Shifts Happen Fast…
Are You Ready to Transform the Dialogue?
Public retirement systems are critically important, highly complex, and fraught with politics. Millions of lives depend on their reliability, and trillions of dollars hang in the balance. Failure is simply not an option.
The momentum of change is accelerating exponentially. There are more major shifts coming, and they are interacting faster, bringing threats and potentially opportunities.
Public retirement systems face at least five key threats:
Financial instability from underfunding and economic volatility;
Integrity risks from political intervention and legislative shifts;
Demographic pressures from aging populations and workforce changes;
Operational vulnerabilities from cyber threats and outdated technology;
Governance weaknesses are due to unresolved conflicts, inadequate oversight, and poor transparency.
Legislation puts the key stakeholders in the same room to (in good faith) resolve potential group conflicting interests in the best interests of all plan participants and beneficiaries. Boards have to keep pace with the external rate of change. They have to adapt fast. They must make decisions collectively. Consensus is preferred, and that can take time and patience. Boardroom dynamics can change quickly. Turnover is inevitable.
Governance and oversight weaknesses are some of the most important threats a board can do something about. Governance weaknesses can lead to instability and difficulty in attracting and retaining board members and staff.
Adapt or fail
Governance failures can severely damage the credibility of the system and threaten its autonomy and viability. Correcting them can be a long and challenging process, so prevention is far preferred. Poor governance is painfully obvious, while good governance is almost invisible.
How much time do you have?
Are you making the best use of it?
How disciplined is the board?
Don't get blindsided
Are you as well prepared as you need to be for what's coming?
Are you sure?
Over the past 15 years, Funston Advisory Services LLC has served almost 50 systems, ranging from State, County, and Municipal systems to Sovereign Wealth and Economic Development Funds, Taft-Hartley, and Faith-Based plans with combined assets under management of almost $3 trillion.
The systems range from very large to very small, and from very successful to very challenged. As independent reviewers and advisors, we've effectively engaged with oversight bodies, boards, and their executive teams.
Throughout that process, we asked and answered a lot of questions about Governance, Risk, and Compliance.
What are the essentials of effective governance, including roles, structure, and fiduciary duties?
How do we engage stakeholders, manage conflicts, and build consensus?
How do we set clear strategic direction and effective policies?
How should we delegate authority, approve key decisions, and maintain oversight of performance and risk?
How do we ensure transparency, accountability, and independently verify the reliability of our information and advice?
In most cases, our recommendations have been adopted and have been highly successful.
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Adaptation requires a proactive risk mindset. Governance dynamics can shift rapidly. Board member turnover is inevitable.
Ask yourself:
· How strong are your governance policies and practices?
· Are you well enough prepared for the coming shifts?
The best time to improve governance, risk, and compliance is when everything seems stable, not when a crisis is already looming or already upon you.
