16th May 2019
Newgate Communications, Sky Light City Tower,
50 Basinghall Street, London EC2V 5DE
Welcome to
Alistair Kellie,Managing Partner,Newgate Communications
on
“How can we accelerate the rebuilding of trust and confidence in Financial
Services?”
Welcome to
Andy Agathangelou, Founding Chair,Transparency Task Force
on
“How can we accelerate the rebuilding of trust and confidence in Financial
Services?”
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Today’s programme:
10:30 Registration, refreshments and networking
11:00Welcome to the symposium by Alistair Kellie, Managing Partner, Newgate Communications; and presentation of the White Paper specially produced by Newgate Communications and the Transparency Task Force on "How can we accelerate the rebuilding of trust and confidence in financial services?" by Alistair Kellie, Managing Partner; and James Watson, Executive Consultant; at Newgate Communications
11:10Andy Agathangelou, Founding Chair of the Transparency Task Force to introduce the Transparency Task Force and set the scene for the event, explaining the overall rationale for the major international project we have embarked on; and how we plan to make it work
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Today’s programme continued:
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11:55Presentation by Matthew Taylor, Chief Executive, the RSA; on leadership
12:15Presentation by Janette Weir, Managing Director at Ignition House; on the state of distrust in the pensions sector and why we need to act with urgency
Today’s Power Panel continued:
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12:35
Power Panel, with panellists talking about the importance they place on
having a trustworthy financial services sector:
- John Howard, former Chair of the Financial Conduct Authority's Financial Services Consumer Panel; and presenter of BBC Radio 4's "You and Yours" consumer programme; Chair of the TTF Advisory Board, TTF Ambassador and a whole lot more!
- Sue Lewis, immediate past Chair of the Financial Conduct Authority's Financial Services Consumer Panel; member of the TTF Advisory Board and a whole lot more!
- Sue Flood, Leader of the Ark Pension Scam Victims Group; member of the TTF Advisory Board and TTF Ambassador
- Antony Elliott OBE FCIB, Founder, the Fairbanking Foundation
Today’s programme continued:
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13:00Presentation of the Transparency Trophy; a special trophy is awarded to a champion of transparency and finance reform at each of our symposia around the world
13:05Lunch and networking; followed by Team Photo
14:00Presentation delivered by Sander Eijkenduijn, Co-Founder at Scorpeo; a case study that will show the desperate need for culture reform and better alignment of interests in the financial services sector; as well as how technology is a friend of transparency
14:20Presentation delivered by Dan Brocklebank, UK Director, Orbis Investments; a case study on the importance of alignment of interests in relation to fee structures
Today’s programme continued:
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14:30"Short Speaking Slots"
“If I had just 5 minutes to comment on how we can accelerate the rebuilding of trust and confidence in financial services, this is what I’d say…”
- Dr Anna Tilba, Associate Professor in Strategy and Governance, Durham University Business School
- Professor John Wilson, Pro Vice-Chancellor for the Faculty of Business and Law at Northumbria University, Newcastle
- Mark Turner, Managing Director, Duff & Phelps
- Dr Scarlett Brown, Head of Research and Policy, Tomorrow's Company
- Professor Michael Mainelli, Executive Chairman, Z/Yen Group
Short speaking slots continued:
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- Corinne Carr, Responsible Pay Consultant, PeopleNet
- Sunil Chadda, Director, Cairn Consulting
- Henry Tapper, CEO, AgeWage
15:30Refreshments and further networking
Short speaking slots continued:
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- Jennifer Tankard, Chief Executive, Responsible Finance
- Heather Buchanan, Director of Policy, All Party Parliamentary Group on Fairer Business Banking
- Tony Greenham, Executive Director, South West Mutual
- Graham Boyd, Founder, evolutesix
- David Stripp, Principal, David Stripp Consulting
- Brandon Horwitz, Principal Consultant, NomBon Consulting Limited
- Colin Baines, Investment Engagement Manager, Friends Provident Foundation
Today’s programme continued:
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16:50Baroness Altmann, former Pensions Minister, to reflect on the afternoon's discussions and debates and to share her thoughts on the major international project we have undertaken.
Baroness Altmann will then formally close the symposium.
17:00Further networking over drinks and nibbles.
18:30Final close
Let’s please show our appreciation to today’s host and sponsors:
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But before we go any further…
Fundraising ideas to Tina Kenyon please!
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About
• We are the collaborative, campaigning community, dedicated to driving up the levels of transparency in financial services, right around the world
• We believe that higher levels of transparency are a pre-requisite for fairer, safer, more stable and more efficient markets that will deliver better value for money and better outcomes
• Furthermore, because of the correlation between transparency, truthfulness and trustworthiness, we expect our work will help to repair the reputational damage the sector has been suffering for decades
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About mission
• We are an informal but increasingly influential forum of ethically-minded people that care about the financial services sector and the people it serves
• We are collaborative, collegiate and consensus-building; focusing on solutions not blame
• We believe the financial ecosystem is profoundly important to the wellbeing of society, the global economy and political stability; but there’s a great deal wrong with it that needs reforming
➢ Our mission: “To drive positive, progressive and purposeful finance reform by harnessing the transformational power of transparency"
• Hidden and excessive costs
• Hidden and excessive risks
• Opportunistic opacity
• Opportunistic obfuscation
• Short-termism
• Insufficient client-centricity
• Scams and scandals
• Regulatory capture
• Irresponsible reward systems
• Malpractice, Malfeasance, Misconduct, Miss-selling
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What is
• A ‘profit before principles’ mindset
• A ‘money before morals’ mindset
• Conflicts and misalignment of interest
• Excessive lending and gearing
• Disingenuous communications
• Financial instability
• Weak governance
• A lack of market integrity
• Lightweight leadership
helping to reform?
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Why isso concerned about the Trust Deficit?
Key Insights from the 2108 Edelman Trust Barometer:
• An annual global study in its 18th year; 28 countries; 33,000 respondents
• Bad news: The Financial Services sector scores a very poor 15th out of 15 (i.e. last) in terms of general levels of trust
• This is a systemic problem for a sector that needs to be trusted to function successfully
• “If you take trust out of financial services, what do you have left?”
• The problem manifests in many ways; for example the UK’s Savings Ratio is the lowest since records began, way back in 1963 – is that partly because people are predisposed to distrust the sector?
➢ What does the worst case scenario look like if low levels of trust in financial services persists?
➢Something needs to change!
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strategy for driving change:
Our Strategy for Driving Change is all about bringing togethor two groups of people:
#1, those with a sense of passion & purpose about what needs to be changed; such as the members of our SIGs
#2, those with the power & position to make change happen; such as the financial regulators
We do this in many ways, for example through our Transparency Symposia; and through our Special Events
Here are three good examples of our Special Events:
‘The First Transparency Strategy Summit in the World’
‘The primary purpose of the first Transparency Strategy Summit in the world is to begin to build consensus on the best way to protect the interests of the UK’s pensions-saving public through full disclosure on all the costs and charges they are paying but not being told about’.
• 12th September 2016 at the Houses of Parliament
……which may have led to the opening of the Work & Pensions Select Committee’s Enquiry on Pensions Costs Transparency
5th Sept 2018 at the Commons:
x 110 (99 in the UK+ 11 overseas)13th Jan 2017
‘Launch of the TTF Banking Team’s White Paper on Current Accounts’
• 26th June 2017 at the Houses of Parliament
‘Sensible recommendations about the lack of transparency around charges for Free-If-In-Credit personal current accounts’
“Ideas to help reduce the chance of another Global Financial Crisis”
• 7th February 2018 at the Houses of Parliament
‘A special meeting at which we presented our White Paper on the topic and initiated the launch of a new All Party Parliamentary Group on Financial Stability’; the inaugural meeting is on 23rd May
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About today…1. We have run 29 Transparency Symposia
2. The Transparency Times goes to many thousands of people, monthly
3. We have awarded 28 Transparency Trophies
4. We have held 3 special meetings at the House of Commons
5. We have over 650 volunteers; organised and mobilised into 21 Teams
6. We have responded to 13 formal Government/Industry Consultations
7. Have had dozens of meetings & calls with Regulators & Government Officials
8. We have produced 8 Thought Leadership White Papers
9. We have gathered over 100 Transparency Statements
10. Have had 100’s of articles/comments published; on Radio 4 three times
11. Spoken at dozens of conferences and events
12. We are growing our presence in 18 countries
➢ We have the support of a global network of Ambassadors; many of whom have extensive subject matter expertise
TTF Ambassadors: UK
David Pitt-WatsonExecutive Fellow
London Business School
Daniel GodfreyCo-Founder
The People’s Trust
Catherine HowarthChief Executive Officer
ShareAction
Con KeatingHead of Research
Brighton Rock Group
Ralph FrankCEO DC (UK)
Cardano
Steve ConleyFounder
Values Based Adviser
Henry Tapper, Founder, Pension PlayPen;
Director, First Actuarial Markus Krebsz,The United Nations Group
of Experts on Risk Management
in Regulatory Systems
TTF Ambassadors: UK continued
Philip MeadowcroftIndependent Shareholder
Activist
Rory MaguireCEO
FundhouseIan Peacock
Chief Client OfficerIG Group
Dr. Anna TilbaAssociate Professor in Strategy and
Governance, Durham University Business School
JB BeckettUK Lead, Association of
Professional Fund Investors
Robin PowellFounder
Evidence-Based Investor
Jackie BeardDirector of Manager Research, EMEA
Morningstar
Mark PolsonFounder and Principal
the lang cat
TTF Ambassadors: UK continued
Mike BarrettConsulting Director
the lang cat
Julia DreblowFounder SRI Services & Fund EcoMarket
Helen Scott,Chief Executive Officer,
Eris FX
Andrew Parry,Head of Sustainable Investing
Hermes Investment Management
James DaleyManaging Director
Fairer Finance
Will PriceGlobal Pensions Consultant
The World Bank
David StrippProposition Manager
David Stripp Ltd
Jon SpainTreasurer
Law for Life
TTF Ambassadors: UK continued
Sunil ChaddaAdvisory Board Member
Association of Professional Fund Investors
Ruston Smith,Chairman,
Tesco Pension Fund Trustee Board, Tesco DC Governance
Committee, Tesco Pension Investment Limited
Mark Falcon,Founder and Director,
Zephyre
Bob ComptonManaging Director
ARC Benefits LimitedWendy Addison
CEO SpeakOut SpeakUp
Andrew MillsFounder and Director,
Insight Financial Research
Joe St Clair UK Director
World Sustainability Development Forum
Professor Michael MainelliExecutive Chairman
Z/Yen Group
TTF Ambassadors: UK continued
Johan CrasManaging Director
Kempen Capital Management
Terry WebsterProfessional Trustee
Lindis Consulting
Sital CheemaSustainability Investment
ConsultantJaanu Consulting
Peter UhlenbruchAODP Investor Engagement
OfficerShareAction
Romi Savova,Chief Executive Officer,
PensionBee
John Howard,Former Chair,
Financial Services Consumer Panel
Annemarie BorgFounder and Director,
Antara Project
Mark Turner,Managing Director,
Duff & Phelps
TTF Ambassadors: UK continued
Mark Evans,Group Business Development
Director,Tavistock Investments
Tom Levitt,Consultant,
Sector 4 Focus
Rory Ridley-Duff,Co-Founder,
FairShares Association
Cliff Southcombe,Managing Director,
Social Enterprise International
Joss Tantram,Director,WBCSD &
Founding Partner,Terrafiniti
Sue Flood,Leader,
Ark pension Scam Group
Adrian Tupper,Counsellor,
Bobby Riddaway,Senior Investment Consultant
CAPITA
TTF Ambassadors: UK continued
Ian Ashleigh,Risk and Compliance
Consultant,Compliance Matters
Tom BaigrieCEO,
LifeSearch
Gareth Morgan,CEO,
Ferret Information Systems
Cliff Southcombe,Managing Director,
Social Enterprise International
Laurence Wormald,Investment Manager,Random performance
Liz Murphy,Steering Group Member,
UK Values Alliance
Rick Adkinson,Managing Director,
Private Capital
Paul Moxey,Visiting Professor in Corporate
Governance,London South Bank University
TTF Ambassadors: Italy
Francesco Briganti,Secretary General,
Cross Border Benefits Alliance - Europe
TTF Ambassadors: Belgium
Benoît Lallemand,Secretary General,
Finance Watch
TTF Ambassadors: Netherlands
Tomas Wijffels,Senior Policy Advisor,
Pensioen Federatie
Eric Veldpaus,Founder, Institutional
Benchmarking Institute
Peter Kolthof, Partner and Head of the Netherlands,
Avida International
Pascal Hogenboom,Associate Director,
Strategia Worldwide
Marlon SahetapyHead of Delegated
SolutionsAon
Guus Warringa,Institutional Investor
Relations, Grant & Eisenhofer
TTF Ambassadors: USA
Paul Secunda, Professor of Law and Director,
Labor and Employment Law Program
Marquette University
Bernie Nelson,President,
Style Research,North America
Dr. Kara Tan Bhala,President and Founder,
Seven Pillars Institute for Global Finance and Ethics
Matthew Murray,Co-founder,
The Center for Business Ethics andCorporate Governance
George Kinder,Founder,
The Kinder Instituteof Life Planning
Stephen DavisAssociate Director and Senior Fellow,
Programs on Corporate Governance and Institutional Investors,
Harvard Law SchoolJon Lukomnik,Executive Director,
Investor Responsibility Research Institute
Richard Field,Founder, The Institute for
Financial Transparency
TTF Ambassadors: USA continued
Darby HobbsFounderSocial 3
Chris TobeFounder
Stable Value Investments
Lorelei GrayeFounder
Leodoran Financial
Adam ChoppinInvestment Director
FIS Group
Greg RogersCo-founder
Eratosthenes
Charlie AtkinsCo-founder
Envonet
John Spoto,President and Founder,
Sentry Financial Planning
Helene Spoto,Co-Owner,
Sentry Financial Planning
TTF Ambassadors: USA continued
David Rowe,President,
David M. Rowe Risk Advisory
Michael Erlanger,Founder and Managing Principal,
Marketcore.com
Joseph Hosler CFAManaging PrincipalAuour Investments
Erik ConleyCEO
Conley Investment Group, Inc.
Aivars LodeChairmanIT Capital
Aaron Bernstein,Editor
Global Proxywatch &Senior Research Fellow,
Harvard Law School Pensions Project
Thom YoungPresident
FARCapital
Rohanna WiseFounder & CEO
Wise Trading Technologies
TTF Ambassadors: USA continued
Sander EijkenduijnCOO
SCORPEO US LLC
William JannaceSenior Counsel,
Ross PLLC
Stefan PagacikCo-Founder,AI4Impact
Jonny RuckCEO,
SCORPEO US LLC
TTF Ambassadors: Canada
Larry ElfordFounder,
Investor Advocates
Larry BatesFounder,
The Wealth Game
Paul Bates,Senior Counsel,
Paul Bates Barrister
John DegoeyPortfolio ManagerWellington Altus
TTF Ambassadors: Australia
Ian Fryer, Head of Research,
Chant West, Sydney David Knox,
Senior Partner, Mercer Melbourne
Dr. Nicholas Morris,Adjunct Professor,
University of New South Wales,Sydney
Gordon Noble,Director,
GNBK Advisory
John Hewson,Professor,
Crawford School of Public Policy
TTF Ambassadors: Ireland
Paddy Delaney,Founder,
Informed Decisions Blog and Podcast
John NolanChief Commercial Officer
Visible Thread
TTF Ambassadors: Poland
Krzysztof Grabowski Ph.DSecurities Broker
TTF Ambassadors: Switzerland
Guy Spier,CEO,
Aquamarine Capital
TTF Ambassadors: India
Prabhu Guptara,Executive Director,Relational Analytics
TTF Ambassadors: Spain
Marcos Eguiguren,Executive Director,
Global Alliance for Banking on Values
TTF Ambassadors: Luxembourg
Edouard Bokuetenge,Co-Founder,
Xprience
TTF Ambassadors: Germany
Paolo SironiIndustry Academy and Author,
Watson Financial ServicesIBM
• Asset Management• Pensions Team• Communications• Financial Planning• PISCES • Fintech• APAC• Americas• EMEA• GTI• Banking• Market Integrity• Costs & Charges• Financial Stability• Investment Consulting & Fiduciary Management• Governance, Compliance, Risk, Legal & Regulatory
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➢ For more information including a list of all our volunteers see: https://www.transparencytaskforce.org/teams-of-volunteers/
AboutSpecial Interest Groups
✓ 650+ valiant volunteers✓ Organised & mobilised into 21 Special Interest Groups✓ Small groups of people working together✓ Subject-matter experts ‘that want to stand up, not stand by’✓ Building consensus on how to solve known problems✓ Not just ‘a talking shop’✓ One or more campaign objectives per Special Interest Group
• Foreign Exchange• Anti-Scams• Hedge Funds• Private Equity• Whistleblowing
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The TTF community has awesome potential as a force for good in financial services• We are collaboratively-minded• We have a “stand-up, not stand-by” mindset• We are willing and able to help drive positive, progressive and
purposeful finance reform
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Through thousands of conversations over the last 4 years, an idea started to come to life…
• The superb work of our Market Integrity SIG got us thinking about reforming the financial ecosystem as a whole
• That led to a memorable conversation with Newgate Communications about producing a White Paper on the trust deficit
• The White Paper progressed to become a call to action• The call to action is for for all stakeholders around the world to work
together to develop an over-arching, all-embracing, big-picture plan• We realised that a plan about the trust deficit would naturally evolve
into a plan to fix the underlying issues that cause the trust deficit• Maybe the first part of the plan should be to facilitate a global
conversation?• Maybe we can find a question to kick things and draw key
stakeholders into dialogue?
“How can we accelerate the rebuilding of trust and confidence in financial services?”
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Test run #1: Boston 12th March 2016
Test run #2: New York 14th March 2016
• …to develop a plan • …designed to drive positive,
progressive and purposeful finance reform
• …through The Finance Development Goals
• Bringing together all the key stakeholders - policymakers, politicians, regulators, thought-leaders, subject-matter experts, progressive market participants, trade bodies and professional associations and so on…
About The Finance Development Goals (FDGs)
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• A very memorable conversation on 15th March; coffee and bagels in New York with Georg Kell, founder of the United Nations Global Compact; SDGs
• I explained the overall objective is to deal with the trust deficit, knowing that will open up the opportunity to deal with the underlying causes
• I explained that want the approach to be truly curative; we want to cure the underlying issues not just the symptoms; “system change”
• After the conversation with Georg Kell, the idea of framing our approach as the FDGs started to materialise, whereby:• Each FDG will relate to an underlying cause of the trust deficit• Each FDG is inherently goal-orientated, creating a positive, progressive,
purposeful, aspirational and future-orientated roadmap for reform• Each FDG is asking: “Where are we now? Where do we want to get to? How
are we going to get there (The Broad Theorem) • Each FDG will have its own visual icon; just like the SDGs (competition, design)• The development if each FDG will have a gravitational pull on subject-matter
experts and relevant stakeholders right around the world; growing our community even further; a virtuous spiral
The early beginnings of the FDGs; listing the topics
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Culture: Ethics, Values, Professionalism, “Principle Before Profit”, “Morals before Money,” Values-Based Leadership, MQ, Leadership Development and Community-BuildingGovernance: Market Integrity, Compliance, Regulatory Master Plan, Audit, Custodianship, Risk Management, Stewardship, Revision of the Credit Rating Agencies, Litigation and WhistleblowingTechnology: Fintech, Online Data Integrity & Privacy, Cyber SecurityTransparency: Clear and intelligible information to enable well-informed decision-making, transparency on costs & charges; standardisation of reporting on performance and risk, removal of information asymmetries, Data Analytics, Data Reporting, Data Benchmarking, Index Development, the Global Transparency IndexProduct Design: Product Accreditation, Asymmetries of Information Audits, Transparency AccreditationCommunications: Consumer Engagement, Simple Benefit Statements, Reputation Management, Positive PR Communicating with integrity, credibility and authenticityMetrics: to measure, monitor and manage trustHR Strategy: Incentive Design, Responsible Reward, Cultural Transfusion, Inclusion and DiversityPurposefulness: Impact Investing, Sustainability, Climate Change, ESG, Socially Responsible Investing, Social Finance, Social/Responsible Stock ExchangesOaths: The positive use of Codes of Conduct, Professional Oaths and Pledges of Trade Bodies, Professional Associations, Standard Boards and organisationsRegulatory Reform: Duty of Care, Fiduciary Duty and Best InterestsFinancial Consumers' Bill of Rights: FairnessAlignment of Interests: The 'Principal-Agent Problem." Progressive Fee Structures, alignment of goals, returns, and risksThe Economic System: Shareholder Primacy evolving into Stakeholder Primacy; diversity of ownership structuresPolicymaking: making sure serious mistakes are not madeFinancial Stability:Education: for the public and people in the sectorOperational and administrative excellence
• We’re just “getting the clay on the wheel” • What’s missing?• 25 FDGs x 4 = 100 topics?
About the book on the FDGs
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• “Why we need to accelerate the rebuilding of trust and confidence in financial services; and how we can do it”
• Writing the book will help to develop the FDGs• Chapter 1 - about our strategy for driving change and who the book has
been specifically written for; 1,000 named individuals that have “the power and position to make change possible” - the politicians policymakers, regulators, leaders of global organisations etc.
• Chapter 2 - the problem statement• Each of the rest of the chapters will be dedicated to a FDG• Each FDG chapter will be a collection of essays written by relevant subject-
matter experts from around the world• Each FDG chapter will also have an action plan written by the subject-
matter experts plus members of the Scientific Committee• The Scientific Committee will be made up of highly credible academics and
researchers from around the world including Oxford, Cambridge, Harvard, Stanford etc. but not just academics
• Altogether, the people involved will be a collaborative dream-team of expertise + motivation + a high propensity to collaborate
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Matthew Taylor, Chief Executive, RSA
Until 11:55 including Q&A
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Janette Weir, Managing Director,Ignition House
Until 12:15 including Q&A
INSIGHTFUL, ACTIONABLE RESEARCH WWW.IGNITIONHOUSE.COMACTIONABLE, INSIGHTFUL RESEARCH
Rebuilding Trust in Long-Term SavingsQualitative consumer research with the over 50’s
Sponsored by:
57
01 OBJECTIVES & METHODOLOGYKey objectives and qualitative methodology adopted
02 EXPLORING TRUSTWhat does trust mean to the over 50s?
03DRIVERS OF MISTRUST OF PENSIONSWhy do consumers mistrust pensions, and what aspects of ‘pensions’ do they mistrust?
04REBUILDING TRUSTWhat factors are important to consumers when building trust?
OUTLINE
Mistrust of pensions is a primary reason for early encashment…
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Over £10.8 billion has been withdrawn by consumers since the
pension freedoms… Over half (52%) of the fully withdrawn pots were
not spent but were transferred into other savings or investments.
Some of this is due to mistrust of pensions. Mistrust is an issue in
itself, but can also give rise to direct harm if consumers pay too much
tax, or miss out on investment growth or other benefits.
FCA’s Retirement Outcome Review, 2017
RESEARCH OBJECTIVES
…but, there has been little work done to understand trust in pensions
Specifically, in the field of pensions there is perhaps a surprising
lack of literature... and little on the impact that different features of
pension design, for example, defined benefit or defined
contribution, voluntary versus mandatory enrolment, have on
people’s trust in a pension.
Trust and confidence in pensions: A literature review, DWP Working Paper 108, 2012
RESEARCH OBJECTIVES
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We conducted exploratory in-depth discussions with 45 people over 50 to burrow beneath the headline figures
RESEARCH METHODOLOGY
60
35 of our 45 reported mistrust of pensions at the recruitment stage based on
responses to a set of screener questions and a short telephone discussion with
Ignition House
45 people aged 50 to 60 whose main pension will be their DC pot - half were
under 55, half were over 55.
WHO’S IN?
We included a small number of people (10 of the 45) who were more trusting or
neutral towards pensions for comparison
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01 OBJECTIVES & METHODOLOGYKey objectives and qualitative methodology adopted
02 EXPLORING TRUSTWhat does trust mean to the over 50s?
03DRIVERS OF MISTRUST OF PENSIONSWhy do consumers mistrust pensions, and what aspects of ‘pensions’ do they mistrust?
04REBUILDING TRUSTWhat factors are important to consumers when building trust?
OUTLINE
EXPLORING TRUST
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Characteristics that are important for trust
INTEGRITY
BENEVOLENCE
COMPETENCE
TRANSPARENCY
STABILITY
SOCIAL
RESPONSIBILTY
❑ Acting in my best interests
❑ Watching my back
❑ Doing the best for me, not themselves
❑ Putting my needs first
❑ Not taking advantage of me for personal gain
❑ Delivering on their promises/ not promising what can’t be delivered
❑ Able to do their job properly
❑ Experienced
❑ Credible
❑ Proven track record❑ Being open
❑ Straight talking
❑ Clear
❑ No jargon
❑ No ambiguity
❑ Accountable
❑ Big
❑ Financially sound
❑ Reliable
❑ Have longevity
❑ Well respected
❑ Honest
❑ Fair
❑ Truthful
❑ Impartial
❑ Value their staff
❑ Care for society & wellbeing of others
❑ Ethical values
EXPLORING TRUST
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EXPLORING TRUST
Propensity to mistrust is quite pervasive… and is perceived to get worse as people get older
6 in 10Who trust pensions say
you “cant’ be too careful”
8 in 10Who mistrust pensions say
you “can’t be too careful”
2 in 10Who work in pensions say
you “can’t be too careful”
Well, it is only in the last 10 years trust has all gone… you can’t trust TV, the news,
Government, the Police. They are all up to it.
Q. Generally speaking, would you say that most people can be trusted or that you can’t be too careful in dealing with people? Source: World Values Survey
EXPLORING TRUST
Mistrustful respondents feel very different about other financial products
Note: Only includes respondents who mistrust pensions (n = 34). Figure shows number of mentions given, but should be treated with caution given the qualitative nature of the research
66
01 OBJECTIVES & METHODOLOGYKey objectives and qualitative methodology adopted
02 EXPLORING TRUSTWhat does trust mean to the over 50s?
03DRIVERS OF MISTRUST OF PENSIONSWhy do consumers mistrust pensions, and what aspects of ‘pensions’ do they mistrust?
04REBUILDING TRUSTWhat factors are important to consumers when building trust?
OUTLINE
DRIVERS OF MISTRUST OF PENSIONS
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68
DRIVERS OF MISTRUST OF PENSIONS
69
01 OBJECTIVES & METHODOLOGYKey objectives and qualitative methodology adopted
02 EXPLORING TRUSTWhat does trust mean to the over 50s?
03DRIVERS OF MISTRUST OF PENSIONSWhy do consumers mistrust pensions, and what aspects of ‘pensions’ do they mistrust?
04REBUILDING TRUSTWhat factors are important to consumers when building trust?
OUTLINE
70
REBUILDING TRUST
How can the industry demonstrate it is worthy of trust?
We need to think much less about trust, let alone about attitudes
to trust detected or mis-detected in opinion polls… much more
about being trustworthy, and how you give people adequate,
useful and simple evidence that you’re trustworthy
Onora O’Neill, FT magazine, 16/17 December 2017
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REBUILDING TRUST
…but continuous negative reinforcement makes some feel that
they are the ‘lost generation’
INTEGRITYThe organisation is honest in the
way it treats you
BENEVOLENCE The organisation puts your interest on at least on an equal footing with
their own interest
TRANSPARENCYThe organisation is open and
communicates in a way which is understandable to you
SOCIAL RESPONSIBILITY
The organisation takes the perspective of society and not
merely its own interests into account
COMPETENCE The group of skills,
competencies, and characteristics that enable a pension provider to
offer a satisfactory level of services
STABILITY & PREDICTABILITYAbility to plan for the future with
high levels of certainty
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REBUILDING TRUST
The industry must demonstrate integrity, benevolence and
transparency
INSIGHTFUL, ACTIONABLE RESEARCH WWW.IGNITIONHOUSE.COMACTIONABLE, INSIGHTFUL RESEARCH
If you would like to find out more, here’s the link to the full report:-
https://www.justgroupplc.co.uk/~/media/Files/J/JRMS-IR/news-
doc/Rebuilding%20Trust%20in%20Long-Term%20Savings.pdf
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Power Panel
John Howard, Former Chair.Financial Conduct Authority's Financial Services Consumer Panel
Sue Lewis, Immediate Past Chair,Financial Conduct Authority's Financial Services Consumer Panel
Antony Elliott OBE FCIB, Founder, The Fairbanking Foundation
Sue Flood, Leader,Founder, Ark Pension Scam Victims Group
“How we can accelerate the rebuilding of trust and confidence in financial services?”
• The TTF shines a light on problems; to help solve them
• The TTF also shines a light on transparency champions; to encourage others
• We do this by awarding a Transparency Trophy at each of our symposia
• The winner gets to keep it
• The star-shape is significant - people can navigate using the stars so the star shape has been chosen to symbolise the idea that the winners are helping to navigate the sector to a better place
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About
• February 2016: Tomas Wijffels, Pensioen Federatie
• April 2016: Rachel Haworth, ShareAction
• June 2016: Jackie Beard, Morningstar
• September 2016: Gina & Alan Miller, the True & Fair Campaign
• October 2016: Robin Powell, Evidence-Based Investor
• November 2016: Daniel Godfrey, The People’s Trust
• December 2016: Ralph Frank, Cardano Risk Management
• February 2017: Con Keating, Brighton Rock Group
• May 2017: David Pitt-Watson, London Business School
• July 2017: Mike Barrett, The Lang Cat
• September 13th 2017: Steve Conley, Founder, Values Based Adviser
• September 28th 2017: George Kinder, Founder, The Kinder Institute
• November 15th 2017: Angela Brooks, Founder, Pension Life
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Previous winners of
• November 23rd 2017: Dr. Chris Sier, Independent Chair, FCA’s IDWG
• November 30th 2017: Dan Brocklebank, Head of UK, Orbis Investments
• March 8th 2018; Henry Tapper, Pension PlayPen, First Actuarial & AgeWage
• March 14th 2018; Bob Compton, Director, ARC Benefits Ltd
• May 24th 2018: Susan Flood, Vice Chair, Ark Campaign Group
• May 24th 2018: Nicholas Morris, Adjunct Professor, Faculty of Law, UNSW
• July 11th 2018: John Howard, Director, Consumer Insights
• July 26th 2018: JB Beckett, UK Lead, Association of Professional Fund Investors
• September 20th 2018: Heather Buchanan, Dir. of Pol. APPG/Fairer Business Bk’g
• 6th November 2018: Lesley Curwen, Reporter, BBC Freelance
• 14th November 2018: Dr. Kara Tan Bhala, President and Founder, Seven Pillars Institute for Global Finance and Ethics
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Previous winners of continued
• 17th December 2018: Julia Dreblow, Director, SRI Services & Founder, The Fund EcoMarket
• 16th January 2019: Norma Cohen, Former Financial Times Correspondent
• 12th March 2019: Darby Hobbs, CEO/Founder SOCIAL3, Co-Founder & Chairperson Conscious Capitalism Boston Chapter; and Professor Boston University
• 14th March 2019: Connie Erlanger, Co-Founder and Chief Executive Officer of Goknown; and Michael Erlanger, Co-Founder, Director and Chief Visionary, GoKnown.
• 20th March 2019: Mark Falcon, Director, Zephyre
➢16th May 2019: ?????????????????????????????????????
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Previous winners of continued
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Lunch & networking break We restart at 14:00 with a “team photo”
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John Pierpont Morgan
“The first step towards getting somewhere is to decide that you are not going to stay where you are.”
“Go as far as you can see; when you get there, you'll be able to see farther”
“The wise man bridges the gap by laying out the path by means of which he can get from where he is to where he wants to go.”
“No problem can be solved until it is reduced to some simple form. The changing of a vague difficulty into a specific, concrete form is a very essential element in thinking”
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Until 12:30 including Q&A
Sander Eijkenduijn,
Co-Founder, Scorpeo
Corporate Actions: The Case of the Missing Billions
Jonny Ruck
Sander Eijkenduijn
Agenda
• Introduction
• Voluntary corporate actions
• Missed value in scrip dividends
• Why is this money being lost?
• White paper – Corporate Actions: The case of the missing billions
• Q&A
Introduction
• Scorpeo has been collecting data on voluntary corporate actions since 2011;
• Every year an average of $1.1 billion is being lost by sup-optimal elections in scrip dividends alone – over $9 billion since 2011!
• The problem is well known in the asset management industry;
• Problem is not well known by fund investors, pension funds and pension fund beneficiaries due to a lack of transparency;
• In November 2017 Greenberg Traurig and Berkeley Research in New York published a Scorpeo commissioned white paper concluding that the systematic failure by asset managers to optimize corporate actions decisions is a breach of their fiduciary responsibility.
Voluntary corporate actions
• Voluntary corporate actions require the controller of the asset to make a decision. These decisions will generally result in more or less value being added to the underlying asset.
• There are many types of voluntary corp actions, for example,
• Elective dividends (Scrips and Drips)
• Rights issue
• Tender Offers
• Dutch auctions
• Takeovers
• The easiest and most Vanilla of these is the Scrip Dividend.
• This is basically a cash dividend but allows the asset owner the opportunity to accept their dividend in the form of shares in lieu of their cash.
• The company will set a price that will allow for the value of the allocated shares to be equal to the cash dividend. After the announcement of this price the shareholder will generally then be given 30 days to decide what they would like to take. Whilst the cash dividend value will always remain static, if the value of the underlying shares increases during that 30 days then the value of the new shares received from the dividend will also increase. Therefore, at deadline for election if the stock dividend is worth more than the cash dividend then optimal decision is to take the shares (even if only to monetize them with immediate effect) so that the total cash is greater than the cash that would have been received by electing to take the cash dividend.
• In most cases there is a provision for a DEFAULT election (i.e. what you will basically receive if you make no election) and this is generally cash. Furthermore there are also provisions to have a standing instruction so that the shareholder always gives the same election irrespective of value.
• These are generally used when the asset control has no interest in maximizing the value or is looking to reduce workload.
• Either way they generally result in large amounts of missed value for portfolios.
Missed value in scrip dividends
Source: Scorpeo US LLC
Missed value in scrip dividends – How do the asset managers compare?
Source: Berkeley Research LLC
Cash 146 10% 114 2%
Stock 410 28% 3,322 54%
Total
Suboptimal556 38% 3,436 56%
Total Events 1,460 100% 6,124 100%
Global The Asset Managers in The Sample
Optimal Election
Number of Events
Majority was
Suboptimal
% of Events Majority
was Suboptimal
Number of Events
The Asset Managers
Were Suboptimal
% of Events The
Asset Managers
Were Suboptimal
• Elective corporate events require knowledge and understanding of the event. Mangers that are being paid by shareholders to manage portfolios often don’t have these and therefore take the easiest option.
• Also, it is not always large amounts of money per event but over a 12 month period it can add up.
• E.g. There are about 130 global scrips annually. If each manager misses $1,000 per event then that is $130,000. If there are 100 managers at a particular Asset management firm that is collectively $13,000,000 per annum being missed at just one Asset management firm, in just one type of Elective event.
• These numbers can add up very quickly to become huge sums of money.
• Without some form of regulation and automation these sums will continue to be lost on a regular basis, value that adds to the bottom-line for underlying investors.
Why is this money being lost?
How bad is it and why do we need more transparency
• Scorpeo has spoken to over 150 asset managers and done value analysis for 26 of them (all missing significant value). Their responses are shocking:
• “We are all over this so we do not need to check if we are missing value”
• “we are comfortable with this”
• “Our traders do not want to do anything about it”
• “The problem is that we cannot increase our fees and all the extra money will only benefit our investors”
• “$13 million is less than the CEO makes so will not get him interested. $13 million a year is not enough to do something about it”
• The value missed is often seen as too small to care about. However invest $13 million a year in the S&P 500 for 40 years (pension build up period from the age of 25 to 65) and you would have made over $4.4 billion.
• With most public pension funds being massively underfunded, they should check their asset managers are taking this serious and do not simply dismiss the amounts lost as too small.
• Given the responses from asset managers, the regulator should step in and demand asset managers set up proper controls and procedures to capture this lost value and report their performance on an annual basis.
Q&A
Stefan Pagacik, Founder & Principal, AI 4Impact
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Until 12:30 including Q&A
Dan Brocklebank,
UK Director, Orbis Investments
"How can we accelerate the
rebuilding of trust and confidence in
Financial Services?”
Dan Brocklebank, CFA
Transparency Task Force
16th May 2019
Delhi
Source: Wikimedia Commons.
Source: Shutterstock.
“Never, ever, think about something else when you
should be thinking about the power of incentives.”
Charles T. Munger
Revenues = AUM x Fee %1. Don’t lose existing clients
2. Multiple fund launches
3. Increase sales force
Assets under management (AUM).
Source: Gerhard Traschütz, National Guard photo by Master Sgt. Kurt Skoglund/Released
Source: Shutterstock.
10%
20%
30%
40%
50%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Asia Europe United States
31 Dec 2018 | Source: Morningstar Direct Asset Flows.
The latest mega-trend in investing: increasing flows into passive funds
Better alternative: transfer the fee risk to managers
Default response: push for ever lower fees
“Heads: we win. Tails: you lose.”
“We only win if you win.”
Big Prize: can we improve the deal for clients?
Now:
Future:
The solution has to include
results-based pricing
“It’s an obscene and usurious fee structure, but it’s
the industry standard…”
Whitney Tilson
Doesn’t that take us back to “2 & 20”?
Source: GPIF.
“GPIF fully appreciates that the new structure
will have a big impact on the asset
management sector as a whole”
Source: GPIF.
Source: GPIF.
Summary
The solution has to include
results-based pricing
Notices – Orbis Investments (U.K.) Limited
Legal Notices
Approved for use in the United Kingdom by Orbis Investments (U.K.) Limited, 28 Dorset
Square, London, England NW1 6QG which is authorised and regulated by the Financial
Conduct Authority (“FCA”). References in this presentation to ‘Orbis Investments’ or the
‘Orbis Group’ are to trading group Orbis Investment Management Limited is part of, or to
one or more entities in that group as applicable. This presentation contains information
relating to one or more funds managed by Orbis Investments (together ‘Orbis Funds’).
Orbis OEIC is authorised and regulated by the Financial Conduct Authority. All other
Orbis Funds are classified as unregulated collective investment schemes for the
purposes of UK legislation and are not available to retail investors in the UK. This
presentation has been prepared for financial intermediaries who may seek to make Orbis
Funds available to their customers. As such, it is directed only at investment
professionals (as defined in the FCA Rules) and must not be relied upon by any other
person. The distribution activities to which this presentation relates will not be conducted
with individuals or entities that are not investment professionals. Subscriptions are only
valid if made on the basis of the current prospectus or offering memorandum of an Orbis
Fund. Past performance is not a reliable indicator of future results. Results may decrease
or increase as a result of currency fluctuations. Orbis Fund share prices fluctuate and are
not guaranteed. When making an investment in the Funds, an investor’s capital is at risk
and they may not get back the amount they originally invested. While we have
endeavoured to ensure the accuracy of the information herein, such information is not
guaranteed as to accuracy or completeness. At any time, members of the Orbis Group
may have long or short positions in, and may be buying or selling, the investments, if any,
referred to in this presentation. This document has been prepared solely for the
information of the party to whom it has been delivered and may not be reproduced or
used for any other purpose. All rights reserved.
All information and investment team commentary, including portfolio security positions, is
as at the date stated at the bottom of each page. The views expressed are subject to
change without notice.
Returns
Net returns for Orbis Funds are calculated gross of all income, net of fees and expenses,
and assume reinvestment of dividends. Here Average Fund Data is presented the latest
Morningstar data available has been used. Strategy net returns are based on the fee
structure for the Orbis OEIC Standard Share Class applied to the asset-weighted gross
returns (before fees) of all Orbis Funds following the same objectives.
Strategy Returns
Strategy gross returns are asset-weighted actual gross returns of all the Orbis Funds
following the same investment objective. Strategy net returns are calculated by applying
the specified fee structure to the Strategy gross returns and do not represent actual net
returns experienced by investors in the relevant funds.
Benchmark Information
On 1 January 2018 the Orbis OEIC Global Balanced Fund changed its benchmark to a
composite index consisting of the MSCI World Index with net dividends reinvested (60%)
and the JP Morgan Global Government Bond Index hedged to Sterling(40%). Data for the
period before 1 January 2018 relates to the old benchmark, a composite index consisting
of the MSCI World Index with net dividends reinvested (60%) and the JP Morgan Global
Government Bond Index (40%).
Sources
MSCI: The MSCI information may only be used for your internal use, may not be
reproduced or redisseminated in any form and may not be used as a basis for or a
component of any financial instruments or products or indices. None of the MSCI
information is intended to constitute investment advice or a recommendation to make (or
refrain from making) any kind of investment decision and may not be relied on as such.
Historical data and analysis should not be taken as an indication or guarantee of any
future performance analysis, forecast or prediction.
The 60/40 Index returns are calculated by Orbis Investment Management Limited using
end of day index level values licensed from MSCI ("MSCI Data"). For the avoidance of
doubt, MSCI is not the benchmark “ administrator" for, or a "contributor”, ·”submitter" or
"supervised contributor" to, the blended returns, and the MSCI Data is not considered a
"contribution" or "submission" in relation to the blended returns, as those terms may be
defined in any rules, laws, regulations, legislation or international standards. MSCI Data is
provided "AS IS" without warranty or liability and no copying or distribution is
permitted. MSCI does not make any representation regarding the advisability of any
investment or strategy and does not sponsor, promote, issue, sell or otherwise
recommend or endorse any investment or strategy, including any financial products or
strategies based on, tracking or otherwise utilizing any MSCI Data, models, analytics or
other materials or information. JP Morgan Global Government Bond Index (the
“GBI”): Information has been obtained from sources believed to be reliable but J.P.
Morgan does not warrant its completeness or accuracy. The GBI is used with
permission. Copyright 2019, J.P. Morgan Chase & Co. All rights reserved. The 60/40
Index may not be copied, used, or distributed without prior written approval. Neither
MSCI nor J.P. Morgan shall have any liability for any damages (whether direct or
otherwise).
© 2019 Morningstar UK Limited. All Rights Reserved. The information relating to
Morningstar contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate,
complete or timely. Neither Morningstar nor its content providers are responsible for any
damages or losses arising from any use of this information. Past Performance is no
guarantee of future results.
© 2019 FE. All Rights Reserved. The information, data, analyses, and opinions contained
herein relating to FE (1) include the proprietary information of FE, (2) may not be copied
or redistributed, (3) do not constitute investment advice offered by FE, (4) are provided
solely for informational purposes and therefore are not an offer to buy or sell a security,
and (5) are not warranted to be correct, complete, or accurate. FE shall not be
responsible for any trading decisions, damages, or other losses resulting from, or related
to, this information, data, analyses, or opinions or their use.
FE does not guarantee that a fund will perform in line with its FE Crown Fund Rating as it
is a reflection of past performance only. Likewise, the FE Crown Fund Rating should not
be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its
underlying securities and should not be used as the sole basis for making any investment
decision.
The next Transparency Symposium:
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“ How can we accelerate the rebuilding of trust and confidence in financial services?”• Boston on 12th March, kindly hosted by Mercer and completed
successfully• New York on 14th March, kindly hosted by Davies Ward Phillips
Vineberg and completed successfully• London on 16th May, kindly hosted by Newgate Communications• Dublin on 29th May, HOST WANTED• Amsterdam on 6th June, kindly hosted by AON• Zurich on 18th June, kindly hosted by SharesInside• Brussels on 20th June, kindly hosted by CFA Institute• New York on 9th September, kindly hosted by Grant & Eisenhofer• Boston on 12th September, kindly hosted by First Republic Bank• Hong Kong on 10th October, kindly hosted by RPC• Sydney on 15th October, kindly hosted by Dimensional Fund Advisors• Melbourne on 17th October, kindly hosted by Mercer• Singapore on 22nd October, HOST WANTED
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“Short Speaking Slots”“If I had just 5 minutes to comment on how we can accelerate the rebuilding of trust and confidence in financial services, this is what I’d say…”
Until 15:30 including Q&A
Sunil Chadda, Director, Cairn Consulting
Henry Tapper, CEO, AgeWage
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“Short Speaking Slots” continued
Until 15:30 including Q&A
Dr Anna Tilba, Associate Professor in Strategy and Governance, Durham University Business School
Professor John Wilson, Pro Vice-Chancellor for the Faculty of Business and Law,Northumbria University, Newcastle
Mark Turner, Managing Director, Duff & Phelps
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“Short Speaking Slots” continued
Until 15:30 including Q&A
Dr Scarlett Brown, Head of Research and Policy, Tomorrow's Company
Professor Michael Mainelli, Executive Chairman, Z/Yen Group
Corinne Carr, Responsible Pay Consultant, PeopleNet
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Refreshments & networking break We restart at 16:10
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“Short Speaking Slots” continued
Until 15:30 including Q&A
Jennifer Tankard, Chief Executive, Responsible Finance
Heather Buchanan, Director of Policy, All Party Parliamentary Group on Fairer Business Banking
Tony Greenham, Executive Director, South West Mutual
Graham Boyd, Founder, evolutesix
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“Short Speaking Slots” continued
Until 15:30 including Q&A
David Stripp, Principal, David Stripp Consulting
Brandon Horwitz, Principal Consultant, NomBon Consulting Limited
Colin Baines, Investment Engagement Manager, Friends Provident Foundation
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Until 12:30 including Q&A
Baroness Ros Altmann,
Former Pensions Minister, House of Lords
TTF 100th Ambassador
Baroness Ros Altmann CBE, Pensions Expert, House of Lords
Baroness Altmann is a leading authority on later life issues, including pensions, social care and retirement policy. Numerous major awards have recognised her work to demystify finance and making pensions work better for people. She was the UK Pensions Minister from 2015 - 16 and is a member of the House of Lords where she sits as Baroness Altmann of Tottenham.
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Key conclusions, wrap-up & close to the proceedings
Our work is done, for today!
Thank you for your attendance, input and ongoing support!
Optional networking, drinks and nibbles until 18:30 courtesy of
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Andy AgathangelouFounding ChairTransparency Task Force
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Many thanks again to today’s hosts, sponsors and everybody else for taking part so fully!