As a student on placement, my first week working on LDI could not have been more different from my university lifestyle; this is especially the case given my term time “9 to 5” is reading biomedical science. For the past two years I have been discovering first-hand the medical improvements that, one by one, are removing the global causes of health related premature death. Now, working in pensions, I have realised that these medical breakthroughs have not come without a cost.
On Monday I knew nothing. By Tuesday I was aware of all the things that I did not know. Today it is Thursday and I have just come out of a meeting having understood the large majority of the topics discussed. Perhaps come the end of the week I will be capable of getting through the day without having to google the definition of every third word mentioned in the conversations around the office…
This highlights, in my opinion, the largest “barrier to entry” of the LDI and derivatives sector: the terminology. Perhaps studying a language degree would have been more useful preparation for this internship as I consider many of my colleagues to be bilingual, and I’m not talking about the portfolio manager from France sitting three seats down from me. Once the terminology used in this sector has been translated, the concepts that define the industry can be understood by anyone. I by no means consider myself an expert, however, the progress that I have made in only 3 days is enough to give confidence that the five remaining weeks I have working here will involve me being of some use rather than sitting here desperately trying to cram definitions into my head.
Despite many differences, similarities between medical research and pension investments can be found. Primarily, their objectives can be viewed as the same. They are both working, to some extent, with the aim of getting people to retirement in the best shape possible, whether that be in health or financial terms. For me this is important because it highlights the fact that anyone, from any walk of life, can find links between their own interests and the pension investment sector. LDI, derivatives, structured equity (my jargon list goes on) should not be seen and considered as “concepts that I could never get my head around”, simply because people may not have heard the words before. Once you invest some time in learning the terminology, you will rapidly witness the benefit (or return!) on this venture.