ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Not sure what resemblance this thread has to public pension woes at this point. I know threads can be hijacked and drift, but wow...
At least I'm trying:
We could hire day laborers at a low rate, and they won't expect any (getting back on topic here!) pensions at all.
lets put up or shut up
how many think that pension advisors should be picked base on their score on a standardized test ?
If tests prove anything, this one should be easy since obviously there has to be a correlation between the score and their future performance (not past)
Who is willing to bet their retirement on a test score?
Do you actually think these are hard questions?
Here's the easy answer: If I were responsible for hiring someone to manage the investments of a pension fund, I certainly could put a test together to evaluate their fitness for the position. I'd certainly put more time/effort into it than this post, but right off the top of my head, it would cover questions to determine their understanding of:
1) The role of diversification in a portfolio.
2) Their understanding of risk (both investment and inflation risk).
3) The effect of fees, expenses and transaction costs on portfolio returns.
4) How to tailor risk to fit the age profile of the group.
5) How to adjust that over time.
6) The cons/cons of actively managed funds over index funds ( intentionally loaded question!).
And yes, you could put that in a standardized form, even multiple choice, true/false. And it could weed out inappropriate managers. And it would be part of the process - certainly there would be an interview to evaluate 'people skills', communication skills, etc. I don't think anyone has framed it that a standardized test is the single measurement or has 100% weighting over everything. But that doesn't mean it won't help or that it would not be useful as part of the process.
No NO NO , you don't get to look at the track record
you only get to look at a score on a standardized test
You keep framing things in such improbable ways (like yardsticks to measure temperature) - what's up with that? And you seem to ignore what is being posted. We have talked about track records (performance improvement over time), so why exclude that? And why 'a score'? We talked of comparing scores over time.
-ERD50