Pensions: In the Business of Changing Lives (w/ Jim Keohane)
ED HARRISON: Tell me about the transition from where you were, which was Merrill Lynch and Wall Street banking, to the pension company. JIM KEOHANE: Yeah. So actually, I worked at several Wall Street firms, Merrill Lynch being one of them. But actually, the last one was Deutsche Bank, which you mentioned. You worked there yourself. I had an opportunity to come to the pension plan. And at the time, I could see a few things. I mean, there was a shift in-- I think, in power from the dealers. You could see that pension funds are getting very large pools of capital and that's where you wanted to be. But also, there's a big difference, I mean, in terms of-- I mean, I've found that since I've got there, I mean, when you work at investment banks, I mean, I was doing proprietary trading. Which, today, would be done in the hedge fund world, so when you worked at an investment bank, you're as good as your last trade. If you got a good trade, you continued to work there. If you didn't, I mean, maybe they'd show you the door. So there was no loyalty given to the employees, and the employees showed no loyalties to the employer. And so it's a bit of a toxic environment. And what it was all about was, if I make a certain amount of money, I may get a percentage of it in my pocket. And that was as far as it went. And also, it really didn't, after a while, it doesn't get you out of bed in the morning. It doesn't really motivate you to continue to work. Whereas when I got to Hoop, it was a very different environment in a sense of, what we do really makes a difference in people's lives. And it's very tangible. And you actually meet the pensioners in particular, I mean, they're extremely thankful that they've been in the plan, and they're very grateful for what we do for them. So we allow them to retire in dignity with a stable financial future going forward. So people are extremely appreciative of that. So what we do I think is very important to our members and it's very important to society. So that really is a good motivator to get you to come in and do your job every day as well as you can because it does make a big difference to those people. ED HARRISON: Yeah, and what you're saying reminds me that we should definitely talk about defined benefit versus defined contribution here, because that's a big part of it in terms of giving people a safety net. This is how much income I'm going to get, irrespective of how long I live for the rest of my life. JIM KEOHANE: Yeah. So I mean, most individuals, no question, they're better off in defined benefit plans, because for a whole bunch of reasons. But the challenge has been difficult for employers to stand defined benefit plans, because there is a changing environment. We have low interest rates. We have people living much longer. So it is more difficult to actually manage these plans and keep them going.