In 2014, when then-35-year-old Tim McCusker was named CIO of NEPC—and its 300 clients with more than $900 billion in total assets—CIO dubbed him “consulting’s wunderkind.” Two years and three Knowledge Brokers lists later, he is sticking by the beliefs and strategies that put him on top.
“NEPC has stood out over the years by making strong and innovative recommendations that differentiate us from our peers,” he says. One of those things has been being an early mover and a strong proponent of risk parity. But since McCusker’s taken the helm, it’s been a tough investment environment for the risk-balanced strategy—along with other NEPC suggestions including more diversification, lower equity exposure, and higher emerging market allocations post-2008. “We’ve had to defend our views,” he continues. “Go a little deeper on why it makes sense—battle and overcome the disease of doubt.” The CIO reminds clients to remember why they got into risk parity, emerging markets, and real assets. “These strategies still make sense,” McCusker adds. “It’s healthy to review the allocations, but it’s not the time to abandon them”—especially as 2016 proved a positive turning point.
McCusker believes consultants still play an important role by helping investors move away from behavioral biases and rash decisions. “There’s something Mike Manning [NEPC’s managing partner] always says,” he recalls. “When everyone’s happy and excited about markets, it’s our job as consultants to calm them down. When markets aren’t performing well, it’s our job to show clients the positives and opportunities.” —Sage Um