In June I looked at how the current covid crisis is accelerating current trends. One post discussed how working-from-home has become ubiquitous among professional services and a follow-up imagined how work patterns should evolve. It was also time to take a closer look at whether investments tilted towards environmental, social and governance factors could protect against market corrections. It’s worth considering how the recent crisis has stress tested processes at pension schemes and whether changes are needed.
The future of the office
In February I was standing in a meeting room looking at rows of people in an office staring silently at computer screens. I wondered why they need to travel to work if they weren’t talking to colleagues. The long lockdown has accelerated the working-from-home trend and it’s time to move away from trends such as hot desking and instead think about creating spaces for people to work well together.
Creating a better working environment
A spate of telephone conversations made me think more about the future of how the professional services do their jobs. The covid crisis has revealed problems with old habits as well as potential challenges for flexible working. We should not replace presenteeism with the expectation for employees to work every moment of the day. Instead we should be focusing on productivity and embracing how different people like to work.
Reducing risk by investing responsibly
Responsible asset allocation helps investors look beyond the financial metrics to assess more nebulous risks. These include examining a company’s environmental record, its management team and its social practices. This can help investors to avoid company-specific hazards and the long-term danger of climate change. And according to a recent MSCI post, it also provides some protection from market corrections.
Stress testing pension processes
Market corrections provide useful stress tests for pension schemes. They can show whether your portfolio has been designed to withstand the impact of a standard bear market correction. But they can also demonstrate whether your governance and processes are up to scratch. Are you nimble enough to take advantage of the opportunities presented? Do you have sufficient bandwidth to hold those managers to account when they need to reposition their portfolios? I suspect some pension schemes will note the need for improvement and this could accelerate demand for fiduciary management.