Apr 9, 2018 · 58m · capital-allocators
Chris Brockmeyer – On Broadway (Capital Allocators, EP.47)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides interviews Chris Brockmeyer, Director of Employee Benefit Funds for the Broadway League, exploring the governance complexities, asset allocation shifts, and operational transitions of managing $7 billion across multi-employer Taft-Hartley pension and benefit plans. Brockmeyer details how labor-management dynamics, philosophical principles, and the strategic shift toward Outsource CIO (OCIO) models drive long-term fiduciary success in commercial theatre retirement funds.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 23.2% of the talking time here. How this is scored →
Ted as informed peer 4.7 Guest teaching 3.9 Guest disagreement 1.3 Ted pushing back 2.5
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 38:12 Brockmeyer rejects framing of governance paralysis
Brockmeyer pushes back against Ted's suggestion that holding through 2008 was purely an accidental byproduct of slow decision-making rather than conscious fortitude.
Hardest push from Ted ▶ 51:04 Ted pushes back on OCIO best-of-breed claimsTed directly challenges the assumption that scaling consultants can deliver superior alpha, pointing out that by definition, scaled OCIOs cannot give everyone best-in-breed managers.
Biggest teaching moment ▶ 21:21 Brockmeyer explains union bans on international equityBrockmeyer reveals to Ted that historical Taft-Hartley restrictions avoided international developed equities because unions objected to funding non-American labor competitors.
Ted holds their own ▶ 33:37 Ted challenges 7.5 percent return assumptions against market realitiesTed leverages market expertise regarding compressed bond yields and high equity valuations to challenge whether boards understand the difficulty of achieving target returns.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| From Philosophy to Labor Relations on Broadway | 3 | 2 | 1 | 1 | Ted opens with conversational questions about Brockmeyer's transition from philosophy to Broadway labor relations. Brockmeyer explains how negotiation and debate skills translated naturally to representing unions and management. | |
| The Structure of Broadway League Multi-Employer Plans | 4 | 4 | 1 | 1 | Ted asks structural questions about the 13 distinct boards and 21 plans. Brockmeyer details the multi-employer Taft-Hartley framework and why historical pride prevents broader plan mergers. | |
| Governance Hurdles and Decision-Making Lag in Pensions | 5 | 4 | 2 | 3 | Ted pushes on the lack of investment professionals among trustees, asking what choice they have but to follow consultants. Brockmeyer explains the painful lag of governance, such as taking over two years to allocate to private equity. | |
| Evolution of Asset Allocation and Diversification Post-2008 | 4 | 5 | 2 | 2 | Brockmeyer educates Ted on the unique political restrictions of pre-2008 Taft-Hartley plans, including resistance to non-US investments. The 2008 crisis forced boards into broader asset diversification like private equity and credit. | |
| Navigating Investment Consultants and Trustee Board Dynamics | 4 | 4 | 1 | 2 | Ted prompts Brockmeyer for concrete examples of consultant breakdowns. Brockmeyer outlines an instance where perceived favoritism between union and management trustees poisoned trust during a private equity search. | |
| Pension Liabilities, LDI Infeasibility, and Return Assumptions | 5 | 5 | 1 | 2 | Ted probes the tension between funding levels and risk-taking. Brockmeyer explains why Liability-Driven Investing (LDI) is politically impossible in Taft-Hartley plans because it caps future benefit growth. | |
| Sponsor Spotlight: Ridgeline Investment Management Technology | 5 | 4 | 1 | 3 | After the sponsor break, Ted challenges whether actuarial return assumptions of 7.5% remain realistic given market valuations. Brockmeyer explains the shift toward separating 5-10 year capital market assumptions from 30-year horizons. | |
| Consultant Effectiveness, Market Patience, and Hegelian Dialectics | 5 | 3 | 2 | 4 | Ted sharpens the conversation by asking if sitting through the 2008 drawdown was wisdom or just governance paralysis. Brockmeyer defends the board's patience while acknowledging the lag, bringing in Hegelian dialectics as a negotiation philosophy. | |
| Transitioning Multi-Employer Plans to an OCIO Model | 6 | 4 | 1 | 3 | Ted questions whether OCIO models justify their higher fees through alpha or merely by circumventing human behavioral mistakes. Brockmeyer explains their recent adoption of an OCIO model and illustrates the rare value of rapid governance via the TARP program. | |
| Comparing Pension Governance and Investment Manager Selection | 6 | 4 | 1 | 4 | Ted presses on capacity constraints, challenging whether scaled OCIOs inevitably dilute performance toward the average. Brockmeyer notes that their new OCIO replaced 29 of 30 existing managers with non-traditional Taft-Hartley rosters. |
Statements from this episode (13)
Broadway League merged its union health plans from 11 to five
“When I started this job a little over 10 years ago, I believe there were 10, maybe 11 health plans, and now there are five. So there have been mergers, substantial, significant mergers on the health fund side.”
Pension governance lag delayed private equity deployment by over two years
“And by the end of the process, it took us north of two years to actually go from the idea of investing in private equity to actually engaging the manager. And then of course, it takes years to actually fund private equity. So, you know, as a result, we missed …”
Pre-2008 Taft-Hartley pension plans avoided private equity and foreign equities
“Well, before 2008, 2009 financial crisis, you would be hard pressed to find a Taft-Hartley plan invested in private equity invested in emerging markets. It just didn't exist. In fact, in some industries, you would not even see plans invested in developed inter…”
Broadway League fired investment consultant after trust eroded during PE process
“Once we finally got to the point where we had gotten the education, the RFP process and the discussions that went on between the consultant, the union trustees and the employer trustees created an environment where one side wasn't trusting the other side. And …”
Well-funded pension plans reliably trigger union-employer friction over benefit payouts
“The most obvious time where it does is When the union, you know, a plan is really well funded, the union trustees come in and say, we want to increase benefits. Inevitably, the increase being sought will make the employer trustees uncomfortable, and so even if…”
Why LDI strategies fail in Taft-Hartley multi-employer pension funds
“LDI strategies don't work in Taft-Hartley for a lot of different reasons, but one of which, one major, I would say, political reason is that once you adopt an LDI type strategy, you are basically saying, These are my liabilities. They're not going to change. A…”
Broadway League funds use internal 7% return targets for conservatism
“A number of funds I sit on, we've established what we consider sort of an internal assumption that we, notwithstanding whatever the actuary certifies with the federal government, will say, You know, we want to use a seven percent return assumption because we w…”
One Broadway pension plan allocates 20% to PE, 15% to EM
“I have one plan in particular that the board has decided it needs to try to Really maximize returns and shoot for an eight plus percent return profile. And that means that we have, you know, 20% invested in private equity and 15% in emerging markets.”
No Broadway League pension plans exited equities during 2008 financial crisis
“And the 2008, 2009 financial crisis taught us that we should not act based on alarming data, alarming information, and none of the plans I sit on exited equities at any point in time. We just sat there and Bore it out, and we were rewarded in the end because w…”
OCIO models can be four to six times costlier than consultants
“Relative to the traditional consultants, an OCIO could be four, five, six times more expensive”
TARP proved hugely rewarding for the one Broadway pension that invested
“When we had the TARP program came about only one plan I sit on took advantage of TARP and it was, as we all know, is hugely, hugely successful and rewarding for those of us that got into it.”