EMPLOYEE BENEFIT FUNDS – PART V - THANKFULLY, WE DON’T ALWAYS GET WHAT WE WANT

In 1977, I moved into the pension fund section at the RJR Treasurer’s Department, reporting to Treasurer John Dowdle. I was still smarting about not going to Houston to become a “Texas Oil Man.” My knowledge of the institutional investment world was absolutely zero, but I was soon to begin a rapid and intense education.

Looking back forty-five years later, it is easy to see that avoiding the Texas “dream” was a blessing. In 1980, oil prices crashed, and the energy industry went into a steep decline, taking years to recover.  I would have been in Houston with no job network and no prospects – like thousands of others.

Instead, RJR handed me a job in one of the fastest growing industries of the latter half of the 20th century – financial services. And I entered the institutional pension market, the fastest growing segment of that industry. In Part II, we reviewed the growth of pensions over a 40-year period, but luckily my 10 years at RJR was its fasting growing decade. This chart gives some perspective.

The pension contribution growth was mainly forced by ERISA, explained in Part III of this series. Asset growth came from those contributions but even more from strong market returns. Also, assets from the pension plans of RJR’s acquisitions were consolidated into the parent company’s plan.

This growth would have brought challenges under ordinary circumstances. But the pension function got an extra helping of complexity when a new Chief Financial Officer, Joe Abely, arrived about the time I moved into this assignment. He came from General Foods to head all financial functions at RJR. It would be an understatement to describe Joe as the antithesis of the “good ole boy” RJR management. I was in a position where this new boss demanded a steep learning curve, and I needed more than a little help.  Fortunately, that help arrived in a very big way. (We will cover that in Part VI.)