Many seek improved and more sensible ways to invest the nest egg.

My View

Investors can reap lasting benefits of the “pension style” approach.


Adopt “pension style” thinking and investing practices for long-term portfolios.

“Well done is better than well said.” —Benjamin Franklin

Investors are often on the lookout for improved and more sensible ways to invest and manage the family nest egg. I favour adopting the thinking and investing ways of pension plan managers. They are skilled at delivering reliable monthly pension income for decades to come.

Every investor’s objective is to create a “pension style” retirement nest egg. That is, a series of dependable portfolio draws that outlast the family. Let’s turn to pension plan practices for some portfolio guidance. Investors too can reap lasting benefits from the pension plan approach.

I adopted the “pension style” management system long ago. Unlike most investors, pension managers focus first on their policies and strategies. Then they attend to making the investment selections that fit their well thought out plan of action. They have been following this simple, effective, well-reasoned approach for ages.

I summarise a few essential pension plan tactics for your consideration:

Long term thinking
Pension managers are very skilled at long term thinking. They understand that frequent market mayhem is a normal part of the long investment journey for both the bearish and bullish environments. Their plans think in decades to deliver pension benefits to each retiree. Time horizons of 30 to 50 years are not out of the ordinary for pension managers.

Manage investing risk
Pension managers pay very close attention to managing investment risks and resist temptations to willy-nilly incur unwanted ones. If a touch of aggressive investing makes sense, limits are established, such as up to 5% of portfolio capital. Pension managers accept the fact that there is no need to dread investment risk — they manage it instead.

Asset mix targets
Pension managers set their applicable asset mix targets before putting capital to work. They know that asset allocation delivers the biggest impact on portfolio returns. Not market timing, nor superior stock selections. In addition, they revisit the suitability and rebalance the asset mix plan on a regular basis.

Stick to basics
Pension managers follow ageless, time-tested strategies and best practices. They diversify broadly and rebalance periodically so that no investment selection creates lasting portfolio damage when it heads south. Part of their investing is about coming to grips with the prospects of being wrong. They accept that they are not always right.

The “pension style” process is disciplined. It has structure to its approach. Ongoing monitoring is provided. The game plan is implemented vis-à-vis the client goals and objectives. Decision are made based on logic. A far cry from individuals who too often simply get wrapped up in the excitement of chasing returns. Investors mean well and are easily swayed by emotions.

There is no reason why individuals can’t invest “pension style”. Investors can comfortably adopt these same strategies to steward their portfolios for the long run.

I encourage everyone, particularly retirees, to think and invest like a pension manager. Your mission is to arrange the portfolio with the best chances of delivering for decades.

Pension style investment management is the fitting approach for long term investors. Whether accumulating or spending the retirement nest egg.

Revisit the suitability of your current management approach. If it does not measure up, find a portfolio manager who can review it and implement pension style improvements.

You will appreciate the pension style benefits.

About Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA  My expertise in the investment and financial advisory profession began in 1972. I graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971. I then attended the University of British Columbia, graduating with the MBA in 1972. I have attained the “Discretionary Portfolio Manager” professional designation. I am committed to offering clients the highest standard of personal service by providing prompt, courteous and professional attention. My advice is objective, unbiased and without conflicts of interest. I’m part of a team that delivers comprehensive services and best value in managing client wealth.