Aoifinn Devitt: I think the problem is that when asked the question, is your fund providing you with value for money? No, because basically you’ve been asked to mark your own homework, and why would you want to mark it with an X rather than a tick?
Henry Tapper: Our next guest stresses the importance of financial literacy for pensioners, fairness, transparency, and value for money, but also reminds us of the awe of nature and the power of love. Let’s hear his story next. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Henry Tapper, who’s the CEO at AgeWage, a firm committed to helping people understand their pension pots and the founding editor of the Pension Playpen, which provides guidance on pensions. He’s been involved in financial services for his whole career and is a high-profile advocate for pensions education and transparency. Welcome, Henry, thank you for joining me today.
Aoifinn Devitt: Hi, I than— thank you very much for inviting me.
Henry Tapper: Then let’s talk about your background to start with. Where did you grow up and how did you come to enter the world of pensions?
Aoifinn Devitt: I was born into a middle-class family in Dorset. I won a scholarship to a private school, which kind of opened the way to go to Cambridge. I grew up in the countryside. After leaving Cambridge, I worked in Iceland for a year before moving to London in the mid-’80s, at which time there was a recession and I couldn’t get any work. So I became a financial advisor because I couldn’t get a proper job.
Henry Tapper: That’s interesting. So what did you do in Iceland?
Aoifinn Devitt: I was a fisherman. I worked on the trawlers catching fish and landing them, mainly in Copenhagen but also in Reykjavik, and worked on the herring fleet.
Henry Tapper: It must have been a fascinating experience, and I’m sure at least in the summer, some beautiful landscapes there.
Aoifinn Devitt: Yeah, and in the winter you got the Northern Lights, so it was pretty brilliant. But the best thing about it was that you were with some incredible people and had a lot of fun.
Henry Tapper: And are you ever able to look at herring again after the experience there?
Aoifinn Devitt: I barreled herring when we weren’t out at sea. It put me off them for life, I’m afraid.
Henry Tapper: I think that probably would have that effect. You said you became a financial advisor because you couldn’t get a proper job. What was the barrier to entry, or were there any, to becoming a financial advisor then? Was it a relatively straightforward thing?
Aoifinn Devitt: You had to work on a self-employed basis. You had to develop your own leads. You had to spend a lot of time with clipboards on Oxford Street. It wasn’t a very pleasant experience, but it did teach you to bootstrap and to run a business for yourself, which is quite a useful grounding. And I won’t forget 1983, ’84 as being perhaps the most challenging years of my career.
Henry Tapper: Now, just moving on, I’d like to dive straight into some of your current passions, and they’ve certainly been lifelong passions from what I can see. Age, Wage and Pensions Playpen— what are the problems that they are aiming to address?
Aoifinn Devitt: Well, Pension Playpen is a procurement website which we set up to help employers choose their workplace pension when they were staging auto-enrolments. I’m now chair, non-executive chair, and we’re relaunching the site in the summer to make it easier to buy a wider range of institutional services I do feel that for many employers and for small trusts, the business of actually getting what they want by way of pensions is long-winded and heavily over-intermediated. And I feel that the internet can help people procure things much more quickly and much more cheaply. So that’s basically the Pension Playpen. I’m also the CEO of AgeWage. Which puts these kind of ideas into action, helping people feeling confident about the pension decisions that they’re taking by making use of investment data in a way that they can understand. I think we’re very unaccountable as an industry for our actions, by which I mean we do not really report on the outcomes of our work we’ve done for ordinary people in a way that ordinary people can understand. For instance, if you go into an estate agent, you can see comparables to your property and compare the rents and prices. You can see the value you get for your money, but there’s no way you can value investment management in terms of what it’s earned you. So AgeWage is measuring and benchmarking performance as it matters to individuals by giving their pension pots an individual score based on how they’ve done compared with others. And we do just the same for institutions. It’s all based on individual experience because nowadays it’s individuals in pensions who are bearing the risks.
Henry Tapper: Since you’ve had these in place, have you seen much progress on these issues? Is there better transparency now, better financial literacy maybe on the part of the pensioners who use your services?
Aoifinn Devitt: I was speaking with Chris Sear this morning. We set AgeWage up together and he’s running ClearGlass Analytics in conjunction with wide-running age wage. And we’re both seeing improvements in terms of the transparency of data that we’re getting. I think there’s a huge gap between the value people have locked up in pensions and the value they place on that money, and that gap still has to narrow. We can’t go on regarding pensions as this pot of money we just don’t understand.
Henry Tapper: Could not agree more. I think there’s a lot of focus on financial literacy at the lower end of the age spectrum, say young people, even children. But not enough attention being paid to financial literacy at the age when it arguably really matters, when it’s around the pensions. Do you think there’s a gap between men and women in that respect? There is some, I think, narrative around that too.
Aoifinn Devitt: Yeah, there’s an enormous gap in terms of the pensions that men and women get. It’s been estimated that on average, a woman is receiving a pension something like £8,000 less than a man. Now, that’s partly as a result of pensions being occupational and rewarding work earnings and not rewarding those kind of earnings which women have which aren’t financial. So there’s no value in the pension system placed on caring, for instance, either for children or for older people. And I think this is a real problem we’ve got to face up to. It’s a societal problem and it’s bigger than anything to do with funds. But when it comes to the actual management of pension funds, I think that women are, or have been historically, shortchanged because they haven’t been given comparable salaries, and that has again led to this gap between men and women. But also, I think women have been largely ignored as financially astute as they are, and they haven’t been given the opportunity to engage with their pensions because they’ve always been seen as the householders, if you like, rather than the breadwinners. To your point about financial education, which I totally agree with, I think that there’s a lot of empowerment that we can and should be giving to women to take control of their finances. And I think that is happening now. It’s not for me to say whether or not women feel empowered, it’s for women, but I would certainly support any initiative which made women a better lot in pensions. And that includes, for instance, some of the anomalies in pensions which we’re getting. I work quite a lot on something called the net pay anomaly, which is a particular problem with regard to tax relief for lower earners. And this is one that discriminates particularly against women. So specific issues which are increasing this gender pension pay imbalance are always ones which we need to focus on because the imbalance is so huge.
Henry Tapper: And you mentioned earlier a very interesting point about the value for money, and that we do a bad job of assessing how much value has been delivered in the investment management or, say, pensions management. There has been some, I know, advance in terms of trying to get funds to declare value— what their value for money that they represent, but arguably it’s not going far enough in terms of that being really meaningful. What are your thoughts on the value for money and the value of funds?
Aoifinn Devitt: Well, I think the problem is that when asked the question, is your fund providing you with value for money, you’re unlikely to get a fiduciary, whether they’re a NED or whether they’re an IGC or a GAA or indeed a trustee, to turn around and say no, because basically you’ve been asked to mark your own homework, and why would you want to mark it with an X rather than a tick? But more fundamentally, there is no common definition of what value for money means. In my view, it is as simple as money in, money out, and it’s got to be based on outcomes. So we’ve started explaining to fund managers who are used to working for defined benefit trusts, but the way funds work for those saving on a DC basis is different. We provide analytics to help fund managers understand how their funds work in the different life stages for DC funds, including the accumulation stage, the lifestyle stage, and these new investment pathways which were introduced in February. And we always use the real data of savers. We’ve got over 2.5 million pots we’ve analysed for value, and we’re going to get some good insights into this big data set. And the key to this all is that we have one way of analysing funds for value for money for everyone so that everyone can basically benchmark themselves against everybody else. And we think until we have this single definition of value for money which is universally adopted, we will constantly find that people aren’t benchmarking themselves but are always proclaiming themselves in their universe of one as providing themselves with value for money. So we really need to get funds to start thinking of their value for money in terms of member outcomes and to start measuring their value for money against others by the outcomes that their funds are actually producing. That’s the big step forward that we need.
Henry Tapper: Absolutely. But that to me seems a fundamental step is looking at comparing fees across the board, compare— and again, but those fees compared to net performance and ultimately versus what the fund promises as well. It’s not that complex a process either.
Aoifinn Devitt: You start, Aoifinn, with the premise that what matters is the money in and money out, then all the headwinds towards getting a decent outcome, such as poor execution, high fees, high charges on the platform, all of these things come into the mix, but they get measured on a composite basis, on the basis of the internal rate of return that individuals are actually getting on their funds. And if you benchmark those internal rates of return against other people’s internal rates of return, you can see that some outcomes are better than others. And these have to be measures of value for money. So we’re not— I speak with Chris about this all the time. He breaks down the individual fees to great detail with huge granularity. We’re much more interested not in doing that, but in actually looking at outcomes and comparing outcomes with each other.
Henry Tapper: And we’re all expecting now to live longer. Live to 100 or beyond based on some calculations. What do you see as the future for pensions with that backdrop?
Aoifinn Devitt: I’m a believer in the idea of a pension as a wage for life. I’m a pensioner myself, and my pension income gives me independence financially, and it gives me the freedom to say what I like and not be constrained. These are really valuable things to me. Now, everybody else is going to have different values from their pensions, But I think that we all agree that without that sort of financial independence in later life, things are a lot harder, a lot tougher. I like to see people look at their later life, by which I mean the second half of their lives, as a time when they have that independence and freedom without worrying that the money will run out before they do. I’m also very aware of physical and mental decline. We need to get ourselves in a good place for later life, and that starts with the finances.
Henry Tapper: Speaking about workplace pensions, is DC a fully formed market at this point, do you think, or does it still have some way to go?
Aoifinn Devitt: I think it’s got some way to go, Yvonne. I think what’s happened so far is that we’ve got distribution in place through auto-enrolments, but what we haven’t done is really develop the investment side of workplace pensions as we should have done. But things are changing fast, and part of this is to do with government who are looking to accelerate what is a natural process where DC pension schemes are consolidating into what are called master trusts. And they’re doing everything they can do, government, to accelerate this process. And the reason they want to do that is twofold. First of all, they consider the governance of small DC pension schemes to generally be poor, whereas big pension schemes provide better governance and therefore better member outcomes. And the second reason is to do with economies of scale. Smaller DC pension schemes can’t invest in the kind of things that the government want them to invest in, particularly in illiquids in the private market, including infrastructure, including private equity, including impact investing—all the things that are needed in order for us to improve the E, S, and G of investments. If you have funds which are less than a billion pounds, they’re really subscale. And the government is looking to move to a situation where we have a small number of very large funds, perhaps 30 to 40 billion pounds DC funds, run rather than the thousands of very small funds we have today. Mean, I it’s worth noting that Nest is closing in now on being a 20 billion pound fund, People’s Pensions closing in on being a 15 billion pound pension fund, There are several occupational pension schemes which operate on a DC-only basis, closing in on £10 billion. So we’re looking at a market which is likely to become very much more consolidated around 40 or 50 big players, and very much less the kind of scattergun multiple scheme market we have today. And I think that’s a good thing. What it’s going to mean, however, is that we’re going to have to see fund managers raising their game because they’re going to have to be selling into a much more concentrated and a much more educated market where the CIOs of pension schemes will start taking decisions directly. This will probably also lead to a reduction in the influence of consultants and I expect to see a much disintermediated market by the end of this decade.
Henry Tapper: But disintermediation usually means a better value for the underlying client, correct? So hopefully it’ll all be heading in that direction.
Aoifinn Devitt: Yeah, and hopefully it will give opportunities to the best fund managers to really come to the fore.
Henry Tapper: What has driven your particular passion for this area? Because you’re an ongoing advocate and have been for many years. What drives that?
Aoifinn Devitt: Okay, my father was a campaigner. He actually became a politician in his 60s and became the first ever Liberal leader of Dorset County Council, which he was proud of till the day he died. He had a strong Christian background as a Methodist. I have a strong set of Christian principles and a big sense of what’s right and what’s wrong. Mostly I feel responsible, having had a great deal of advantage, to make the most of what I’ve been given.
Henry Tapper: I like the way that has— that runs in the family, that sense to do good. Very powerful indeed. So you’ve had a very long career. We’ve known each other, I think, probably well over a decade. What were some of the highs and lows of your career so far?
Aoifinn Devitt: I think the highlights of my career has been the freedom that has come with sticking at one thing for so long, nearly 40 years now. The low point were the years of my 20s when I was often having to sell products dressed up as an advisor I didn’t feel very comfortable with the way I was going about things then and still feel a little bit ashamed, I guess, of the way in which we did things back in the ’80s. I think things have moved on, but we shouldn’t forget just how dreadful the retail financial services market was before 1987 and how much it’s progressed really since the R. I’m delighted to see the quality of financial advice we have now. I look back into the early ’80s with a sense of, let’s say, chagrin.
Henry Tapper: If you were to say what was— I mean, obviously, there has been reform, but was it mis-selling or just a conflict of interest in how the selling was done?
Aoifinn Devitt: I think there was just a total absence of any kind of training. Literally, when I joined, I had a week in a classroom to learn about financial services, and then I was sent out to sell products. Advisor. As an.
Henry Tapper: That is a little alarming. Just going back to your personal story now, so were there any key people who influenced you in your career and in life, and in what way?
Aoifinn Devitt: Well, I mentioned my father, but both my parents have been very strong influences on me. I guess the first person inside the pensions industry who really changed the way I was going about things was somebody who ran a consultancy called Gissings, called Sean Breslin. Who was an irascible character of similar origin to you even, but he was a with man a great sense of personal integrity. He taught me a lot about both about business and about doing things the right way. I remain to this day a huge fan of Sean Brosnan. The second person who I think has changed the way in which I am is my partner, Stella Eastwood, who’s the Group Pensions Director at Lloyds Banking Group. Stella is a quite amazing woman who I’m very proud to be associated with and extremely proud to be a partner of for the last 20 years. And I guess the third person— here’s another Irishman— is Colm Keating, who is my mentor, presiding genius, a great personal friend, and I think one of the most wonderful people I’ve ever met. So if I could single those three business partners out— Sean Preston, Stella Eastwood, and Colm Keating— these are the people who’ve changed my life.
Henry Tapper: I’m very glad to see some of my fellow countrymen have made a contribution to your extraordinary career of advocacy. So thank you for that. Looking back at any piece of advice that you received or any creed or motto that you live by, is there anything you can share there?
Aoifinn Devitt: Okay. When I was doing my dissertation at Cambridge, I did it largely on Ezra Pound, and I found him a frustrating character because he had some very aberrant views. He ended up getting locked up in a concentration camp at the end of the war. And he wrote some of the great poetry of the 20th century. There was one particular canto which I love, which contains the words, ‘Learn of the green world what can be thy place in scaled invention or true artistry.’ In a very green decade, I think this comment, which was made now 90 years ago, stands out. Ezra Pound is one of my great influencers I’ve always felt humbled by nature and by the architects of the natural world.
Henry Tapper: That’s a beautiful insight. It is indeed a great humbler, a great leveller, and also a great way to, I think, cope with some of the problems that even in our industry, just to kind of put things into perspective. My last question is around any advice you might have for your younger self. Anything you know now you wish you had known, maybe embarking on that working trip to Iceland Two things.
Aoifinn Devitt: One is to be humble and not to take yourself too seriously. Secondly is to love. And again, there’s a wonderful line from the same Cantos I’ve just quoted from: “What thou lovest well remains, the rest is dross. Pull down thy vanity.” And that would be my motto for my younger self, and I guess my older self too.
Henry Tapper: Well, that’s a beautiful reminder to love, and I think we all now are aware of our boundless ability to love. So that’s a very nice way to end our conversation. So thank you so much, Henry. I think you have, I think for a long time known your place in the world. And I think for us, we are all the richer for it, for the advocacy that you do and the light you shine on some of these topics. And I’m really happy that you came here to share your insights with us.
Aoifinn Devitt: Thank you very much, Aoifinn.
Henry Tapper: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces Podcast. If you liked what you heard and would like to tune in to hear more inspiring investors on their personal journeys, Please subscribe on Apple Podcasts or wherever you get your podcasts. Series 4 is brought to you with the kind support of Federated Hermes Inc., a leading global investment manager. Guided by their conviction that responsible investing is the best way to create wealth over the long term, their investment solutions span equity, fixed income, alternative and private markets, multi-asset and liquidity strategies, and a range of separately managed accounts distributed through intermediaries worldwide. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
Aoifinn Devitt: I think the problem is that when asked the question, is your fund providing you with value for money? No, because basically you’ve been asked to mark your own homework, and why would you want to mark it with an X rather than a tick?
Henry Tapper: Our next guest stresses the importance of financial literacy for pensioners, fairness, transparency, and value for money, but also reminds us of the awe of nature and the power of love. Let’s hear his story next. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Henry Tapper, who’s the CEO at AgeWage, a firm committed to helping people understand their pension pots and the founding editor of the Pension Playpen, which provides guidance on pensions. He’s been involved in financial services for his whole career and is a high-profile advocate for pensions education and transparency. Welcome, Henry, thank you for joining me today.
Aoifinn Devitt: Hi, I than— thank you very much for inviting me.
Henry Tapper: Then let’s talk about your background to start with. Where did you grow up and how did you come to enter the world of pensions?
Aoifinn Devitt: I was born into a middle-class family in Dorset. I won a scholarship to a private school, which kind of opened the way to go to Cambridge. I grew up in the countryside. After leaving Cambridge, I worked in Iceland for a year before moving to London in the mid-’80s, at which time there was a recession and I couldn’t get any work. So I became a financial advisor because I couldn’t get a proper job.
Henry Tapper: That’s interesting. So what did you do in Iceland?
Aoifinn Devitt: I was a fisherman. I worked on the trawlers catching fish and landing them, mainly in Copenhagen but also in Reykjavik, and worked on the herring fleet.
Henry Tapper: It must have been a fascinating experience, and I’m sure at least in the summer, some beautiful landscapes there.
Aoifinn Devitt: Yeah, and in the winter you got the Northern Lights, so it was pretty brilliant. But the best thing about it was that you were with some incredible people and had a lot of fun.
Henry Tapper: And are you ever able to look at herring again after the experience there?
Aoifinn Devitt: I barreled herring when we weren’t out at sea. It put me off them for life, I’m afraid.
Henry Tapper: I think that probably would have that effect. You said you became a financial advisor because you couldn’t get a proper job. What was the barrier to entry, or were there any, to becoming a financial advisor then? Was it a relatively straightforward thing?
Aoifinn Devitt: You had to work on a self-employed basis. You had to develop your own leads. You had to spend a lot of time with clipboards on Oxford Street. It wasn’t a very pleasant experience, but it did teach you to bootstrap and to run a business for yourself, which is quite a useful grounding. And I won’t forget 1983, ’84 as being perhaps the most challenging years of my career.
Henry Tapper: Now, just moving on, I’d like to dive straight into some of your current passions, and they’ve certainly been lifelong passions from what I can see. Age, Wage and Pensions Playpen— what are the problems that they are aiming to address?
Aoifinn Devitt: Well, Pension Playpen is a procurement website which we set up to help employers choose their workplace pension when they were staging auto-enrolments. I’m now chair, non-executive chair, and we’re relaunching the site in the summer to make it easier to buy a wider range of institutional services I do feel that for many employers and for small trusts, the business of actually getting what they want by way of pensions is long-winded and heavily over-intermediated. And I feel that the internet can help people procure things much more quickly and much more cheaply. So that’s basically the Pension Playpen. I’m also the CEO of AgeWage. Which puts these kind of ideas into action, helping people feeling confident about the pension decisions that they’re taking by making use of investment data in a way that they can understand. I think we’re very unaccountable as an industry for our actions, by which I mean we do not really report on the outcomes of our work we’ve done for ordinary people in a way that ordinary people can understand. For instance, if you go into an estate agent, you can see comparables to your property and compare the rents and prices. You can see the value you get for your money, but there’s no way you can value investment management in terms of what it’s earned you. So AgeWage is measuring and benchmarking performance as it matters to individuals by giving their pension pots an individual score based on how they’ve done compared with others. And we do just the same for institutions. It’s all based on individual experience because nowadays it’s individuals in pensions who are bearing the risks.
Henry Tapper: Since you’ve had these in place, have you seen much progress on these issues? Is there better transparency now, better financial literacy maybe on the part of the pensioners who use your services?
Aoifinn Devitt: I was speaking with Chris Sear this morning. We set AgeWage up together and he’s running ClearGlass Analytics in conjunction with wide-running age wage. And we’re both seeing improvements in terms of the transparency of data that we’re getting. I think there’s a huge gap between the value people have locked up in pensions and the value they place on that money, and that gap still has to narrow. We can’t go on regarding pensions as this pot of money we just don’t understand.
Henry Tapper: Could not agree more. I think there’s a lot of focus on financial literacy at the lower end of the age spectrum, say young people, even children. But not enough attention being paid to financial literacy at the age when it arguably really matters, when it’s around the pensions. Do you think there’s a gap between men and women in that respect? There is some, I think, narrative around that too.
Aoifinn Devitt: Yeah, there’s an enormous gap in terms of the pensions that men and women get. It’s been estimated that on average, a woman is receiving a pension something like £8,000 less than a man. Now, that’s partly as a result of pensions being occupational and rewarding work earnings and not rewarding those kind of earnings which women have which aren’t financial. So there’s no value in the pension system placed on caring, for instance, either for children or for older people. And I think this is a real problem we’ve got to face up to. It’s a societal problem and it’s bigger than anything to do with funds. But when it comes to the actual management of pension funds, I think that women are, or have been historically, shortchanged because they haven’t been given comparable salaries, and that has again led to this gap between men and women. But also, I think women have been largely ignored as financially astute as they are, and they haven’t been given the opportunity to engage with their pensions because they’ve always been seen as the householders, if you like, rather than the breadwinners. To your point about financial education, which I totally agree with, I think that there’s a lot of empowerment that we can and should be giving to women to take control of their finances. And I think that is happening now. It’s not for me to say whether or not women feel empowered, it’s for women, but I would certainly support any initiative which made women a better lot in pensions. And that includes, for instance, some of the anomalies in pensions which we’re getting. I work quite a lot on something called the net pay anomaly, which is a particular problem with regard to tax relief for lower earners. And this is one that discriminates particularly against women. So specific issues which are increasing this gender pension pay imbalance are always ones which we need to focus on because the imbalance is so huge.
Henry Tapper: And you mentioned earlier a very interesting point about the value for money, and that we do a bad job of assessing how much value has been delivered in the investment management or, say, pensions management. There has been some, I know, advance in terms of trying to get funds to declare value— what their value for money that they represent, but arguably it’s not going far enough in terms of that being really meaningful. What are your thoughts on the value for money and the value of funds?
Aoifinn Devitt: Well, I think the problem is that when asked the question, is your fund providing you with value for money, you’re unlikely to get a fiduciary, whether they’re a NED or whether they’re an IGC or a GAA or indeed a trustee, to turn around and say no, because basically you’ve been asked to mark your own homework, and why would you want to mark it with an X rather than a tick? But more fundamentally, there is no common definition of what value for money means. In my view, it is as simple as money in, money out, and it’s got to be based on outcomes. So we’ve started explaining to fund managers who are used to working for defined benefit trusts, but the way funds work for those saving on a DC basis is different. We provide analytics to help fund managers understand how their funds work in the different life stages for DC funds, including the accumulation stage, the lifestyle stage, and these new investment pathways which were introduced in February. And we always use the real data of savers. We’ve got over 2.5 million pots we’ve analysed for value, and we’re going to get some good insights into this big data set. And the key to this all is that we have one way of analysing funds for value for money for everyone so that everyone can basically benchmark themselves against everybody else. And we think until we have this single definition of value for money which is universally adopted, we will constantly find that people aren’t benchmarking themselves but are always proclaiming themselves in their universe of one as providing themselves with value for money. So we really need to get funds to start thinking of their value for money in terms of member outcomes and to start measuring their value for money against others by the outcomes that their funds are actually producing. That’s the big step forward that we need.
Henry Tapper: Absolutely. But that to me seems a fundamental step is looking at comparing fees across the board, compare— and again, but those fees compared to net performance and ultimately versus what the fund promises as well. It’s not that complex a process either.
Aoifinn Devitt: You start, Aoifinn, with the premise that what matters is the money in and money out, then all the headwinds towards getting a decent outcome, such as poor execution, high fees, high charges on the platform, all of these things come into the mix, but they get measured on a composite basis, on the basis of the internal rate of return that individuals are actually getting on their funds. And if you benchmark those internal rates of return against other people’s internal rates of return, you can see that some outcomes are better than others. And these have to be measures of value for money. So we’re not— I speak with Chris about this all the time. He breaks down the individual fees to great detail with huge granularity. We’re much more interested not in doing that, but in actually looking at outcomes and comparing outcomes with each other.
Henry Tapper: And we’re all expecting now to live longer. Live to 100 or beyond based on some calculations. What do you see as the future for pensions with that backdrop?
Aoifinn Devitt: I’m a believer in the idea of a pension as a wage for life. I’m a pensioner myself, and my pension income gives me independence financially, and it gives me the freedom to say what I like and not be constrained. These are really valuable things to me. Now, everybody else is going to have different values from their pensions, But I think that we all agree that without that sort of financial independence in later life, things are a lot harder, a lot tougher. I like to see people look at their later life, by which I mean the second half of their lives, as a time when they have that independence and freedom without worrying that the money will run out before they do. I’m also very aware of physical and mental decline. We need to get ourselves in a good place for later life, and that starts with the finances.
Henry Tapper: Speaking about workplace pensions, is DC a fully formed market at this point, do you think, or does it still have some way to go?
Aoifinn Devitt: I think it’s got some way to go, Yvonne. I think what’s happened so far is that we’ve got distribution in place through auto-enrolments, but what we haven’t done is really develop the investment side of workplace pensions as we should have done. But things are changing fast, and part of this is to do with government who are looking to accelerate what is a natural process where DC pension schemes are consolidating into what are called master trusts. And they’re doing everything they can do, government, to accelerate this process. And the reason they want to do that is twofold. First of all, they consider the governance of small DC pension schemes to generally be poor, whereas big pension schemes provide better governance and therefore better member outcomes. And the second reason is to do with economies of scale. Smaller DC pension schemes can’t invest in the kind of things that the government want them to invest in, particularly in illiquids in the private market, including infrastructure, including private equity, including impact investing—all the things that are needed in order for us to improve the E, S, and G of investments. If you have funds which are less than a billion pounds, they’re really subscale. And the government is looking to move to a situation where we have a small number of very large funds, perhaps 30 to 40 billion pounds DC funds, run rather than the thousands of very small funds we have today. Mean, I it’s worth noting that Nest is closing in now on being a 20 billion pound fund, People’s Pensions closing in on being a 15 billion pound pension fund, There are several occupational pension schemes which operate on a DC-only basis, closing in on £10 billion. So we’re looking at a market which is likely to become very much more consolidated around 40 or 50 big players, and very much less the kind of scattergun multiple scheme market we have today. And I think that’s a good thing. What it’s going to mean, however, is that we’re going to have to see fund managers raising their game because they’re going to have to be selling into a much more concentrated and a much more educated market where the CIOs of pension schemes will start taking decisions directly. This will probably also lead to a reduction in the influence of consultants and I expect to see a much disintermediated market by the end of this decade.
Henry Tapper: But disintermediation usually means a better value for the underlying client, correct? So hopefully it’ll all be heading in that direction.
Aoifinn Devitt: Yeah, and hopefully it will give opportunities to the best fund managers to really come to the fore.
Henry Tapper: What has driven your particular passion for this area? Because you’re an ongoing advocate and have been for many years. What drives that?
Aoifinn Devitt: Okay, my father was a campaigner. He actually became a politician in his 60s and became the first ever Liberal leader of Dorset County Council, which he was proud of till the day he died. He had a strong Christian background as a Methodist. I have a strong set of Christian principles and a big sense of what’s right and what’s wrong. Mostly I feel responsible, having had a great deal of advantage, to make the most of what I’ve been given.
Henry Tapper: I like the way that has— that runs in the family, that sense to do good. Very powerful indeed. So you’ve had a very long career. We’ve known each other, I think, probably well over a decade. What were some of the highs and lows of your career so far?
Aoifinn Devitt: I think the highlights of my career has been the freedom that has come with sticking at one thing for so long, nearly 40 years now. The low point were the years of my 20s when I was often having to sell products dressed up as an advisor I didn’t feel very comfortable with the way I was going about things then and still feel a little bit ashamed, I guess, of the way in which we did things back in the ’80s. I think things have moved on, but we shouldn’t forget just how dreadful the retail financial services market was before 1987 and how much it’s progressed really since the R. I’m delighted to see the quality of financial advice we have now. I look back into the early ’80s with a sense of, let’s say, chagrin.
Henry Tapper: If you were to say what was— I mean, obviously, there has been reform, but was it mis-selling or just a conflict of interest in how the selling was done?
Aoifinn Devitt: I think there was just a total absence of any kind of training. Literally, when I joined, I had a week in a classroom to learn about financial services, and then I was sent out to sell products. Advisor. As an.
Henry Tapper: That is a little alarming. Just going back to your personal story now, so were there any key people who influenced you in your career and in life, and in what way?
Aoifinn Devitt: Well, I mentioned my father, but both my parents have been very strong influences on me. I guess the first person inside the pensions industry who really changed the way I was going about things was somebody who ran a consultancy called Gissings, called Sean Breslin. Who was an irascible character of similar origin to you even, but he was a with man a great sense of personal integrity. He taught me a lot about both about business and about doing things the right way. I remain to this day a huge fan of Sean Brosnan. The second person who I think has changed the way in which I am is my partner, Stella Eastwood, who’s the Group Pensions Director at Lloyds Banking Group. Stella is a quite amazing woman who I’m very proud to be associated with and extremely proud to be a partner of for the last 20 years. And I guess the third person— here’s another Irishman— is Colm Keating, who is my mentor, presiding genius, a great personal friend, and I think one of the most wonderful people I’ve ever met. So if I could single those three business partners out— Sean Preston, Stella Eastwood, and Colm Keating— these are the people who’ve changed my life.
Henry Tapper: I’m very glad to see some of my fellow countrymen have made a contribution to your extraordinary career of advocacy. So thank you for that. Looking back at any piece of advice that you received or any creed or motto that you live by, is there anything you can share there?
Aoifinn Devitt: Okay. When I was doing my dissertation at Cambridge, I did it largely on Ezra Pound, and I found him a frustrating character because he had some very aberrant views. He ended up getting locked up in a concentration camp at the end of the war. And he wrote some of the great poetry of the 20th century. There was one particular canto which I love, which contains the words, ‘Learn of the green world what can be thy place in scaled invention or true artistry.’ In a very green decade, I think this comment, which was made now 90 years ago, stands out. Ezra Pound is one of my great influencers I’ve always felt humbled by nature and by the architects of the natural world.
Henry Tapper: That’s a beautiful insight. It is indeed a great humbler, a great leveller, and also a great way to, I think, cope with some of the problems that even in our industry, just to kind of put things into perspective. My last question is around any advice you might have for your younger self. Anything you know now you wish you had known, maybe embarking on that working trip to Iceland Two things.
Aoifinn Devitt: One is to be humble and not to take yourself too seriously. Secondly is to love. And again, there’s a wonderful line from the same Cantos I’ve just quoted from: “What thou lovest well remains, the rest is dross. Pull down thy vanity.” And that would be my motto for my younger self, and I guess my older self too.
Henry Tapper: Well, that’s a beautiful reminder to love, and I think we all now are aware of our boundless ability to love. So that’s a very nice way to end our conversation. So thank you so much, Henry. I think you have, I think for a long time known your place in the world. And I think for us, we are all the richer for it, for the advocacy that you do and the light you shine on some of these topics. And I’m really happy that you came here to share your insights with us.
Aoifinn Devitt: Thank you very much, Aoifinn.
Henry Tapper: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces Podcast. If you liked what you heard and would like to tune in to hear more inspiring investors on their personal journeys, Please subscribe on Apple Podcasts or wherever you get your podcasts. Series 4 is brought to you with the kind support of Federated Hermes Inc., a leading global investment manager. Guided by their conviction that responsible investing is the best way to create wealth over the long term, their investment solutions span equity, fixed income, alternative and private markets, multi-asset and liquidity strategies, and a range of separately managed accounts distributed through intermediaries worldwide. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
