Even as you read this, the very financial whizzes responsible for the subprime fiasco and global credit crisis, just the most recent on a long list of financial screw-ups, are lobbying Congress for permission to buy and manage your pension fund.

“A broad coalition of Wall Street firms, from banks and insurers to hedge funds and private equity firms, are pushing lawmakers to let them buy and manage so-called frozen corporate pension plans, which no longer accept new members but must continue to cover current ones. Of the $2.3 trillion in U.S. corporate pension fund assets, some $500 billion sits in frozen plans, including those of big companies such as IBM, Hewlett-Packard, Verizon, and Alcoa.”

In an UN-surprising move the Treasury Department approved the idea; fortunately the IRS ruled that the plan would require legislative approval (and you thought the IRS wasn’t your friend).

Hilariously, Treasury “offered a blueprint for lawmakers to allow “financially strong entities in well-regulated sectors” to acquire pension plans. Now the debate moves to Congress, which would have to change existing law.”

Knowing who those “financially strong entities” are will really increase your warm and fuzzy feelings—they include Aon Consulting, Citigroup, Morgan Stanley, Prudential Financial, Cerberus Capital Management, and, to raise the level from hilarious to hysterical, consider that “JPMorgan’s newest property, Bear Stearns, was among the first to lobby Congress and regulators. It started last year, just as two of its hedge funds were imploding.”

But your friends on Wall Street are drooling over all the zeros in the potential fees. “…McKinsey & Co. predicts that the assets in frozen plans will more than triple, to $1.7 trillion, by 2012. By taking over frozen plans, Wall Street firms could charge fees based on the total assets, perhaps in line with the standard 1% to 2% levied by many money managers.”

Charles Millard, the current director of the Pension Benefit Guaranty Corp loves the plan, as does Former PBGC Director Bradley D. Belt, a GW Bush appointee and former top aid to John McCain, “who two years ago teamed up with private equity firm Reservoir Capital Group to form Palisades Capital Advisors, a pension advisory firm,” and thinks that the little guys like him should be able to play, too.

As to the thoughts of the opposition, “Critics, including some on Capitol Hill, worry that financial firms won’t always have workers’ best interests at heart…”

Ya think? Well, duh.

And be sure to see what Small Business Bomers has to say about this!

What do you think?

Your comments—priceless

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Image credit: microboy   CC license

By Wes Ball, author of The Alpha Factor – a revolutionary new look at what really creates market dominance and self-sustaining success. Read all of Wes’ posts here.

A friend just sent me a copy of an article about the presidential campaign from back in late May.  At first I wondered if she just thought I was so far out of touch that I needed to do some catching up.  She pointed out instead that my Alpha Factor model was playing out right before our eyes in this campaign.  I agree.

The article was written by Bernie DeGroat at the University of Michigan.  It quoted research conducted by another university colleague about the value of “experience” in getting the presidential nomination.

Here’s part of what he said: “A new study by D. Scott DeRue of the U-M’s Ross School of Business and colleague Jennifer Nahrgang of Michigan State University shows that the number of years of political experience doesn’t matter much when it comes to getting nominated.”

According to DeRue, “It is clearly not experience, so there is something else about Obama… Obama’s personality and charisma have captured the hearts of the American people.”

Guess what?  That’s exactly what I found in my research regarding how people make decisions.  Rationality is not dead.  It never existed.

We all grow up believing that people make rational decisions based upon clear lists of performance or other “factual” criteria.  It’s just not true.

People are emotional beings and that’s where their decisions are made.  Make people feel good about themselves (I refer to that as “Self-satisfaction”) or help them believe that other people will feel better about them (I call that “Personal Significance”), and you are tuned into the “buying channel.”  That’s where all buying decisions really occur.

When researchers ask people why they made a buying decision, they always give a litany of rational reasons’

• it works better;
• it costs less;
• it fits better;
• it has more features;
• blah, blah, blah.

None of those proved out to be real reasons, according to my research.  They were just the way people believe they need to explain their decisions to other people.

The real reasons for their buying decisions were far more controversial and emotional.

• it makes me feel better about myself;
• it makes me believe that other people will notice me more;
• it makes me believe other people will think better of me;
• it makes me feel that I am more the person I wish I were;
• it makes me believe that more people will love me.

It’s all emotional fulfillment that drives decisions.

Companies could learn a lot from the current presidential campaign.

John McCain may have all the experience that Obama lacks (a rational factor), but he has proven himself incapable of making people feel good about themselves or of making them believe that anyone will think better of them for voting for him.  Hence, Obama has strong support among a broad cross-section of the population in both political parties.   McCain doesn’t.

This has nothing at all to do with my personal political preferences.  I personally wish the Republicans had a “real” candidate – someone who could inspire people and make them desire to be part of his campaign.  They don’t.

What does this say about leadership?

If you think you can run a company on purely rational factors, you’ve lost before you start.

If you think you can steer a corporation without making people feel good about themselves and about being part of what you’re doing, then you will certainly fail.

Every Alpha company I have tracked that has lost its way got lost on this issue.

Although every CEO knows that he has to manage the rational side of the business, he better also understand that the emotional side is where the key to his real success lies.

How do you handle the emotional factor?

Your comments—priceless

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Post from Leadership Turn Image credit: BaronBrian

The art of the sound bite isn’t a modern concept—it’s as old as human communications. Previously known as one liners, le mot juste or dozens of other terms over the years it involves just a few words that encompass and transmit a specific point or idea.

Will Rogers was a master le mot juste. More than a half a Century ago, he commented on the state of politics and his words are as literally accurate today as when he said them.

“We could certainly slow the aging process down if it had to work its way through Congress.”

“I belong to no organized party. I am a Democrat.”

“If we ever pass out as a great nation we ought to put on our tombstone, ‘America died from a delusion that she has moral leadership.”

And one more special one to sum up the entire political arena at all levels from local to international.

“If you ever injected truth into politics you’d have no politics.”

Do you have a favorite Will Rogers-ism?

Your comments—priceless

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