Don Ezra says he’s fortunate not to have lived in agrarian times, because his true skill set is mental, not physical. And he admits his approach to investments is a painstakingly slow process. “It’s both a blessing and a curse,” he says. “It’s a blessing because nothing is going to be skipped over. But when you are linear, you are painfully slow.”
But that linear approach has been a benefit to the actuaries, investment committees and pension committees that Ezra has counselled over his 40-year career, as evidenced by his nomination for Benefits Canada’s 2011 Lifetime Achievement award. Wrote the nominator, “Don is recognized as a leader in providing plan sponsors’ understanding of investment matters around the world.”
Ezra’s career began with the life insurance industry in England in 1966. In 1971, he immigrated to Canada and worked as a pension investment consultant, joining Russell Investments in 1984 as the first president of its Canadian office and then moving to the U.S. as managing director, consulting, in 1989. Currently, he is co-chair, global consulting.
Now in the twilight of his career—Ezra plans to work part-time with Russell until he turns 70—his thoughts have turned to his own personal asset/liability model. Ezra views himself and his wife as a DB plan with the associated asset/liability framework. “I’ve spent all my life in the institutional field, and now I’m applying all of the ideas I’ve learned to a two-person institution: my wife and me.”
Most people do not save enough to be able to afford to retire the way they want to, Ezra explains. “The only way to supplement that in the absence of turning up the savings dial or turning down the spending dial is to turn up the risk dial.” He’s thinking of the amount of money that he and his wife need for retirement not as a liability but as their goal. “The ratio of assets to the goal is our funded ratio. That’s straight out of DB, and we’re less than 100% funded.” Understanding the process and planning for retirement is a priority for Ezra. “There’s confidence that comes from knowing your situation—even if what you know is that you’re less than 100% funded.”
Longevity is another issue. Death is certain, but the financial uncertainty associated with longevity is bigger than the financial uncertainty associated with investing 100% in equities once you reach about age 75, he explains. And while most people can’t afford to be 100% in equities, most cannot afford to weather the uncertainty of longevity. The only way to completely de-risk is to buy a retirement income policy: an annuity.
Ezra says his deferred annuity will begin when he reaches 85. “That way, longevity is looked after and [my wife and I] just have to plan to my age 85. And one of the things we’re doing is turning down the spending dial.”
In the latest bout of volatility, Ezra says that while his approach to investing remains the same, what has changed is his appreciation of risk. “In the ’90s, risk was just the uncertainty as to how well things could work out,” he says. “Now, it’s how badly they can work out—and the fact that they may not work out at all.”
But what has worked out is Ezra’s success in passing on his “economical living” to his children. When they were younger, Kathryn and David would sit around the dinner table for “Dad’s Decumulation Talk.” “I’m not sure my kids would have described it as fascinating, but now that they’re 30 and 35, they understand the significance of this stuff. And they’re living ‘econ’ lives in their own way as well, which is just great.”
Brooke Smith is managing editor of Benefits Canada. brooke.smith@rci.rogers.com
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