UniFi by CAIA Crossing the Threshold - 3

The retirement promise was upended 50 years ago by a bookish benefits consultant named Ted
Benna who first saw the potential, but not the consequences, for the 401(k) Defined Contribution
(DC) plan. The impact on the retirement system was slow and steady over the early periods as
the annuitization and inevitable decline of the defined benefit schemes was akin to a battleship
cutting its engines. The older and vested workers, and retirees, continued to accrue or receive the
contractual benefit, as the younger workforce eagerly accepted periodic matching contributions
from their employer, blissfully unaware and equally unequipped to handle the long-term
consequences of what has now become a multi-trillion dollar reset.
Do not believe for a moment that the FIG forces will simply continue to serve up the low-fee and
commoditized fare of the public market options in the typical and now dominant DC retirement
plan, nor should they. Successful and sustainable outcomes must be far more nuanced, specific,
and thoughtful. Simply changing the definition of an accredited investor, or the repackaging
of sophisticated product into leaky wrappers, put FIG asset gathering at a premium, over the
discerning wealth building (and preserving) needs of the deciduous consumer of their offerings.
Play Dough
Money is fungible and it is fitting that the Old English descriptors of 'bread' and 'dough', date back
to the 1800s. As a line-item on anyone's balance sheet, the dough remains ubiquitous, but largely
uninteresting as a wealth-building investment option, especially when inflation-adjusted. As value
creation, capital formation, and lending continue to be found in private markets, and investors
seek more structured products to mitigate volatility, limit specific exposures, or maximize after-tax
returns, public market beta can no longer be seen as the sole solution.
In the 1950's the homophonic Play-Doh was a popular toy, and like the Banna creation, born out of
unintended consequences. It was meant to be a cleaner for wallpaper until an innovative toy maker
realized how much fun (and profits!) came from pushing this pliable dough through molds of massproduced
shapes and sizes. Fun for toys and 'play doh', but the stakes in the real world are high, and
the FIG machinery must never conform to a single mold or offer more liquid product wrappers that
might give the consumer what they want, rather than taking the time to explain to them what they
really need.
Access to alternative investments will continue to redefine and widen the aperture for true
diversification, but how do we determine appropriateness, know the right questions to ask, and
where to go to get those answers?
It starts with access to thoughtful and transparent advice, and here, there is no
model portfolio to deploy. We are as individualistic as the print of our thumb.
The liability side of my balance sheet looks very different, as do my goals,
my risk tolerance, and even my dreams. Portfolios must be aligned with
all these complex ingredients, and it is hard to fathom how proper
and suitable outcomes can come via a single wrapper or mold.
Within Crossing the Threshold, we chose to enlist
some of the smartest minds in our FIG to explore
the very best practices to democratize
education before product. That is the
hallmark of a fiduciary and the
expectations of all clients
coming to us seeking
informed advice.
3

UniFi by CAIA Crossing the Threshold

Table of Contents for the Digital Edition of UniFi by CAIA Crossing the Threshold