08. The Rise of DC: How the Pensions CIO Role Is Changing with Veronica Humble, CIO, Cushon.

In this episode of The CIO Chair Podcast, we speak with Veronica Humble, Chief Investment Officer at Cushon, about how the role of the CIO is evolving in the world of defined contribution (DC) pensions. As more individuals take responsibility for their retirement outcomes, CIOs must rethink how investment strategies are designed, communicated, and delivered at scale.

Veronica shares how Cushon is approaching this challenge by focusing on member engagement, simplicity, and long-term value creation. With a background in quantitative investing and portfolio construction, Veronica brings a data-driven perspective to pension design, combining rigorous analysis with a strong focus on real-world member outcomes. She explains why traditional pension structures often fail to connect with savers, and how integrating ESG principles, private markets, and default fund design can help deliver better retirement outcomes. 

We explore the importance of digital experience, behavioural insights, and creating investment journeys that members can actually understand and engage with.

For chief investment officers, pension professionals, and institutional investors, this episode offers practical insight into how investment leadership is adapting to meet the needs of today’s savers, and what the future of DC pension investing could look like.

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Transcript

SPEAKER_01 0:10

Welcome to the CIO Chair, a podcast hosted by the CIO Investment Club in collaboration with the Pension Insurance Corporation. In each episode, we will sit down with top chief investment officers to explore their unique investment philosophies, decision-making processes, leadership strategies, and personal career journeys. Now let's get started. Welcome everyone to the CIO Chair, hosted by me, Sean Thompson. And me, Hata Ch Singh. The CIO Chair's guest today is Veronica Humble, the Chief Investment Officer at Cushion, now part of WTW. Veronica leads the investment function and is a strategist for Cushion Master Trust. Prior to this role, Veronica was head of DC Investments at Legal and General Investment Management. During her time at LGIM, she was responsible for investments, product development, and ESG initiatives within the DC business. Veronica started her career as a quant analyst in Phoenix Group and has a Master of Science in Mathematics and a PhD in statistics. Welcome to the CIO chair, Veronica. It is a pleasure to have you here. And as I always say to our guests, I hope you are sitting comfortably.

SPEAKER_00 1:34

Thank you, Sean. Absolutely lovely to be here.

SPEAKER_02 1:37

Fantastic. So, first of all, warm welcome, Veronica. And if you could let us know, was finance always the plan?

SPEAKER_00 1:45

Actually, no. Not at all. I was a theoretical mathematician to start with. So I fell into finance somehow accidentally, looking for jobs after my PhD, having no idea that finance existed, but very quickly figuring out that actually that's quite interesting. So quite logically, I started as a quant, and then the rest gradually developed. And I remember exactly when I started doing DC pensions, which was really quite interesting. That was on the day when George Osburn announced that nobody needs to buy annuities anymore. Almost the old pension liberation day. And a colleague who was in our wider team and solutions team at LGM, who was hired to uh to build out the EDC business, was slightly overwhelmed with all the questions that she was getting. And I volunteered to help, and one thing led to another. So here I am.

SPEAKER_02 2:47

That's brilliant. So were there any moves along the way to your role as CIO that felt risky or uncertain at the time?

SPEAKER_00 2:56

Yeah, actually quite a few. So I went to work after after I started as an uh liability squant in uh what is now part of uh standard life, uh I went to work for a small systematic hedge fund, which was really good fun. It was only for a year, it was quite small, but just being very, very close to the market, uh seeing how the strategies are performing like in real time rather than super long term at like 20, 40 year horizon, hopefully, that we uh I live in now. It was was quite interesting. And uh then actually joining Cushion was uh really interesting as well, because I came from much more sort of established institutional space to a challenger uh fund manager, not quite fund manager, pension provider, but uh it was really interesting. But I really liked where it was sitting, kind of a challenger provider with uh a fintech uh firm with a really dynamic culture and kind of everything to play for and a big organization to back it. So I it was still fairly risky, but I really like that type of risk.

SPEAKER_02 4:09

Absolutely. So the defined contribution area, um, where you are obviously one of the key CIOs, is an exciting and growing area. What is the DC area and what why is it experiencing such growth?

SPEAKER_00 4:21

Uh so yeah, DC is great. So we all are used to insurance orb DB pensions in the past. However, DB pensions uh have been in decline for quite a while, not by assets, because uh kind of that's been fairly stable, if not growing, in the past. Uh, but from auto enrollment uh that government has announced in 2012, that basically made it mandatory for all the employers to provide pensions to their employees that sparked the growth in defined contribution pensions, um, where you just have investment. DV pensions, just to kind of to uh recap for our listeners, DB pensions is when you have specific promises that you have for your employees in the future and you just deliver fixed amount or kind of inflation amounts linked to their uh salary uh in the future. Whereas DC, there is no such thing, so you're just investing on behalf of uh employees or members of the pension scheme, and then when they come to retirement, it's their choice how to use it. So it's been growing from 2012 when uh the auto enrollment started, starting from very large schemes and down to like uh microemployers. Uh so now most of the people in the UK are uh enrolled in DC contribution pensions. And yeah, we're still growing. Our contributions are very quite strong, and cash flows are very positive. So for the next 10-15 years, uh DC will be experiencing still quite explosive growth.

SPEAKER_02 6:05

That's amazing. And uh and so people in their 20s are effectively saving for their retirement, and that's obviously a nudge into the saving. Like what other behavioral nudges are inherent in the system?

SPEAKER_00 6:19

I think the most interesting one is that uh uh most of the people are invested through the default funds because we know that uh, you know, people in the 20s don't really think about their pensions, it's far away, it's not that interesting for them. To be honest, they have more pressing things than to uh really think about their retirement in 40 years' time. So, what the industry was shaped to do is to make sure what they are invested in is appropriate and a good investment for them. So, this is where the idea of a default fund came from. It's all steeped in the uh in behavioral finance and kind of works around that. So, what happens if if members are enrolled in their pension, they are automatically put into a fund uh or default strategy. They are totally allowed to opt out of that and uh choose investments themselves, but more than 90% never do. So this is why default funds are so important.

SPEAKER_01 7:25

So, how how many actual members do you have uh within Cushion?

SPEAKER_00 7:31

So we have over 700,000 members.

SPEAKER_01 7:34

So 700,000 members, all of whom are very different in their stages of their life, and therefore some may be young, some may be middle age, some may be close to retirement. How do they change their default fund as as they grow older? Is that is that something that's done?

SPEAKER_00 7:56

Yes, it's done for them. So, as uh a lot of other providers, we have what is called in UKDC lifestyling. So you start with a combination of funds and then of a few years before retirement date or kind of nominated retirement date, the that mix of funds start to change, and then you end up with a certain uh different mix at retirement. So it's typically it is uh higher growth first and then slightly less volatile towards retirement. So kind of typically uh high very high equity allocation to start with, and then uh more bonds and cash-heavy uh at retirement. So we follow the same uh uh the same pattern. Our uh de-risking period is uh seven years, so we start with uh 75% in global equities, 10% in bonds, and 15% in multi-asset private markets in our headline strategy, and then go to sort of low, about 50% in equities and the mix of um bonds, again, private assets and inflation-linked bonds, etc., at retirement. But again, uh individuals are free to choose slightly different strategies. For example, if they want to target annuities, there is an annuity focused strategy for them so that it moves much more in line with annuity prices and there isn't a gap when they want to buy an annuity at a certain age. And then if they want to target cash as another outcome, again, there it there is one for them to choose from. Uh, but the yeah, we have more way more than 90% sort of high 90s that are in the default in the main default fund.

SPEAKER_01 9:48

I'm always surprised that it is that high, the the number, not you know, 95%, let's say, in the default fund. I mean, is that a surprise or is that actually what one would expect you should be seeing across the industry and across DC members?

SPEAKER_00 10:06

I think nobody was surprised that it will be quite high when uh this whole thing was designed earlier on. Uh, but I think people are still surprised that it is that high. It differs between different types of schemes. So in order enrollment master trust, it's typically kind of yes, sort of 95 to 99% uh are in default funds in some of the industry schemes. So, for example, in kind of large banks, it can be much lower because people are more investment savvy or just investment focused and at different stages of life. So they might be choosing more actively.

SPEAKER_02 10:47

That's great. And and so what is a master trust? And and how do master trusts differ between each other?

SPEAKER_00 10:54

So master trust is a multi-employer pension scheme. So typically, before the auto enrollment was set up, you would have pension schemes attached to the employers and to their DB scheme. DC might be a section of the DB scheme, and then uh it would all have different investment strategies. You would work with uh the pension provider to uh to align your investment strategy or your scheme investment strategy to your beliefs or some such. Uh when uh ultra norm was set up, uh the master trusts were allowed as the structures where different employers can come in and all have the same investment strategy, or maybe two or three types of investment strategies. Uh, so this is how it came to be. So, for example, we have 20,000 employers within our Cushion Master Trust now. So it's over 700,000 members, but also like a large number of particularly small and medium employers, uh, so that they don't need to analyze different providers, they just uh choose the master trust uh option between different providers, and then kind of everything is done for them in one go.

SPEAKER_01 12:14

And who who governs the master trust and and who helps sort of guide the decisions that are being made in a master trust? Right.

SPEAKER_00 12:23

So, yes, uh we have a set of trustees, they are the asset owners, they work closely with the investment team and with their investment advisors. There is this wonderful delicate dance between all of us because yes, we're in a house investment team, but we then make proposals to the trustees, but then uh the investment uh consultants will make their recommendations off the back of these proposals and conversations with trustees, and then the trustees are the actual decision makers who make those decisions.

SPEAKER_01 12:57

So uh so are consultants still very much a big player in the DC world as they were and have been in the DB sector?

SPEAKER_00 13:06

There are two types of consultants. There are investment consultants who uh will, as uh the name suggests, consult on the investment side, and they might be advising uh single trust schemes, they might be advising master trusts, and then there are more holistic employer benefits consultants who will uh then consult on a wider selection of employer benefits, and they also might be running the master trust selection processes if the single uh trust decides to go into one of the master trusts. So, yes, in short, uh they're very much a big part of uh what's happening, both in terms of advising the master trusts uh and rating the master trust and selecting them for the new employers because we still have quite a few single employer trusts, and we still have quite a few going into master trust in the next uh few years.

SPEAKER_02 14:09

That's amazing. So, so within that, what's the role of a CIO and what does success look like for you?

SPEAKER_00 14:15

Ah, uh good question. Uh usually I discuss this with uh my manager, so but you know, it's it's it's it's a it's a good one. Um uh I think to me this is still we still drive the investment strategy. Yes, trustees are the ultimate decision makers, and we absolutely uh uh have very uh strong relationship and very good conversations with them along the way. There are normally no surprises because if you come with something then trustees are deeply surprised by your suggestion, uh kind of you've done uh something deeply wrong. So we kind of get their their feedback and their ideas around sort of where they see opportunities and risks. We go and explore the market, we come with our proposals as well in terms of where we see the opportunities and risks. So this is kind of uh a very live and very uh sort of two-way, if not three-way, with consultants conversation. Uh so we shape investment strategy, but we are not ultimately kind of from the regulatory point uh responsible for that. We also, in our case, we actually have a great relationship with trustees where they push back, they challenge us, so we know that this is not kind of uh box ticking exercise at all. It's it's quite it's quite challenging at times, but that's part of the fun. If you're not being pushed, if you're not being asked the tough exam questions, then uh it's uh uh it gets a bit boring.

SPEAKER_02 15:54

Absolutely.

SPEAKER_00 15:54

Yeah, so from my from my perspective, to answer the second half of your question, uh sort of what success looks like, is uh you know, fundamentally we need to deliver good outcomes for our members. Uh and that's that's what we work towards.

SPEAKER_02 16:09

That's brilliant. And and so you you mentioned uh the asset allocation, which I think was 75% equities, 10% in fixed income, and 15% in private markets. How was that sort of modeled? Like, you know, what were the what were the inputs to that sort of uh outcome?

SPEAKER_00 16:24

So all sorts of modeling techniques here here, obviously, from very straightforward, let's just have uh uh some long-term um uh uh equity risk premium assumptions for different asset classes with volatilities and correlations between them, to um let's do some Monte Carlo modeling on top of that, so stochastic modeling and look at the tail scenarios, to actually uh let's look at different risk scenarios as well. They can be stochastic, they can be just fixed scenarios, some in the past, some in the future. So I think you use all uh all of the toolkit to make sure your allocation is robust and sensible. Uh, you can't really optimize it perfectly because there is a lot of uncertainty in the market, all your assumptions are fundamentally uncertain, so you're not trying to do the kind of optimal, incredible uh allocation for a very specific narrow set of assumptions, but you need to make sure that with different approaches and with different models it all still makes sense. And we have been, for example, building out the risk framework for that over the last year. Uh, so to make sure that again, on different risk scenarios, we're still comfortable with our allocation. Uh, but there are some big questions there, you know, fundamentally, what's your uh risk assumptions for equities and equity risk premium for global equities, for regional equities? What is uh the right level of risk for individuals at different life stages? And again, there isn't one perfect answer, but you need to have your set of beliefs uh and you need to have uh trustees' set of beliefs. We're actually going through exercise with trustees at the moment to kind of to explore and reconfirm kind of some basic, basic investment beliefs, and then you sort of back solve it from there.

SPEAKER_01 18:27

When you're looking at these modelling uh techniques, are are there times when the answers might not be what you expected and therefore your beliefs override the expected or the results of the modelling?

SPEAKER_00 18:42

Given that we have a very long-term strategic astral location, normally not it's not the case because it just needs to make sense from sort of pretty much every angle. But at the same time, yes, we sort of we will look at the biases we're currently actually looking at, different style biases and need to kind of ask ourselves: are we comfortable that we have this bias or that bias? Or do we want to be like neutral on every one of them?

SPEAKER_02 19:11

And how do you like are people more concerned about inflation and and how how does inflation figure into the thought process around sort of long-term allocations?

SPEAKER_00 19:22

Great question. So our trustees have set up a long-term comparator with like CPI plus three for our overall strategy, which is quite interesting because obviously you can't quite deliver to that. It's not like you're you have an absolute return target and you can sort of specifically deliver to that or you can hedge this as with uh with the DB approach. So it makes sense from long-term perspective where if they look at what members want and what members would uh like would think is a good outcome over like multiple decades. And then we need to make sure that we think this is again, this is sensible from the point of view of our ASTA location. Uh, that informs the risk levels, that informs kind of also our approach to private markets, uh and this is why we have a fairly high allocation, uh and we can see that growing, for example, in the future potentially. Uh so from the uh from the members' point of view, uh I think I think inflation became more prominent five years ago, obviously, and kind of ten years ago when we had a very low uh inflation uh uh scenarios and low inflation environment. Uh, it was not quite the case. Uh, but I think now with first Ukraine and now uh Trump and Iran, uh, we do have uh people worrying about that. We don't typically have members reaching out and being super worried, but we know that this is in front of people's minds.

SPEAKER_02 21:10

And when you implement these, do you tend to manage assets in-house or do you use external partners?

SPEAKER_00 21:17

Uh we use a combination, so we don't use kind of direct investing in-house. Uh, so we obviously use partners and fund managers, um, but we use a combined approach. So, for example, for our private markets portfolio, uh, we're working with Shreders, um, and we actually seeded the uh UK's first LTAF uh that they uh that we co created with Shredders. So this is a multi asset private market portfolio uh that we then rely on then to allocate more dynamically to different asset classes, and you know, for the time being, we will not have expertise in house to do that. So maybe when we are at Maybe even at 50 we will, but you know, for the time being, not quite, and it's not our strength at the moment. So we will outsource different parts of the management to different fund managers. It can be specific mandates on equities, for example, it can be satellite allocation for the private markets one, or it can be just, you know, private markets SAA, for example.

SPEAKER_02 22:29

And how does the LTAF work and what kind of assets does the investor get access to?

SPEAKER_00 22:35

So LTAF is uh basically a regulatory framework. It's a fund type that was made possible quite recently. And uh we actually think this was an incredibly positive development for the industry because uh there was a lot of skepticism around private markets previously. And we kind of went from okay, this is all looking quite attractive, but how on earth do people actually in DC schemes can invest in that? Come LTAFs, and so now there is a solid framework to do that, and suddenly people are much more comfortable. So the conversations in the industry and with trustees and with other participants have moved from kind of, you know, how can we do this to implementation and to potentially actually going beyond LTAF and doing specific investments outside? But actually, so within the LTAF that we have it's basically fund of funds with a fund wrapper on top and different requirements for liquidity and for valuation. So uh we have, I don't quite remember how many sort of underlying funds we have, but quite a few. And then the uh the manager of the LTAF can allocate more dynamically to the underlying uh strategies there.

SPEAKER_01 24:00

And is the is the LTAF that's been run for you by Schroeder's, is it just you in the LTAF or are there other asset owners investing in it?

SPEAKER_00 24:10

Uh there are other asset owners, yes.

SPEAKER_01 24:13

And how does that work in in practice, um, Veronica, in terms of, you know, if other asset owners need to withdraw their monies, how does that affect the fund and your investment in it if you're continuing to stay invested whilst others might be coming in and going out?

SPEAKER_00 24:31

So LTAFs have partial liquidity or kind of can have partial liquidity, and the the one the fund that we have is exactly that. We actually just passed the three-year mark when we can actually have liquidity out, not just liquidity in. So, from our perspective, we kind of currently we don't need it. For us, it's important to be able to allocate new cash flows in, but there is a cap on how much can be withdrawn uh every quarter, and the fund is generally naturally designed so that it will get uh enough liquidity from the cash flow of the investments that they have inside the fund. So, uh from our perspective, we obviously welcome other investors uh as well, and uh yeah, we're happy to see it grow.

SPEAKER_01 25:21

And how does um responsible investing figure into your thinking, both in terms of investing via the LTAF, uh, where you're giving the responsibility to another asset manager versus your actual asset managers that you've appointed that you have more direct uh input with in terms of what they can and cannot invest in?

SPEAKER_00 25:41

Yeah, so uh responsible investing is extremely important to us, and particularly we were always very focused on climate. So actually, the Shredder's fund that we're invested in on the private market side is called Climate Plus. Kind of cue in the name. But from our perspective, this is not just about purely portfolio decarbonisation, sort of you tilt your equity index and hooray, job job done. This is an important uh tool, but uh what's becoming more and more visible now is that two other pillars of our responsible investing approach, which are the physical decarbonization and portfolio resilience, are becoming more and more important. And on the physical decarbonization, this is again part of our uh private market strategy. There is a lot of renewable infrastructure in there, and that's kind of how we deliver uh the uh physical decarbonisation and other things like you know, uh very um innovative agriculture. We have some very well-designed low-carbon greenhouses there, or kind of farms. I actually went and visited one of those uh I think last year and possibly a year and a half ago, which was really good fun. And I've taken back some peppers from it that my children immediately chomped through. Uh so they were eating their pension, literally. Uh and uh on the other hand, I think what we're seeing now, the portfolio resilience becomes more and more important, particularly with recent events uh and kind of with inflation shocks. And part of that is again renewable infrastructure that delivers long-term uh energy security, but at the same time, uh other elements like uh we have a mandate with Aviva investors, which is for natural capital, which we think again, kind of medium to long term uh will help that.

SPEAKER_01 27:45

Do you see do you see a lot of the responsible investing? Is that coming from you as CIO at Cushion and your investment team and the trustees? But do you also see a lot of it coming from the members themselves wanting um more responsible investing um being um invested in within their schemes?

SPEAKER_00 28:04

I think it's both. I think there is definitely demand for the responsible investing in members and in employers, uh, but at the same time, you know, it has become now part of just standard investment process. If a few years ago this was driven by the client demand, now uh you just need to take it into account. And we're actually working with uh one of the startup companies who are doing like really interesting data on uh physical risks and transition risk called tracks, transition exit. So they are an offshoot from Exeter University, and uh they are looking at just completely different data for speci uh where we're most interested in, in addition to kind of uh a slightly different way of looking at the transition risk is the physical risk. So kind of if you think about it, uh like same industry, almost kind of very similar plants, but one uh located somewhere where there is a high risk of flooding, and the other one somewhere where there is a much lower risk will be affected differently. And this is no longer something on the like 2050 horizon. Uh, it is uh the heightened risks for wildfires and uh floods and other extreme weather events are being observed now, and particularly kind of will be fairly visible over the next five, ten years, which is already within our immediate investment horizon. So you have to take this into account uh when you look at your portfolio.

SPEAKER_02 29:41

And in terms of getting the the exposure from equities, like I guess there are a couple of questions that that seem to come up with uh with equity allocations. Number one is the concentration in in the US, particularly in the Mag 7, like large stocks. And the second one is currency risk, given that recently, let's say, dollar to sterling has been quite volatile.

SPEAKER_00 30:04

Yeah, so kind of both great questions. I'll I'll start with the currency risk actually. We were traditionally not hedging the currency risk. We are currently working on hedging that. Uh there is a question, kind of what's the process and sort of what are the levels, but we uh we're just in the process of putting it in place the mechanisms for that. Um and on concentration, again, great question. But I think to me, this is about your core investment beliefs and your processes. Uh so we historically didn't have any caps on concentration there. So we are just in in our equity portfolio. There are no uh country biases and no kind of caps on individual stocks exposure. So good question whether this should continue, but uh kind of for the time being, that's aligned to our investment beliefs, so this is where we are, and I think uh kind of people should be quite disciplined around where it's coming from for them, and I can see both, but it's also very easy to have slightly more knee-jerk reaction. Ooh, you know, it's uh it's really concentrated. So, but do you really believe that uh kind of how much of a risk it is? And you know, we all had these conversations two years ago and was seen as like a massive risk. At the same time, you know, it didn't really work out that way, and uh the Max 7 did ride the wave incredibly well.

SPEAKER_02 31:41

That's great. And and and then in terms of the UK, obviously, uh presumably all of your sabres are UK-based? Yes. Um how how does the UK figure in your portfolio, either through the you know, the bonds, equities, or your private assets?

SPEAKER_00 31:57

So uh again, on the equity side, we have a global portfolio, so we don't have the UK bias, it's just proportionate to the part of the global economy. Uh on the private side, uh there is a very different uh story, and uh uh I think more than half of our investments are in the UK. So our renewable infrastructure is basically all of that is in the UK.

SPEAKER_02 32:21

And are there investment opportunities that, if they were available in the UK, would would increase the allocation to the UK? Or do you think where you you've currently got it is is where it's likely to be for the for the long term?

SPEAKER_00 32:34

I mean it's a good question. I think that will probably uh depend on the views of our fund managers, frankly, because my kind of I'm not uh structurally in a position to pick individual uh industries. But you know, we do have, and our fund managers do have better access to the UK opportunities if they are UK-based. So uh kind of again with Schroeder's, they have a fairly significant bias to the UK within their portfolio, which works well for us. Uh we have recently invested in British Business Bank's uh British Growth Partnership Fund One. Uh so that will also be primarily UK, and again, like that that's that works well for us, and I think it makes uh perfect sense.

SPEAKER_02 33:23

Well, congratulations on that. So, in so, in terms of mistakes and lessons, how has your investment style evolved over the years or since you started in the investment landscape?

SPEAKER_00 33:33

So I think from from my perspective, it's about being just disciplined around risks and opportunities and having a um proper processes and kind of people to worry and think about specific items rather than kind of just trying to cover everything. Uh, in terms of, well, not quite mistakes, but much more kind of where the focus is. So for DC, the level of risk is super important. Uh, and I think what we have seen is there were a lot of uh kind of under-risk strategies historically, and they were not adaptive enough to uh basically ride those 10 years of phenomenal equity growth. I do worry whether the uh the world has shifted and now we're kind of in a much more diversified, much riskier world. But uh again, kind of see the previous point about having the right investment processes and thinking around this rather than just initial worries.

SPEAKER_01 34:43

Do you do you see what's going on around the world at this moment in time? Is there more uncertainty in terms of where the investment return and the opportunities are going to come from going forward? Versus perhaps, you know, looking back in 2008, um global financial crisis. I mean, where where do you see today fitting in with perhaps the way you've managed and been a CIO at Cushion in the past?

SPEAKER_00 35:09

I think today is uh for me, it's again going back to what are the uh members' long-term objectives and remembering that we're delivering to those and not being distracted by short-term events because we're talking 10, 20, 30, 40 year horizon, which is quite frightening, but nonetheless. I do remember though, on the financial crisis, I started a year before that, and we were actively discussing with my boss at that time, uh, kind of when I was coding up the economic scenario generator, whether the equity risk premium is zero or not. So it's quite funny to look back at that and again the phenomenal equities growth. And I think that it's it's again it's about being disciplined and uh being plugged into the discussions, but at the same time not forgetting the long-term nature of the of that investing. Nobody knows the answer. Is like American exceptionism there or is it shifting? Maybe it's shifting a bit, but is uh uh but has something fundamentally changed? Uh are equity still the way to go, or not quite? So, you know, these are all very interesting conversations and very uh very pertinent ones, but uh nobody knows the answer. So it's about being disciplined and thoughtful about what do you assume and why.

SPEAKER_01 36:41

So you so you mentioned being disciplined. So what leads to me to the one of the next questions is I mean, what do you think makes a great investment team and what role does culture play in the decision making that team makes?

SPEAKER_00 36:55

Great question. Uh I because I I just absolutely love my team. Uh, and I think uh what works really well is that everyone has their areas of ownership that are aligned with what they're passionate about and what they know almost most about, but at the same time, everyone overlaps a bit, so you don't have kind of key person risk, uh, and people can be not quite interchangeable, of course, but people can step in, everyone knows what others are doing uh broadly, and you have kind of for each topic, you will have kind of a couple of people who can cover that, but there will be a core ownership for each of the topic from one from one of the people. And I think if you can structure it that way, that there naturally works really well.

SPEAKER_01 37:53

So so following on from that, when you're looking to hire someone into the business, what often gets overlooked and and what is it that you might look at differently to someone else when they're looking at hiring someone within the investment team?

SPEAKER_00 38:07

I think what often gets overlooked, people often might get quite regimental in terms of we need exactly this. Whereas there might be quite uh people in the market who can cover this, but also something else. Or maybe you have people in the team who can step up. So kind of the way I approached this uh in the past was almost like, okay, here is the matrix, and kind of here are the things where I would like more uh capabilities, uh, and then see who's available or kind of in particular time frames, and then you can flex different people doing different things. Uh, sort of with with my latest hire, actually, it was amazing because the person just fit uh the roles incredibly well, but I didn't expect that to happen. I I could see two different roles uh there, and it could have been two completely different people uh in that position, and then we would have flexed other people doing kind of other bits.

SPEAKER_01 39:18

Do you think that people coming straight out of school and not going to university um don't have a chance of getting themselves into the financial services sector? Do you think you have to be a graduate to be able to make it in the investment industry?

SPEAKER_00 39:34

Very good question. It's difficult for me because I come from a quant background which is sort of PhD heavy. Yeah. Uh but actually I don't I don't think it depends on kind of how good your schooling is. Basic maths is uh uh is super important and understand sort of orders of magnitude, how things uh fit together. But I can see actually apprenticeship roots as well.

SPEAKER_02 40:05

So technology, obviously, Cushon is a tech a fintech firm. How is technology affecting the investments industry, uh, either within the investment process or more generally?

SPEAKER_00 40:16

So, from our perspective, as you said, we're in FinTech uh firm. This means that we actually we built everything ourselves. So our founder basically started it as usual in his kind of shed or uh room, being frustrated about an inability to get the right ice investment. So started playing with models and then kind of built it from there. Uh but we own all our tech, which is very exciting because the way it affects it is for us, certain technical challenges are just not a consideration. You can have different um priorities and like sequencing can be uh different, but the question is like, oh, if we want to do this, does it mean that we have a three-year development program and we need to go to external parties? It's all a bit too difficult, is just not the way we think. Uh like, is it doable? Yes, can we do it? Absolutely, kind of what will it take us? And then kind of we we take it from there. And this is really good fun. This is actually what attracted me to cushion in the first instance as well. In terms of kind of future tech developments, I think we're kind of the whole industry is obviously undergoing changes and will be really interesting to see how it plays out. I think from the purely investment perspective on our time horizons, I don't quite see the immediate impact because uh it's about sort of members' priorities again over long term, and it's more about you know investing in tech companies rather than immediately kind of optimizing something on the short-term horizon. Uh, but obviously the the whole industry will get quite disrupted. Uh, and we see a lot of adoption of uh AI already, and you know, we have stuff in-house we we have already started doing quite quite quite a lot of things in-house.

SPEAKER_02 42:20

And that's like I think you you talked about, you know, AI is out there now, and it we're starting to see whether it's going to have impact or not. What advice would you give to someone who's just about to start their career in finance? What are the what are the traits that could help them stand out?

SPEAKER_00 42:36

So kind of one one of the people in my team just learned to code with uh in three months. So, and coded up some of our reporting, our internal reporting, uh, from zero.

SPEAKER_01 42:49

That's amazing.

SPEAKER_00 42:50

So Yeah, that's amazing, exactly. So, and I remember us discussing uh kind of a few months, uh sort of sometime last year, uh how we should go about this. Do we need to send him to authors or something? But it's like, no, just through uh AI systems and through kind of just learning by doing. And I think learning by doing is something that our industry is really good at and people forget about as well sometimes, to Sean, to your previous question about kind of non-graduate truths. I mean, uh most of this stuff you will never be taught at uni at all. Yeah. Right? So kind of if anything, really, it's more kind of some fundamental maths or economics that uh and some of the finance that can be helpful, but none of it is mandatory. So kind of there is a lot that you can learn just on the job. I mean, I started as a theoretical mathematician, and I kind of I uh it was fascinating because even from purely maths perspective, when I started coding up those economic scenario generators, like finally you you got the Feel for how the models behaved because theoretically I can derive all that, I knew that, but I never had the sense. Yeah, so uh it was really interesting, and I think kind of uh it's uh more and more of this will happen now with acceleration of tech developments, that people just can get the knowledge uh uh straight away. Uh you need to be very careful and don't get caught up by hallucinations uh and be kind of much more critical, but it's a great enabler.

SPEAKER_01 44:32

So just going back um the fact that you were a quant analyst, uh just interesting to know what's your what's your view about quantitative and systematic investing? And how how do you see that as playing a part in uh investment strategies? Uh, and do they play a part in in yours?

SPEAKER_00 44:52

Currently, no. I think uh to be honest, this is a more short-term alternative investment. I mean, there is there is an argument whether you want uh as a diversifier to uh to include some of the quant strategies. I mean, some of that actually, mind you, already included or can be included uh in the equity indices design or kind of other indices design, but more on the medium to to long-term horizon. But I think the question is uh is from the DC perspective, is also kind of the what's the cost efficiency and how much you're getting from this versus your time horizon. Uh and I think DC was typically much more simpler indices and now potentially a bit more in private markets. But uh I think everything is on the table that is just where the priorities are.

SPEAKER_01 45:47

So we're just coming towards the the end, Veronica, and I was just wanting to sort of find out from you. I mean, how do you stay informed um about key trends um in the field of finance in in terms of the role that you play at Cushion? You know, what do you look at, what do you read, what other podcasts do you listen to? Um, you know, what what is out there that uh interests you most that you might want to say to others that they should think about reading and and listening to?

SPEAKER_00 46:16

So to me, uh the industry has a lot of conferences, events, webinars that are super interesting and super important. I think kind of in terms of uh reading and um books are probably lagging quite a bit. They're interesting, but they are more for general interest. In terms of what's happening right now, podcasts are uh are good for kind of for chats and for understanding where people's priorities are, understanding the market, uh where your competitors are. But I think for me, the primary one is probably conferences and industry events.

SPEAKER_01 46:56

Smaller, engaging investment breakfasts and lunches at the CIO investment break.

SPEAKER_02 47:01

Oh, there we go. Shameless. And one before we go to the sort of uh the quick fire round, what would you want your legacy as a CIO to be?

SPEAKER_00 47:12

Fundamentally uh delivering for our members and uh them being both uh comfortable in terms of uh where their finances are versus their trajectory for retirement, but also demonstrating to them what their money is invested in. And that was always a big part of cushion. It's not just purely investment investment side, but it's also using our uh tools and kind of us being a fintech and our app and the way we deliver uh content to our members uh to actually demonstrate what we're doing. We have a map of the UK, for example, with all the dots around where the investments are. Uh and uh again, now investing in the VC fund, uh just being able to show this is what we're doing with your money so that you feel a bit better around kind of your money being locked in for 40 years.

SPEAKER_01 48:12

Brilliant. Thank you. Fantastic. Veronica, it's been it's been an absolute pleasure. But before we go, we have our quick fire round. Um, you may have heard of it, you may have even listened to it. So we're gonna ask you your favorite things. Uh, so you've got to be quick off the mark. Favourite sport?

SPEAKER_00 48:30

Probably tennis.

SPEAKER_01 48:33

Tennis to play?

SPEAKER_00 48:34

Nope.

SPEAKER_01 48:35

Okay, but just enjoy it. Excellent.

SPEAKER_00 48:37

Yes.

SPEAKER_01 48:38

Um, favorite film or TV drama.

SPEAKER_00 48:42

So the film that I probably watched the uh the most was Amelie, and I think I uh I love the soundtrack, but uh I think these days it's quite difficult for me to go to cinema. Uh but I used to do a lot of that, and I love the 1920s German expression cinema and things like that.

SPEAKER_01 49:00

Brilliant. Uh favorite drink.

SPEAKER_00 49:04

Oh uh that will be probably a Negroni.

SPEAKER_01 49:09

Very good. My friend had a Negroni last night, actually. Uh favorite book.

SPEAKER_00 49:17

I I don't have a favorite book because I I read uh more books and uh there is always more information. I kind of I rarely reread things, but uh yeah, I can I can say what what I'm reading, so it's mostly work and work related, or children and children related. But at the moment I'm I'm reading Chip War, which I should have read a couple of years ago, but nonetheless, and I'm listening to the book about uh uh Demus Hassabis.

SPEAKER_01 49:52

Okay. And lastly, favorite hobby?

SPEAKER_00 49:55

I don't have a hobby, I have children.

SPEAKER_01 49:59

That is your hobby, children. There you go. Easy, easy peasy. Listen, Veronica, it's been an absolute pleasure. Thank you so much for joining us on the CIO chair. Uh, we look forward to uh perhaps uh talking to you again sometime soon.

SPEAKER_00 50:12

Thank you very much. It's been an absolute pleasure.

SPEAKER_01 50:15

Thanks, Veronica. Thank you so much for listening. Be sure to stay tuned. In the meantime, follow the CIO Investment Club on LinkedIn, Threads and X to stay in the loop about our upcoming guest interviews on the CIO Chair Podcast. For more information about us, please visit our website at www.cioinvestmentclub.com. Thank you and goodbye.