This was a lunch where we were pretty well split between the undecided and the committed. Committed to TDF were Henry Cobbe and Gallia Grimston of Elston Consulting, who provide advice within TDFs. Comitted to Lifestyle was former Watson’s consultant turned insurance rep. PJ Zoulias of Aviva , a firm that doesn’t do TDFs but does do lifestyle. PJ was unsurprisingly committed to lifestyle.
PJ’s argument centred around personal choice of asset mix and manager selection which apparently is available within some lifestyle options.
Henry argued that the TDFs were collective solutions that allowed those decisions to be taken by experts (like him).
It has to be said that while the committed knocked seven bells out of each other, there was a degree of bemusement from other parts of the room.
Brian Morgan eloquently pointed out that whatever the answer , the question was really about which structure gave better member outcomes and should be elevated above a consultant v fund manager squabble.
A clear distinction was drawn between a mechanistic approach to managing a lifestyle glide path compared to the discretionary approach found within most target date funds but again there was some disquiet in the room that the TDF approach might just as well be mechanistic and that the argument was being hi-jacked by consultants paddling their own canoes.
The TDF brigade were on stronger ground when the argument moved to operational efficiency. There was considerable support for the view that there managing a glide path within the fund rather than through buying and selling units sounded a lot cheaper and carried less risk of things going wrong.
The argument for TDFs seemed to be clinched by a realisation within the room , that as a collective enterprise, TDFs offered the fiduciary the opportunity to measure and so to provide some constructive governance (plenty of applause from the lawyers).
With pies , fish and chips and sandwiches in the offing, the vote showed a surprisingly large majority in favour of the collective TDF. PJ is however to be congratulated for sticking to his guns and to providing a robust and prolonged assault on the false arguments employed by (among others ) myself!
It was noted that despite the prevailing swing towards TDFs, no one in the room was in a scheme that offered them! Note to product managers.
Perhaps the last words should go to the journalist in the room. Richard Evans of the Telegraph smiled benignly at me and remarked
I have never sat through a debate so little of which I understood.
Richard is surely right, whatever your view on the subject, we’ve got to find a better way of constructing our arguments and expressing our views.
The TDF v lifestyle debate is in its infancy, If it is to get beyond the arcane dispute of the investment consultants, we need to find a new language that doesn’t baffle the sobre young hack!
Present
Robert Burgon
Vivi Friedgut
David Hargreaves
Mark Scantlebury
Terence Prideaux
Thomas Schildhammer
PJ Zoulias
Graham Forrest-Jones
Andy Hutt
Giles Davis
Henry Tapper
Maria Nazarova-Doyle
Brian Morgan
Mark Benfield
Adam Gillespie
Gareth Davies
Henry Cobbe
Richard Evans
Gallia Grimston
Christine Brightwell
Henry Tapper
Apologies to any I have missed or mispelled
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