FUNSO DOHERTY, managing director and CEO of Pensions Alliance Limited (PAL Pensions), is an investment professional with over two decades of experience. He has held a number of positions in leading investment management firms both in the United States of America and in Nigeria. In this interview with BusinessDay’s BASHIR IBRAHIM HASSAN, GM, Northern Operations, Doherty talks about the challenges confronting pensions management business in Nigeria. He discloses how he has kept PAL pensions afloat amid the economic challenges, industry competition and the COVID-19 pandemic.
On assumption of duties, how did you plan to reposition PAL pensions?
PAL, like most well run organisations operates a strategic planning cycle. We have a five-year strategic planning cycle, and then we have interim operating planning periods within the five-year strategic plan. So, each year there’s a sub strategy which ties into the larger five-year strategy, which we develop every year. It is almost like the medium term framework. Then we have an annual strategic focus which we came up with when we took office last year. And there are five things that drive it.
Strategically, we are setting out to be a top tier PFA creating value, in terms of vision statement. And our mission is to secure and deliver retirement benefits with ease. We have a number of objectives in terms of where we want to be in the industry.
Now, in terms of the strategic priorities that we believe are key to getting us to this destination, I will highlight five. The first is that we want to deliver outstanding customer experience across different channels at the right cost; essentially to deliver a seamless experience to customers, so customer experience is paramount.
Secondly, we believe it’s important to deliver top tier investment returns to our customers. So, in addition to customer service, it’s also important to deliver the investment returns which impacts how they do with their pensions. So two from the customer perspective. To do this, we think it’s important to deliver operational excellence; so everything relating to our infrastructure, technology, the channels we operate. Thirdly, the way all of these work seamlessly process wise is another big area of focus for us, operational excellence. And within that is also compliance, because we must comply, being that we’re in a very regulated industry, to make sure we do not detract from the need to deliver compliance and operations.
Fourthly, and I would say , very importantly, we believe that our people are very central. At PAL we want to be the employer of choice, we want to attract and retain some of the best in the industry. And we align our operations in such a way that we can attract and make the best people feel comfortable; that they are located in the right place. Because we believe that if our employees are happy, our customers will be happy.
And then, finally, we believe that if we do all of these things, we will achieve differentiation in the marketplace. And that differentiation will deliver commercial benefit to us, and will cause our brand to stand out. That then becomes almost like a natural consequence of doing these things which we think of as pillars, well. So, that’s really the way I would characterise it.
What can you say is unique about PAL pensions in comparison to others in the industry?
Let me start with what I call our core values and there’s an acronym for it called EPIC — Empathy Partnership, Integrity, and Commitment. As you know, the PFA business is a licensed business regulated by the Pension Commission. We are all licensed to do only one thing, which is manage pension funds, you can’t do any other business other than pension management business.
In a way, one might look at that and say we are all doing the same thing and offering the same service, but we believe it’s not just about the nuts and bolts of the service, but it’s also the way we do what we do, and how our customers experience us. Because, we might all be licensed to do the same thing, but the way our customers experience engaging with us, will be very different, and the outcomes that we deliver will be very different. So in EPIC, empathy means that we put ourselves in our customers’ shoes. We identify with them and we understand their needs. It is central to who we are. Partnership follows on from that. We see ourselves as being in partnership with them and it’s not a short term partnership, but a long term partnership. Our customers may be with us for 10, 15 or 20 or 30 years and, in that period, they are operating with us in a position of trust. And, everyday, we must do our utmost to make ourselves worthy of that trust. Because by the time they will be deriving the real benefits that they are looking for, it may be 20 years down the line when they’re now coming to get those benefits, and we are in a position to continue to deliver those benefits in an ongoing basis. So that that spirit of partnership is foundational for us.
The two other things — integrity and commitment. Integrity is a word that I would say is overused in our environment but under-delivered. In other words, it is over promised but under-delivered. In our case, what we say is what we want to do, and that basically is what integrity means to us. It goes beyond ethics. Yes, it’s s important to be ethical, to obey all the rules. That’s just the basic that, everybody should do. But beyond that, integrity is really about saying something, and doing what you say you will do.
Finally, commitment; we’re very committed to what we do, and that goes all the way from the shareholders, the board, the management and the staff on the road. We believe we’re here to serve a purpose, we see ourselves as fulfilling a calling and we’re absolutely committed to it.
What are your major success stories as Managing Director, not PAL Pensions’ success stories, but what you have achieved as managing director from the time you assumed responsibility till date?
It’s interesting because I took the reins of power in April of 2020. If you remember what was happening in April of 2020, we just commenced the lockdown. And as you can imagine, that’s an interesting period to be taking over the reins of an organisation. And then, of course, COVID brings with it a number of things, not just the healthcare challenges, but also the commercial challenges; because, the economy goes into a bit of a tailspin.
So, I think that one of the important things that we were able to do was that sustaining our operations with a great deal of robustness and a great deal of integrity, with a disaster, and business continuity arrangements, We brought them on stream. We continued to service our clients seamlessly, our client’s benefits continue to be paid, contributions continued, all of these things that we prepared ourselves for as a business. And, of course. there were some things that you couldn’t have anticipated, and we had to deal with them in real time.
What other key lessons did your organisation and you as a business manager learn, apart from working remotely?
A number of things, including the fact that we must invest in various means of being able to reach customers. For example, the robustness of our digital channels. Even though most organisations had digital channels before, they had not thought about it in a way where that is the only means by which you can be servicing your customers, and at a point in time, that was the situation.
Basically you could not be physically open and you needed to be sure that you could pretty much do everything digitally what you would do in person, at least for a period of time. So, what we need to do is to invest in the robustness of our digital infrastructure, being able to be ubiquitous across channels, and being able to make our customers feel that they have full access to us, whether that is through the Internet, whether it’s through their smartphones, they can call us. There’s an IVR that sorts out their needs online and so on. Those are some of the things and then, gradually as we come back, we find that, you can’t think just in the traditional way.
For example, when you have to open certain branches and people have to come back, even though you may not historically have ever thought about having a staff bus, it’s not something you’ve thought about maybe as an organisation, but you have to think about it. If you ask people to come to work, how are they going to get to work, how do you protect and support them in that process? So things that you may not have thought about, or something you think you will think about in three or four or five years, you have to be flexible to think about it and make decisions around it relatively quickly. So, we need to be flexible, which we’re always known to be, but I think it just increases the notion that you have to operate in real time in making some of those decisions.
Communication is the last thing I would highlight, in a scenario such as what we’ve gone through in the last 15 months, it is very important to be a well connected organisation, in terms of the communication that flows across the organisation. Because that makes the difference between organisations that do well, and those that don’t do well when you go through this kind of disruptive scenario. And communication needs to operate on multiple levels. You need to communicate with each other as a management team, you need to communicate as management communicating to the larger team, the teams themselves have to have mechanisms for communicating within themselves, within specific functions and across functions across the organisation.
And then, it has to be cross functional as well, so that people can’t operate in silos, otherwise you will have problems. There has to be cross fertilisation. At the end of the day, most importantly, you have to have a means of constantly communicating with your customers. Because at the end of the day, the customer is the reason why we are here, so they won’t be disconnected from us, for whatever reason, it is never a good thing. So, communication, communication, communication.
What impact has COVID-19 had on your revenue and how would you manage it?
There are multiple dimensions to the question. If you think about our business, I would say it’s not a very volatile business and it’s an annuity business. So, fortunately, I will say we’re probably less impacted than many other industries by the COVID and I’ll explain why. If you take the hospitality business for example, which is very obvious, you can imagine how volatile their earnings would be as a result of Covid-19, because people are not showing up in the hotels, bars, it’s almost like an existential problem for those kinds of people. For us on the other hand, our customers, and the work that we do relates to customers and their employment; to the extent that people remain employed and they continue to earn their wages and their employers are obligated to continue to make their pension contributions. We have some people from the informal sector but mostly from the formal sector.
In a disruptive scenario, what you have to do is to ensure that people are able to meet those commitments in a convenient way. You give them digital means to do what they need to do and so that they don’t need to come to your office to drop a check or whatever. So to that extent, we are fortunate and we must thank God for that. However, where we see it is in the fact that many employers, being impacted in their own businesses are scaling back operations. Some are laying off people, others are not employing the way they would normally employ. Because of that, the growth that you might expect to see in employment which drives pension contribution is muted. And then you see people who may have lost their jobs or who may be the temporarily the out of work, also needing temporary access to their pension savings. In a sense, you see that impact as well, and we have to be there for them because that’s part of this partnership and trusting that we talk about; and we have to be make ourselves, easily accessible to those people and to move quickly to meet them at the point of their need, to the extent allowable by law.
Now the third and maybe the final aspect I’ll talk about in this is that there’s another dimension in which we are so much impacted. If you think about COVID-19 disruption and the larger economy, we have a situation where the economy is not as strong. In some places, it goes into a bit of a tailspin. In Nigeria, we’re a bit lucky, because we’re not a tourism driven industry for example. Even though via oil it affects us, but, where the larger economy is not doing well, that may affect the financial markets, pension assets invested in the financial markets, so you may not see the kind of returns that you would normally see in a more stable, growing environment. And that gives us more work to do as fund managers, to ensure that we are being flexible, diligent, we are doing the work that we need to do, to ensure that we continue delivering the returns to customers, in spite of the macroeconomic challenges that these kinds of disruptive times could potentially occasion.
Where do you see PAL pension in the next four years, with you as a managing director, in terms of growth?
For us at PAL, it is clear to us that growth is a central objective of ours. But we will not grow at the expense of continuing to serve our customers well, so you have to take it in that context. But, like I said the goal is to be a top tier PFA creating value.
When we think about top tier we’re thinking top tier in terms of service, operations, size, profitability, all of those things. That clearly is an objective of ours and everything that we’re doing is with a view to delivering that over time. As you may know, the industry is growing, and it’s also going through changes. For example, you might know that the regulator has recently set a new minimum capital for operators, moving into 5 billion from the 1.5 billion or so that we had.
That itself creates a competitive dynamic within the industry. which we all as players have to deal with. But what I would say is that the strategic goal to be a top tier PFA delivering value — top tier as measured by customer experience, by efficiency of operations, profitability, growth all of those dimensions — are objectives that I intend to deliver.
What are the challenges that are peculiar to PAL pension and also the general challenges in the industry?
I will take your question in reverse order, and maybe talk a little bit about the general challenges just to set the context. So, if you think about the industry, we are much bigger today in relation to the Nigerian economy. The pension industry is about 16 or 17 years old under the pension law. I was fortunate to be one of the people that were around when it started. It was much smaller in relation to the economy, and we said in time it is going to be larger, perhaps much larger than the banking industry, because our balances are not transactional balances, they are accumulated balances, whereas in the banking industry most of the balances are transactional, that may be a matter of time.
Now the larger economy has challenges today, and we see ourselves in an economy that has a number of vulnerabilities, the principle fact is that it is a mono export economy. All of our earnings are in foreign currency and are tied to one commodity, which is a volatile commodity. What then happens is that every few years, you have a commodity crisis, which leads to a currency crisis, which leads to macroeconomics turmoil. So, as an industry, one of our biggest challenges, is managing a pension industry, in the context of this kind of this kind of economy, when you think about those crisis periods that happens every few years, it is generally associated with a significant depreciation in the value of the currency, which then leads to significant inflation, and of course, purchasing power. Now, as a pension industry, the loss of purchasing power is one of the greatest enemies, that’s what we’re fighting against every day, because you’re there trying to sustain the purchasing power of your assets. So as an industry, I think this is one of the principal challenges that we are faced with. We’re working hard every day to meet that challenge.
Internally, in our own operations in terms of our own investment operations, we are working to ensure that we’re making investments that allow us to keep pace with the price levels. But there’s also a collective responsibility. Collectively, we have to think about the rules, the regulations, the accommodations that we provide to the industry to allow us to accomplish this purpose; and this is a task that belongs not just to operators, but involves regulators, government, the people, because the people must also be advocates, and I must add, the press. This press is an important component of this as well. And when I talk about government, I mean the larger government including legislators, because they will be changing the laws that. Interestingly this weekend, there’s a retreat that is going on, it is a pension industry legislative retreat, we have it once a year with the legislators, so that we can sit down in one place and address some of these things together.
Though this is an area of challenge, it’s also an area of great opportunity because if we deal with it effectively, it’s not just the industry that will benefit, the larger economy will also benefit, and then the contributors will be the greatest beneficiaries. So, that’s just to set the context at the industry level.
Now to answer the PAL side of the question. Obviously, the big challenge that PAL faces, and not just us, is that this is a very competitive environment. Yes we have the industry challenges but then we also compete with one another in the pension business. Our business is also a regulated business so the basis of that competition must operate within the context of the regulations that we have. So, as a manager, this is what you’re sort of dealing with everyday, to see how you can advance the interests of the organisation and in this case, PAL ahead of that of your competitors dynamically in a marketplace that is that is challenging. So far, we’ve held our own and we’re very optimistic about the future and where we are going as an organisation and to continue to operate successfully.
Our environment is becoming more competitive, not less competitive, operating successfully in that kind of environment, and winning for your clients and yourself, requires a few things; most of which relate to the people within the organisation. It requires focus, dedication, teamwork, hard work, and all the things I’ve talked about at various points in this conversation. A lot of them revolve around people, and as an organisation, people are central to what we’re doing and we’re seeking every day to ensure that we deploy our best resources, our best capacities to engage with our customers in a way that differentiates us in the marketplace.
And that’s the challenge that PAL will continue to address over the next two to three years.
