA”). References in this presentation to ‘Orbis Investments’ or the

‘Orbis Group’ are to trading group Orbis Investment Management Limited is part of, or to

one or more entities in that group as applicable. This presentation contains information

relating to one or more funds managed by Orbis Investments (together ‘Orbis Funds’).

Orbis OEIC is authorised and regulated by the Financial Conduct Authority. All other

Orbis Funds are classified as unregulated collective investment schemes for the

purposes of UK legislation and are not available to retail investors in the UK. This

presentation has been prepared for financial intermediaries who may seek to make Orbis

Funds available to their customers. As such, it is directed only at investment

professionals (as defined in the FCA Rules) and must not be relied upon by any other

person. The distribution activities to which this presentation relates will not be conducted

with individuals or entities that are not investment professionals. Subscriptions are only

valid if made on the basis of the current prospectus or offering memorandum of an Orbis

Fund. Past performance is not a reliable indicator of future results. Results may decrease

or increase as a result of currency fluctuations. Orbis Fund share prices fluctuate and are

not guaranteed. When making an investment in the Funds, an investor’s capital is at risk

and they may not get back the amount they originally invested. While we have

endeavoured to ensure the accuracy of the information herein, such information is not

guaranteed as to accuracy or completeness. At any time, members of the Orbis Group

may have long or short positions in, and may be buying or selling, the investments, if any,

referred to in this presentation. This document has been prepared solely for the

information of the party to whom it has been delivered and may not be reproduced or

used for any other purpose. All rights reserved.

All information and investment team commentary, including portfolio security positions, is

as at the date stated at the bottom of each page. The views expressed are subject to

change without notice.

Returns

Net returns for Orbis Funds are calculated gross of all income, net of fees and expenses,

and assume reinvestment of dividends. Here Average Fund Data is presented the latest

Morningstar data available has been used. Strategy net returns are based on the fee

structure for the Orbis OEIC Standard Share Class applied to the asset-weighted gross

returns (before fees) of all Orbis Funds following the same objectives.

Strategy Returns

Strategy gross returns are asset-weighted actual gross returns of all the Orbis Funds

following the same investment objective. Strategy net returns are calculated by applying

the specified fee structure to the Strategy gross returns and do not represent actual net

returns experienced by investors in the relevant funds.

Benchmark Information

On 1 January 2018 the Orbis OEIC Global Balanced Fund changed its benchmark to a

composite index consisting of the MSCI World Index with net dividends reinvested (60%)

and the JP Morgan Global Government Bond Index hedged to Sterling(40%). Data for the

period before 1 January 2018 relates to the old benchmark, a composite index consisting

of the MSCI World Index with net dividends reinvested (60%) and the JP Morgan Global

Government Bond Index (40%).

Sources

MSCI: The MSCI information may only be used for your internal use, may not be

reproduced or redisseminated in any form and may not be used as a basis for or a

component of any financial instruments or products or indices. None of the MSCI

information is intended to constitute investment advice or a recommendation to make (or

refrain from making) any kind of investment decision and may not be relied on as such.

Historical data and analysis should not be taken as an indication or guarantee of any

future performance analysis, forecast or prediction.

The 60/40 Index returns are calculated by Orbis Investment Management Limited using

end of day index level values licensed from MSCI ("MSCI Data"). For the avoidance of

doubt, MSCI is not the benchmark “ administrator" for, or a "contributor”, ·”submitter" or

"supervised contributor" to, the blended returns, and the MSCI Data is not considered a

"contribution" or "submission" in relation to the blended returns, as those terms may be

defined in any rules, laws, regulations, legislation or international standards. MSCI Data is

provided "AS IS" without warranty or liability and no copying or distribution is

permitted. MSCI does not make any representation regarding the advisability of any

investment or strategy and does not sponsor, promote, issue, sell or otherwise

recommend or endorse any investment or strategy, including any financial products or

strategies based on, tracking or otherwise utilizing any MSCI Data, models, analytics or

other materials or information. JP Morgan Global Government Bond Index (the

“GBI”): Information has been obtained from sources believed to be reliable but J.P.

Morgan does not warrant its completeness or accuracy. The GBI is used with

permission. Copyright 2019, J.P. Morgan Chase & Co. All rights reserved. The 60/40

Index may not be copied, used, or distributed without prior written approval. Neither

MSCI nor J.P. Morgan shall have any liability for any damages (whether direct or

otherwise).

© 2019 Morningstar UK Limited. All Rights Reserved. The information relating to

Morningstar contained herein: (1) is proprietary to Morningstar and/or its content

providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate,

complete or timely. Neither Morningstar nor its content providers are responsible for any

damages or losses arising from any use of this information. Past Performance is no

guarantee of future results.

© 2019 FE. All Rights Reserved. The information, data, analyses, and opinions contained

herein relating to FE (1) include the proprietary information of FE, (2) may not be copied

or redistributed, (3) do not constitute investment advice offered by FE, (4) are provided

solely for informational purposes and therefore are not an offer to buy or sell a security,

and (5) are not warranted to be correct, complete, or accurate. FE shall not be

responsible for any trading decisions, damages, or other losses resulting from, or related

to, this information, data, analyses, or opinions or their use.

FE does not guarantee that a fund will perform in line with its FE Crown Fund Rating as it

is a reflection of past performance only. Likewise, the FE Crown Fund Rating should not

be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its

underlying securities and should not be used as the sole basis for making any investment

decision.

[email protected]

The next Transparency Symposium:

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“ How can we accelerate the rebuilding of trust and confidence in financial services?”• Boston on 12th March, kindly hosted by Mercer and completed

successfully• New York on 14th March, kindly hosted by Davies Ward Phillips

Vineberg and completed successfully• London on 16th May, kindly hosted by Newgate Communications• Dublin on 29th May, HOST WANTED• Amsterdam on 6th June, kindly hosted by AON• Zurich on 18th June, kindly hosted by SharesInside• Brussels on 20th June, kindly hosted by CFA Institute• New York on 9th September, kindly hosted by Grant & Eisenhofer• Boston on 12th September, kindly hosted by First Republic Bank• Hong Kong on 10th October, kindly hosted by RPC• Sydney on 15th October, kindly hosted by Dimensional Fund Advisors• Melbourne on 17th October, kindly hosted by Mercer• Singapore on 22nd October, HOST WANTED



“Short Speaking Slots”“If I had just 5 minutes to comment on how we can accelerate the rebuilding of trust and confidence in financial services, this is what I’d say…”


Sunil Chadda, Director, Cairn Consulting

Henry Tapper, CEO, AgeWage



“Short Speaking Slots” continued


Dr Anna Tilba, Associate Professor in Strategy and Governance, Durham University Business School

Professor John Wilson, Pro Vice-Chancellor for the Faculty of Business and Law,Northumbria University, Newcastle

Mark Turner, Managing Director, Duff & Phelps





Dr Scarlett Brown, Head of Research and Policy, Tomorrow's Company

Professor Michael Mainelli, Executive Chairman, Z/Yen Group

Corinne Carr, Responsible Pay Consultant, PeopleNet


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Refreshments & networking break We restart at 16:10






Jennifer Tankard, Chief Executive, Responsible Finance

Heather Buchanan, Director of Policy, All Party Parliamentary Group on Fairer Business Banking

Tony Greenham, Executive Director, South West Mutual

Graham Boyd, Founder, evolutesix





David Stripp, Principal, David Stripp Consulting

Brandon Horwitz, Principal Consultant, NomBon Consulting Limited

Colin Baines, Investment Engagement Manager, Friends Provident Foundation




Baroness Ros Altmann,

Former Pensions Minister, House of Lords


TTF 100th Ambassador

Baroness Ros Altmann CBE, Pensions Expert, House of Lords

Baroness Altmann is a leading authority on later life issues, including pensions, social care and retirement policy. Numerous major awards have recognised her work to demystify finance and making pensions work better for people. She was the UK Pensions Minister from 2015 - 16 and is a member of the House of Lords where she sits as Baroness Altmann of Tottenham.

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Key conclusions, wrap-up & close to the proceedings


[email protected]

Our work is done, for today!

Thank you for your attendance, input and ongoing support!

Optional networking, drinks and nibbles until 18:30 courtesy of

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Andy AgathangelouFounding ChairTransparency Task Force



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Many thanks again to today’s hosts, sponsors and everybody else for taking part so fully!


Documents

16th May 2019 - Transparency Task Force · the Trust Deficit? Key Insights from the 2108 Edelman Trust Barometer: • An annual global study in its 18th year; 28 countries; 33,000