Money talk Ideas are currency for consultants. Miller describes Towers Watson as an “ideas business” focusing on research. Its best-known research team is the Thinking Ahead Group (TAG), set up 15 years ago by Roger Urwin and Tim Hodgson. Headquartered in the UK, it is led by Hodgson and has seven full-time members who are supported by contributors in Towers Watson offices around the globe, such as Tim Unger in Sydney. “Their job is to sit in a room and think,” Miller says. “TAG has a blank sheet. Out of every 100 or so ideas that TAG looks at, perhaps seven or eight might be considered worthy of being included in clients’ portfolios. Quite possibly, only two or three might be included. “When the team comes up with an idea they believe offers a rich reward for risk, you can be very certain that everyone in the organisation takes notice.” These ideas are like “nuggets of gold” that can be brought to clients, Miller says. Hodgson says TAG is not focused exclusively on risks and opportunities within financial markets. It explores the interconnections between politics, economics, society, environment, technology and finance. “There are very few self-contained problems,” Hodgson says.

Its ideas span the world. The team members are “specialist generalists” who assess how interconnections ultimately impact investment portfolios. “For TAG we need individuals who are enquiring, discontented and dissatisfied with the status quo.” Hodgson quotes Henry Ford, who invented assembly lines for automobile production, to substantiate this: ‘If I had asked people what they wanted, they would have said faster horses.’ Towers Watson does not request that TAG’s ideas manifest regularly in clients’ portfolios. It wants to see “pure research and development.” At any time, TAG has a number of “thoughts” that are active and at varying stages of development, he says. For example, something that is “bugging” him is how investing, which in economic terms can be seen as deferred consumption, impacts asset values in public markets. “When baby-boomers are saving for retirement, what happens? Is it that all they did was increase the price:earnings (P:E) ratios [of equities]? Now they’re selling and there is no-one to sell to. Those P:E ratios will fall and they will not have saved as much as they thought.” In 2009 the group named extreme risks for investors, such as solvency, hyper-inflation or deflation, and policy risk. It has made two additions: resource scarcity and infrastructure failure, which allude to society’s dependence on infrastructure and power to function.

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