William R. Atwood, executive director of the Illinois State Board of Investment, Chicago, is at the center of a game of chicken between a statutory obligation to pay pension benefits and a fiduciary obligation to invest assets to earn at least an 8.5% assumed rate of return. It's a dilemma triggered by the failure of the Illinois General Assembly and Gov. Pat Quinn to fund any state pension contributions this fiscal year and by the $10 billion board's three constituent retirement systems, which each separately set their return assumptions: Illinois State Employees' Retirement System, Judges' Retirement System and General Assembly Retirement System.
With his skills, Mr. Atwood, working with ISBI's trustees, is up to the challenge to lobby the Legislature and restructure the board's investment allocation. Mr. Atwood learned about management working on public policy issues in his early 20s, first for then-Sen. Charles Percy and later for Govs. James R. Thompson and Jim Edgar. “The good thing about government, as a young man at least at that time, is you had the opportunity to get a lot more responsibility early on (than in the private sector),” he said. “I learned a lot about how organizations operate, budgeting, legislature management; and you learn how to function in organizations.” In his late 20s, he entered money management — first joining Investment Counselors Inc., St. Louis, serving as vice president for business development, “a kind of chief operating officer,” responsible for operations, business development, marketing, client services, personnel — “everything except portfolio management” — and then working in various capacities with various firms until he was encouraged to apply for the opening for ISBI executive director. He was hired there in 2003.
What's the biggest risk or challenge ISBI faces? Funding and associated liquidity problems. Our plan sponsor (the state) is just not in a position to reliably fund its obligations. So the consequences for us are pretty extreme. It has increasing consequence for our ability to meet our actuarial assumption.
William R. Atwood
- Current position: Executive director, Illinois State Board of Investment, Chicago
- Assets: Defined benefit, $10 billion; Defined contribution, $2.8 billion
- Age: 49
- Education: Bachelor of Arts in political science, Southern Illinois University, Carbondale; Master of Liberal Arts, University of Chicago
- Professional activities: Active in Council of Institutional Investors under ISBI membership.
- Professional credentials: Series 3 license and Series 63 license, administered by the Financial Industry Regulatory Authority
- Personal: Married, with two children, ages 3 and 6.
- Performance of the DB fund (as of Aug. 31 vs. custom benchmark):
- Year to date: -0.3% Benchmark: -0.3%
- One year: 4.6% Benchmark: 5.0%
- Three years: -5.2% Benchmark: -3.7%
- Five years: 1.4% Benchmark: 2.3%
- 10 years: 1.9% Benchmark: 2.5%