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Top economist highlights “perverse” professional behaviour during the recession
Financial professionals adopted “perverse” ways when responding to the collapse of the financial system according to a top economist and author at the annual Barnett Waddingham investment conference earlier this week.
Commenting on what should be learnt from the economic crisis, leading economist and author Tim Harford commented: “Behavioural economics goes a long way to explaining the collapse of the financial system – indeed, what we saw were smart people responding in perverse ways in order to achieve a desired incentive. He also pointed out the realities involved in trying to predict a future crisis: “What is constantly ignored is that economists aren’t very good at making forecasts. Despite economic forecasters roughly agreeing on outcomes amongst each other, reality begs to differ.”
The conference saw industry professionals predicting their views of what the coming year will hold – with China being pinpointed as a potential future victim of the worldwide economic instability. “There will be another crash in the future and it might well be China,” said Steve Russell, Investment Director of Ruffer plc. “Indicators show some warning signs already as Chinese bank lending is exploding upwards, which is likely to end in tears.”
Mark Lovett, co-CIO European Equities at RCM commented: “Valuation of equities reflect understandable concerns about the hurdles facing the global economy in 2010. Key metrics, such as free cashflow yield, provide a strong underpinning to equity values and we can see further positive upside despite the challenges and uncertainties.”
This year’s conference, hosted by Barnett Waddingham, the UK’s leading independent firm of actuaries and consultants, was held at the National Motorcycle museum in Birmingham and was attended by pension trustees and investment professionals from across the industry. The conference has become a highlight in the industry calendar known as an opportunity to gather views from across the board and make predictions for the coming years.
Marcus Whitehead, Partner, Barnett Waddingham commented: “The current economic climate brings with it a lot of concerns amongst pension trustees and investment professionals as to what the effects of inflation and other remedial actions will have on pension schemes. Through our investment conference we hope pension trustees can become armed with knowledge and be as prepared as possible to deal with the turbulent times ahead.”
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For further information please contact Steph Deimbacher (marketing@barnett-waddingham.co.uk)
Notes to editors:
About Barnett Waddingham
Barnett Waddingham LLP is the UK’s largest independent firm of actuaries and consultants. The firm works with Corporates, Trustees and Individuals in both the private and public sector, offering clear advice and a full range of professional advice including trustee consulting, employer pensions advice, pension management and administration, investment strategy, public sector pensions, risk benefits, life and general insurance consulting as well as the provision of SIPPs, SASSs and specialist executive pension plans’.
The firm has grown steadily since its inception in 1989. There are currently 42 partners and over 450 staff, based in 7 locations around the UK (Amersham, Bromsgrove, Cheltenham, Glasgow, Leeds, Liverpool and London).
Barnett Waddingham is also the UK representative of NORACS (North American Actuarial Consulting Services) and EURACS (European Actuarial Consulting Services).