I had such hopes that the VFM podcast had turned a corner but I was mistaken. This week’s conversation with Jerry Butcher, the Director of Workplace at Scottish Widows is a stinker!

Jerry Butcher came by recommendation; he is Robert Cochran’s boss and Robert is much liked by everyone and especially by Darren and Nico.  Jerry arrived fresh from a career in investment banking and before that  the army and a spell getting an MBA at Insead. With time at Deutsche and Lloyds Bank, he has little  experience of pensions and while he was urbane and modest, he is clearly at Scottish Widows to clear up the mess that Scottish Widows master trust and its disastrous administration of its personal pension book created.

Although not mentioned on the Pod, the answer for Scottish Widows is to twist the arm of its parent Lloyds Bank to get what must be the best part of £10bn from the Lloyds staff DC pension scheme known as “Your tomorrow“.

As my head picture says “marketing can create value for a company, not necessarily the customer.

The ballooning in size of Scottish Widows master trust will give it scale but not credibility. That went some time ago, Scottish Widows win very little on the open market and listening to Jerry, they have decided they aren’t going to in the future.

The tactics as laid out as an investment banker would, is to engage with existing customers through technology. Everything from joint apps with LBG so that those who have a Scottish Widows pension pot , can see its value on their Lloyds banking app. This is the headline of this podcast (apart from the news that we are going to hear about Arsenal’s triumph for the next six months).

Presumably the aim of Lloyds for Scottish Widows master trust is to make customers into experts so they can take decisions on how to keep money with Scottish Widows. But after Jerry helped sell off Scottish Widows investment business and then its annuity business, it is pretty hard to see how Scottish Widows will compete , other than as an adjunct to Lloyds Banking Group. This does not make them a provider of pensions, it makes them a wealth manager.

In an excruciating section of the pod’s 79 minutes we are told that Lloyds is the only high street bank whose venture into pensions has worked. Darren reminds us that NatWest  screwed up with Cushon, HSBC screwed up with their business-less master trust and Barclays never even tried (despite having Nico onboard at one stage).

Lloyds success we are told was in buying Zurich’s DC platform and their master trust. I helped build that business and remember selling to Royal Mail. Hilariously they came to Cheltenham to visit Eagle Star (as we were) to invest in the platform, arriving at the date in two jaguars, the Royal Mail trustees were  directed to the mail room at the back of the building, we didn’t get the business.

But Zurich picked up one big client 10 years later and it was the same Royal Mail who used the Zurich platform for their DC scheme.  Royal Mail’s Zurich DC plan is now their Scottish Widows plan but it is now closed , having been superseded by the Royal Mail Collective DC plan (aka as CDC).

It is not surprising that CDC does not come up in conversation, it did not come up in Robert Cochran’s recent Times article on “Radical Retirement”. Scottish Widows, unsurprisingly don’t sound at all enthusiastic about CDC.

I have to say that this podcast was an embarrassment, the week before we had Jasper Hack talking good sense about the Netherland’s three pillars. He spoke from a position of knowledge and made more sense in his second language than Jerry made in his first.

There is nothing wrong with investment bankers but they make dreadful mistakes when running pension schemes. They see pensions as an extension of banking and everything that Jerry said reminded me of where pensions have gone wrong. Jerry is clearly a nice guy and will make financial sense to Scottish Widows who have done little for pensions except contribute an annual report that even I don’t read.

Darren and Nico clearly think that Scottish Widows is a success, nobody else does. The best thing that they could do is turn their master trust into an UMES workplace CDC plan. I see no chance of that. Robert is a good guy doing a good job but he is working with an outfit that is little more than an adjunct to LBG. Banks do pensions no good, investment bankers can make good decisions on finance but they don’t understand pensions!