Competition is intensifying among corporate and public pension funds vying to attract the best investment talent they can afford.
With assumed rates of return likely to remain low in the foreseeable future for all pension funds and scant chance of public pension plans receiving contributions from government sources to make up any shortfall, sources said the capability of in-house investment teams to achieve the highest possible return is on the line.
"The competition between pension funds for investment personnel, especially public plans, is very intense. They all are looking for better staff with higher skill sets to accomplish the very difficult job of meeting investment expectations," said Frederick "Rick" Funston, managing partner, Funston Advisory Services LLC, Bloomfield, Mich., which provides fiduciary advice to pension funds.
In addition to upgrading and replacing talent in traditional areas such as manager selection, due diligence, asset allocation and portfolio construction, some sponsors are searching for people with new skill sets that increase the chance of their plan meeting and exceeding investment expectations.
Next-generation roles that plan sponsors — especially large public funds — seek to fill are data specialists with experience in quantitative processes, big data analysis, machine learning and other applications of artificial intelligence.
Funds hiring in this area include the C$368.5 billion ($276.2 billion) Canada Pension Plan Investment Board, Toronto; the C$193.9 billion ($145.3 billion) Ontario Teachers' Pension Plan, Toronto; and the $153 billion Teacher Retirement System of Texas, Austin.
Dedicated inclusivity/equity officers also are in high demand to oversee and advance enterprise-wide efforts to diversify pension fund organizations, with Ontario Teachers and Texas Teachers searching now for people to fill the role.
The need for sophisticated portfolio risk management processes has plan sponsors hunting for candidates with hands-on experience using Aladdin, BlackRock Inc.'s popular risk-management system, and other options.
Chicago-based Exelon Corp., for example, recently hired a new risk officer for its $17.8 billion defined benefit plan and $9.3 billion defined contribution plan. The $34 billion Indiana Public Retirement System, Indianapolis, continued the ongoing build-out of its risk management team with the recent addition of an investment operations officer, which has freed other risk officers to focus more on investments.