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Follow Apple lead and keep complexity hidden: Ruppert

The pension industry should heed the lead of former Apple chief executive Steve Jobs and present products in a simple, bundled package, keeping the complexity on the inside, Todd Ruppert, president of T Rowe Price, told delegates at the European Policy Forum in early November.

“Steve Jobs showed us, and it’s true with most consumer products, user friendliness goes a long way to driving take up,” he says.

“If the user interface works, keep the complexity on the inside of the package.”

For example, he says, target-date funds are preferable to target-risk-type funds as consumers only have to answer one question: “How old are you?”

“Most people don’t want to spend a lot of time thinking about investments; they want bundled solutions,” he says.

While Ruppert says innovation is needed in various parts of the industry, and there is not one product alone that will act as a panacea for three risks consumers face: longevity, inflation and market.

But he believes age-appropriate target-date retirement funds, with an appropriate glide path, are an “intelligent solution”.

He says between 2002 and 2010 in the US, the growth of target-risk products increased five-fold, but in that time target-date funds increased by 24 times.

This growth is due in part to the Pension Protection Act of 2006, which provided a safe harbour for providers of target-date funds, exempting them from fiduciary duty.

The forum, Finance Regulation and the Dynamics of Saving and Investment Markets, was attended by a who’s who of European financial regulators including Andrea Enria, chair of the European Banking Authority; Steven Maijoor, chair of the European Securities and Markets Authority; Gabriel Bernardino, chair of the European Insurance and Occupational Pensions Authority; Michel Barnier, European Commissioner for Internal Market and Services; Jean-Baptiste de Franssu, chief executive of INCIPIT; and David Wright, Deputy Director-General of the European Commission responsible for financial services.

Ruppert says public-private partnerships are essential for providing adequate retirement income, and that annual automatic deferral escalation combined with service, not just product, are key elements of providing for long-term savings.


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