“No one has invented the perfect way to manage large pools of money,” says Rick Abbott, the former director of investments for the Winnipeg Civic Employees’ Benefits Program. In June 2010, he retired as director after 18 years in the role and 40 years as an investment manager. “You can’t have a perfect strategy because things are always changing.”
To manage constant change, Abbott spent his career being thorough, pragmatic and engaged in the industry. In the mid-1990s, he got involved with the Pension Investment Association of Canada (PIAC) and became chair in 2004. Listening frequently to colleagues across Canada discussing challenges and solutions kept him ready for change. “It was important to be aware of all of the different ways to manage money,” he says.
Abbott began his career in 1970 in Toronto at the Bank of Nova Scotia. “By 1973, the stock market was very challenging and the world was in crisis. I had gotten married and wanted to return home to Winnipeg for the quality of life, a balanced lifestyle and my cottage,” he recalls. He asked for a transfer to Winnipeg and soon after left the bank to join Great-West Life’s investment team. For over 14 years he worked, as he calls it, on “the other side servicing pension clients.”
At Great-West Life, Abbott could have specialized in one area of investment management—like mortgages, stocks or real estate—but that’s not what he wanted. “In the pension game you have to have knowledge of all of those investments as opposed to focusing on one,” he says. It was this variety that motivated him to take the director of investments role with the Winnipeg Civic Employees’ Benefits Program in 1992, where he managed funds exceeding $5 billion.
Abbott managed the pension fund’s bonds internally, but the rest of the assets were managed externally. He picked managers by carefully reviewing their track records and selecting those that demonstrated consistency. “I wanted to deal with honest people so there was also the very subjective element of apparent integrity [that influenced my choices],” he explains.
When it came to the investment options, Abbott acted like a filter. “Pension funds are approached a lot and often to finance projects to revitalize certain areas of the economy. I always asked, ‘Are these projects really financially viable?’” he says.
To determine if an investment was worth considering, Abbott and his team stuck to a basic premise: believing in the relative efficiency of the marketplace. “We avoided the commercial asset backed securities, the Icelandic banks and, to a great extent, the U.S. bank mortgage fiasco. The market certainly identified that these sectors had higher risk because you got paid a few basis points more than other supposedly triple-A investments. That made us do extra due diligence, which led us to avoiding them.”
These days it takes more than due diligence to avoid a risky investment. “There are real political challenges today. Throughout most of my career you would look at investment opportunities and rationally do due diligence. Now I think politics has such a major impact—and politics is a pretty tough game to analyze,” he says.
But he’s leaving that to the next generation of pension managers. Abbott has instead turned his attention to the CancerCare Manitoba Foundation, where he will be part of the finance committee, managing a pool of money that funds cancer research.
Leigh Doyle is a freelance writer based in Toronto. leigh.doyle@gmail.com