‘Joe Duffy gets candid on losing his pension, coronavirus and a reckoning ‘ an interview in the Irish Independent by Niamh Horan May 10 2020
In an industry that spends the bulk of its time servicing clients needs, preparing reports, ensuring that clients investment goals are correctly aligned to their timeframes, risk tolerances and capacity, the above headline generated a collective groan on May 10th. If that wasn’t enough to cause a shudder the paragraph below dictated how the following week would be spent. Worried clients, convinced the sky was falling, referencing the article that they had read and if it had happened to Joe, did it happen to them?
“Any spare money goes into the pensions in our household. I don’t have a pension from RTE, I don’t have sick pay and I don’t have a safety net – and the pension is gone again. It disappeared 10 years ago with the crash and now with Covid-19. It was invariably invested in stocks and shares.”
A few things bothered me about this article, (aside from the obvious fallout). What was he invested in? Was he over-invested in Equities coming into 2020? Joe turned 64 in January, why hadn’t he been advised to de-risk his portfolio by some degree? Maybe he had and chose to ignore the advice. Did he get bad advice between 2007 and 2009, cash out at the bottom and come back into the market too late to take advantage of a 10-year bull market. Had fear hamstrung his decision making? Who knows? Context is everything and if his pension is ‘gone again’ then there needs to be serious questions asked as to why.
Over the next week to 10 days on more than one Zoom, Skype or phone call Joe’s pension came up, both clients and peers wondered how does someone lose a pension, not once but twice? I’m sure he didn’t expect to be the focal point of someone else’s financial review but by default he came up consistently. People were worried about Joe, Joes pension was gone, how did it happen, is my pension gone, how will I be affected? A myriad of questions, all genuine but brought about by one article.
The more it came into the conversation the more I was called on to defend my profession, while listening to anecdotal stories about friends who lost everything in their pension, due to bad advice, fees, stock market falls, etc. My standard answer in this situation is to offer to review Mick or Mary’s pension to see what happened. I tend not to be bothered by the anonymous individual who sits on a bar stool pontificating, but this time is different. Joe is not anonymous, Joe is well known, probably the most well-known presenter currently on Irish radio, one of the top three paid presenters on RTE, if you are not familiar with Joe, Joe’s Radio show has a JNLR listenership of 363,000, Monday to Friday, the article ran in the Irish Independent which has an average readership of 512,000 people per day obviously some of these readers are listeners too but you get my gist Joe’s words rightly or wrongly have power, people listen to well know personalities and in this instance Joe has caused fear and confusion.
Joe may have lost his pension, it may be gone, but in all honesty, even if it was fully invested in Bank of Ireland Shares, which are currently having a torrid time on the stock market, it wouldn’t be lost. While not a scientific analysis I took a hypothetical assumption of Joe having €1,000,000 in his pension (the number is random, I’ve no idea what’s in Joes Pension) on 14th February 2020, even if it was invested in Bank of Ireland Shares it would have been down by 61.6% so he still would have had approx. €400,000 in his pension fund.
I then took three popular investment funds to look at Joe’s hypothetical €1,000,000 using the same dates, his million would be down between €60,000 and €120,000 approximately. A large hit but not gone, far from gone.
The problem with Joe’s comments and the headline on the original article is the unintended consequences of his words. Not everyone is on a €389,988 annual contract, the average income in Ireland is approx. €46,000, Joe is on eight and half times that, people on the average and lower scrimp and they save and they hope beyond hope that the state pension remains accessible at age 66 and would think they had won the lottery if it was reduced to age 65. A lot of people will depend on their private or occupation pension to supplement their retirement, they also listen to Joe, they see him as an honest champion, an ordinary guy who has done well and they trust him. This is the crux of the problem.
If Joe says his pension has gone, it is believed and causes unnecessary consternation, this in turn leads people to make irrational decisions based on perceived speedbumps. Stock Market corrections happen, albeit not normally as hard and as fast as March 2020 was but they are expected to happen, markets move, that’s why investment outperform cash. When people make these irrational decisions, it may lead to loss both of confidence and money. Joe’s unintended input to people’s thought process midway through a pandemic was unfortunate at best and potentially costly.
The knee jerk reaction that clients were considering needed to be offset with good financial advice, our job is to explain the risks, pitfalls, timing and rational of their pension investment. Ongoing servicing and relationship development should be the bridge between fear and knowledgeable investment, this bridge should be strong enough to mitigate the damage that can be done with a throwaway comment from Joe.
I’m sure he didn’t intend to scare people with his responses, its possible a lot of people took them with a pinch of salt. Those that didn’t though, put down a tough few days, sometimes its better to think before you speak and realise the amount of faith people put in your words.
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