Opinion: AIMCo will rebuild trust by renewing focus on customers

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New York Times columnist David Brooks wrote a book called The Second Mountain in 2019, presenting an analogy of a person’s life consisting of two mountains. The first promotion was one that was measured by fame, fortune, achievement, and happiness – self-centered goals. The second mountain, seen only by those who are brave enough to let part of their old self die after a fall from grace, is about contributing and serving others.

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In July, I became CEO of Alberta Investment Management Corporation, or AIMCo, during a turning point for the company.

By shifting attention to how we serve others, our clients, and their beneficiaries, our second mountain is in sight. We are entrusted to invest other people’s money: our province’s savings, emergency funds, and the pensions of Alberta nurses, police officers, public servants, first responders, and teachers, to whom we owe a deep appreciation for their service during these two last years. especially.

Between two mountains lies a valley of despair, and we have had ours: the now-familiar business losses suffered due to a volatile business strategy. In the wake of these losses, our board and management did the right thing. They conducted a review of AIMCo’s risk management practices and the root causes of company failures. From that review, 31 recommendations emerged and we are on track to have them all implemented by the end of the year.

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Most importantly, our purpose of serving others will serve as a touchstone as we redirect our investment from the relentless search for short-term “alpha” (or excessive returns) to the pursuit of consistent long-term returns for our customers. Clients: Albertans’ pensions, endowments, and public funds.

In fact, we are quite good at what we do. Over the past decade, the company has generated more than $ 70 billion for Albertans. And we’re back on track, with a total fund return of 7.3% in the first half of 2021.

Yet at times it seemed that we were more concerned with our own survival than with helping our clients ensure long-term prosperity for the people of Alberta. We know we need to rebuild trust and we are doing so by renewing our focus on our customers.

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And there is urgency in our work. Thomas Piketty’s influential 2014 book, Capital in the 21st Century, argued that when economic growth is low (as it appears to be), wealth accumulates more rapidly in returns to capital than in returns to labor. The crux of their argument is that investing has become more productive than working. Lower and lower interest rates and excess central bank liquidity exacerbate this result, as does a shift in the tax burden towards individual taxes and away from corporate tax.

But … what if the workers own the capital? Through their pension plans, workers can participate in ownership of the means of production. Pension plans can also help address the disturbing imbalance that unbridled capitalism creates. Pension and endowment investment managers therefore play a key role in closing wealth and income gaps. Delivering on our promise to our customers serves this higher purpose.

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As economic forces push us further and further towards the haves and the have-nots, pensions are an underestimated counterweight to preserving our system of democratic capitalism, which remains the best way to allocate capital and labor in an economy.

Helping our clients manage retirement savings for Alberta public sector workers offers more than just financial security. We help these pensioners avoid an inequality trap and preserve a more just and prosperous future. Our mission goes beyond generating returns and answers why we do it and for whom.

Redirecting our attention to a second mountain, serving others, gives us a motivating and unifying purpose. Over time, my hope is that we will regain the trust of Albertans and customers to look after their savings and ensure a better financial future for our province.

Evan Siddall is CEO of Alberta Investment Management Corporation (AIMCo).