On Jan. 5, I received an unsolicited e-mail from The Blackstone Group, an alternative asset manager and provider of financial advisory services. They invited me to watch their webcast, “The Surprises of 2010,” featuring the commentary of Byron Wien, senior managing director.
In order to earn enough investment return, firms such as Blackstone are paid large fees to invest clients' assets. More than an hour into the webcast, the moderator asks: “Looking back on one of the surprises from last year as it relates to government deficits at the state level, what is your current thinking on states such as New York, New Jersey and California?”
North Dakota does not pay Blackstone to manage pensions, but I suspect a number of public plans do. Mr. Wien's response may be one of the biggest surprises of 2010. Explains Mr. Wien, “... retirement benefits for state workers — really not only in New York, California and New Jersey but throughout the country — are very generous, too generous. We literally can't afford the benefits we've given our retirees in state and local government so we've got to change that.”
Talk about biting the hand that feeds you! I think if I were a client, I would choke on my next fee payment to The Blackstone Group.
Steve Cochrane
Executive director/chief investment officer
North Dakota State Investment Board
North Dakota Retirement and Investment Office
Bismarck
