Words to live by

As the Great Gretzky* said, “I missed 100% of the shots I never took.”

* not a football player

The winner is . . . not me

Cheryl McBride of the General Land Office is the new trustee on the Employees Retirement System Board of Trustees. She lost a close election for a trustee position last year, and many people with interest in the process of picking a new trustee predicted she would get the nod. Just as a reminder, she is taking the unexpired term of trustee Don Green, whose retirement from state government makes him ineligible to continue serving as a trustee.

The board of trustees for ERS picked for the replacement for Green, whose term expires Aug. 31, 2010.

I may have an additional thought or two to post on my interview with the board, which took place this morning. But I would like to answer a question that’s come my way a lot in the past few weeks: Do I think the process is fair? (past tense, now). I believe so, yes. Craig Hester, an Austin money manager who is chairman of the ERS Board, told me the process would be open and fair and the board members would be diligent in picking a new trustee. I’ve seen Craig in action on the board of the University of Texas Investment Management Co. and ERS, and he has always struck me as a stand-up guy who acts in the best interests of all stakeholders. And most of the trustees spoke up during the interview, asking smart, tough questions. I enjoyed the heck out of the interview, in fact.

Why do you want to serve?

I thought it would be helpful to post parts of my responses to the questions on the application to be a trustee of the Employees Retirement System of Texas. From my application:

Q: Why do you want to serve on the ERS Board of Trustees?
A: I am strongly committed to playing a role in providing the best possible pension and health plans for state workers. The ongoing economic turmoil has shed even more light on the importance of retirement savings programs and health-care plans for all workers. These benefits plans are a critical piece of the state employment landscape and contribute to the functioning of state government and the vitality of Central Texas — and beyond.

For all its detractors, journalism, my former career, is a sort of public service. I now work in a more direct form of public service by helping people avoid investment fraud and becoming more informed investors. I would like to use my knowledge of pension and benefits plans, acquired over more than five years of intensive reporting on institutional investing, to help shape the future of the ERS. If we can improve ERS, we can attract even more quality individuals to state government and ensure a secure future for those who have served the state.

Q: What you do you believe should be the role and responsibility of an ERS Board Member?
A: . . . To be a good steward for the System’s assets by ensuring its long-term viability. This responsibility requires vigilance in all aspects of pension fund governance; duties should be performed without fear or favor. No matter how an individual became a board member — appointment by state officeholder, election by state employees, or appointment — a trustee position should not be used to advocate benefit increases that harm the long-term health of the fund.

The role of a board member is to be prepared for meetings; to ask probing and perhaps uncomfortable questions; to vote solely with the best interests of the System at heart; to avoid even the appearance of a conflict of interest; and to collaborate with fellow trustees and ERS staff for the betterment of the System. . . .

Q: Please describe any qualifications, experience and expertise . . . in investments.
A: Five years of intensive reporting on public pensions and endowments in Texas for the Austin American-Statesman. While not typical experience or expertise in the sense of working in the financial services industry, my reporting on large public funds exposed me to hundreds of hours of pension and endowment board meetings and countless interviews with board members and investment professionals — in short, a wealth of knowledge about the issues facing the ERS.

At your service,
Bob Elder

Support from…

Letters of recommendation, actually, that I included today with my application to be a trustee of the Employees Retirement System Board of Trustees.

I’m honored to have the support of:

Texas Securities Commissioner Denise Voigt Crawford

State Sen. Robert Duncan

State Sen. Kirk Watson

Paul Ballard, CEO and chief investment officer of the Texas Treasury Safekeeping Trust Co.

Bruce Zimmerman, CEO and CIO of the University of Texas Investment Management Co.

Barry Burgdorf, vice chancellor and general counsel, University of Texas System.

Sens. Duncan and Watson were on Texas Monthly’s list of the 10 best legislators for the 2009 session. Sen. Duncan is a regular on that list, in fact. He is also the Legislature’s leading voice on pension issues. Sen. Watson is unmatched in his commitment to state employees and the Central Texas region.

I know from my time as a reporter specializing in legal issues that both men are extremely well regarded in the legal profession.

From TM magazine’s July issue:

Sen. Robert Duncan “brings his accumulated knowledge and wisdom to bear on a colossal agenda of real consequence.”

Sen. Kirk Watson is “that rarest of birds—an effective liberal. . . . This session he emerged as the thoughtful leader of the loyal opposition, armed mostly with a pragmatic survival instinct.”

Bruce and Paul are widely respected money managers for the UT System and the Comptroller’s various investment funds, respectively.

Barry has been a prominent lawyer for decades, now serving the UT System, and a tireless volunteer in the community. Barry was the lead outside lawyer for UT in the Hopwood affirmative action case in the 1990s.

I’m very grateful for their support.

At your service,

Bob Elder

“Elder, it’s your turn”

That’s what a friend told me some years ago when he lost his re-election campaign for a second term as mayor of a West Texas city. He lost his re-election bid quite badly, as I recall, but the loss didn’t dampen his enthusiasm for public service.

He put himself and his family on the line in two campaigns and worked hard to serve the public in the best way he knew how. His point to me was, I gave it a shot.  I’ll try to find another way to serve the public. In the meantime, it’s up to people like you to enter public service — put yourself out there, see what you have to contribute.

So I am putting myself out there with an application to be a trustee of the Employees Retirement System of Texas, the multi-billion-dollar billion pension fund for state employees.

My background: I was a reporter and editor for 30 years before joining the Texas State Securities Board in 2008. I am a 1981 graduate of the University of Texas at Austin, and over the course of my career I’ve covered the law, business and politics as a staff writer and editor for Texas Lawyer magazine and other American Lawyer Media publications, the Austin American-Statesman, the Wall Street Journal and other publications. I have written for the Texas Observer, Harper’s, The American Prospect, Lingua Franca, and the land use journal Tierra Grande, among other magazines notable, obscure and defunct.  I’ve managed to collect a few journalism awards, most recently a 2007 award from the Society of American Business Editors and Writers for coverage of pension funds in Texas.

I’ve been most interested in law and finance during my years of reporting, which led me to develop an unusual (at the time) beat at the Austin American-Statesman.  In 2003 I began writing articles about the mammoth public pensions and endowments right in the newspaper’s backyard — the Teacher Retirement System, the Employees Retirement System, the University of Texas Investment Management Co., the Permanent School Fund, the General Land Office’s funds. All told, more than $200 billion being managed on behalf of a great many citizens of the state of Texas.

I covered the “public capital” beat for five years and started a blog of the same name (which has been maintained by my successor at the paper). In those years I learned a great deal about the investment strategies and health-care plans offered by pensions, and more important, how smart questions and extended due diligence can head off serious problems.

I want to use that knowledge and experience to take my shot at serving the public.

At your service,

Bob Elder, Austin, Texas

Signals in the noise

On Friday I will submit my application to become a trustee of the Employees Retirement System of Texas. In the coming days I’ll talk more about the skills I think I can bring to the ERS board, but to answer the obvious question: Yes, I’m the ex-reporter who used to cover ERS and all the large public pensions and endowments in Texas for the Austin American-Statesman.

I left the paper in October 2008 and have since worked at the Texas State Securities Board in the areas of communications and investor education. I’m a frequent speaker around the state on investor protection topics.

This blog will serve as a forum for observations during the ERS board’s deliberations over a new trustee and as a forum for communications with my fellow state employees should I win the job.  The current ERS trustees will choose the new trustee from applications by state employees. The new trustee will serve the remainder of the unexpired term of Don Green, which runs until Aug. 31, 2013.

A note about the name of this blog.

In his 2008 book  “When Markets Collide,” Mohamed El-Erian talks about finding signals in the noise generated by the turbulence of financial markets.  Of course, as co-CEO of PIMCO, the global investment giant, and former investment chief for Harvard’s endowment, he’s talking about finding signals — clues — in complex and obscure corners of world markets (emerging market bonds and the like). And sometimes, El-Erian suggests, the wise course is to just fade the noise, tune it out. Sometimes noise is just noise.

Finding signals in the noise is also an appropriate course of action to decipher the world of  institutional investing, which is the arena for public pension plans such as the Employees Retirement System of Texas.  The big, multi-billion-dollar arena. There is a fair amount of misinformation and misunderstanding of the role of public pensions, which are a critically important facet of public employment.

There is a lot of noise in the world of financial services.  Some of it is from the money magazines touting 10 Market Beating Stocks for This Decade! or Mutual Funds You Have to Own Now! Some of it is from the breathless promotion of the financial services industry, with its promises to move you seamlessly to the next best thing and always one step ahead of the crowd. And some of it is just in the needless complexity of many financial products. This is true in personal finance for the average retail investor — the Main Street investor — and it’s true for the world of institutional investing.

This blog intends to be your occasional resource for filtering investment noise and explaining the strategies of the ERS and its importance to the State of Texas.

Stay tuned, and thanks. At your service,

Bob Elder

Austin, Texas

relder57@gmail.com