The whole pension thing was completely by accident,” says Pretty Sagoo, explaining how she ended up in banking, working with insurance and pension fund clients.
In the language of the industry, her career has revolved around structuring and pricing deals, de-risking, swaps, hedges and the like. But Pretty doesn’t do jargon. “It just winds me up when people talk jargon to me – using phrases like ‘five yards’ or ‘three yards’ when speaking to a client. A yard is a billion – now how is a client supposed to know that? A little actuary who’s just joined from university is left thinking that’s some new financial measurement when it’s just bankerspeak.”
She quickly distils her day job into terms that even a layman can understand: pension schemes have assets and liabilities. On the liability side, due to the money owed to pensioners, there are risks linked to movements in interest rates, inflation and the fact that people are living for longer than expected (longevity risk).
Pretty’s career has centred around finding solutions to manage these risks and, today, she leads insurance solutions for Deutsche Bank’s European clients.
If this sounds like a job for a rocket scientist, well it very nearly is. Pretty is a trained physicist with a PhD in atmospheric physics from Imperial College, London. She never wanted to go into finance. In fact, in her final year as an undergraduate, when the banks were raking up her fellow physicist students, she accused her mates of selling out. “I told them it was bloody disgraceful”.
She was “a total green-y” and all her life had wanted to be an environmental scientist. “I was just a bit anti-capitalism,” she laughs.
Having completed her thesis on changes in the Earth’s greenhouse effect measured from space, she was published in a selection of newspapers and media. By all accounts, her career as a scientist was about to take off. And then she got pregnant.
Her boyfriend was also studying science and, between them, they decided that to pay the bills one of them needed a City job. “I walked into my PhD supervisor’s office and said to him, ‘This is the end of my life.’ He was a wise old soul and said, ‘don’t be ridiculous’.”
Her parents were less sympathetic. She was pregnant, unmarried and her boyfriend (now her husband) was Italian. “It’s just a British Asian thing… there was nothing worse I could ‘do’ to my orthodox Sikh family.”
Her Italian in-laws were more relaxed about the news and welcomed the chance to help look after her baby when she joined Goldman Sachs as a graduate. “The banks were sucking up physics graduates at the time. They wanted people to run the numbers, to do the analysis for pension funds and insurers on what their asset allocation should be.”
She loved it. The numbers, the quant analysis – she started in the fixed income space in a quant-based role, running the numbers for pension funds. It was super technical and the intellectual stimulation she craved. But she also learnt that producing for the bank is the number one priority – and nobody needs to say that for you to know it.
“I think for any family it’s super stressful when you’re both at the beginning of your career and trying to raise a child. UK society is just not made for two people to have intense jobs and children – the framework around us is not supportive – nursery ‘deadlines’, trains, traffic.
“After two years I realised my work-life balance was so screwed up that I was either going to end up divorced or collapse from exhaustion.”
She halved her salary and took up a job with a UK insurer based in Bristol. “It felt cuddly, balanced – people actually left work at a decent time and went to see their families. I had to get used to people not swearing in the workplace, slamming their hands on the desk…”
She continues: “In a bank you can literally walk in every day and there’s the chance you could get fired. That’s how a bank is. Banking is high risk, high reward – I mean people can disappear overnight… It’s just a tougher environment.”
Despite a more civilised pace, she missed the variety and energy of the City. So when one of her former bosses called up saying he had moved to Deutsche Bank and had the perfect job for her, she didn’t hesitate. And her husband? “He said: ‘go for it, I can see your brain will be dead soon. I will manage. Just go’.”
Pretty laughs. She has no qualms about telling it like it is. “I have a really rubbish memory but there are little things I do remember and I remember walking on to a trading floor and thinking ‘I’m home’. It was good to be back.”
Her son is now a teenager and I ask her how he’s coped with having a (very hard) working mum. “He’s fine, he’s always singing. If anything I was the one who missed out by not doing the whole mummy thing. When I worked in Bristol I used to take him to school. I really liked that. When you take your children to school they tell you stuff.”
In hindsight, she would also have liked to have had another child but there was never a good time – “Work just took over. I don’t think there is ever a good time when you are working, which is why I think you just have to do it.”
Pretty clearly enjoys what she does, and is fiercely passionate about her work, but I can’t help asking her if these sacrifices have been worth it. “The fact is if you really want to stand out, if you want to make a massive difference, you need to go the extra mile.”
For her, going that extra mile means finding solutions that can help clients, and make money for the bank.
“That’s what Solvency II is all about. Insurers have to measure risks – mortality, behavioural, market risk...” she rattles off what seems like an endless list, and adds, “these companies are in a tougher position in that they have to hold buffers – excess money against the main risks.
Pension funds can have fewer assets than liabilities and carry on nevertheless. If an insurance company has fewer assets than the money owed, it’s bankrupt. It’s about managing the insolvency risk.”
She’s also a director at the Life & Longevity Markets Association, a non-profit organisation of financial institutions that promotes the development of common standards and a liquid traded market in longevity.
Pretty explains the need for an association that provides a liquid, accessible market and the tools for pension funds and insurance companies to lay off their longevity risk. “Instead of measuring and immunising every single person in a pension fund against the risk of living longer, you measure the likelihood of the population living longer. The trade becomes much simpler and cleaner. As a risk management tool it makes sense. In the Netherlands there have been massive trades done on this basis. The UK hasn’t got there yet. But the Dutchies have just got on with it – they have just run the numbers.”
I ask her about longevity – will we all really live that much longer? “It is a massive issue. We hear a lot about the pension freedoms but most people have little grasp of how long they could live. I speak as a punter, but I would totally buy an annuity,” she says. An annuity guarantees an income for life from a pension plan. These retirement products have fallen out of favour following the new pension reforms aimed at giving people greater control over their pension savings. “People are going to live for longer than they think and we simply don’t save enough. The Chinese save almost half of their money – that’s just not something we Brits do.”
That said, Pretty’s been quite astute with managing her own finances. She learned the importance of knowing what you invest in the hard way – having lost all the savings she had put away working as a hall warden at university. “I invested in technology stocks right at the height of the tech bubble and lost a large chunk of my savings. I was gutted but in many ways this also helped get me interested in the markets. I started reading everything I could find on finance.”
Our ‘fast track’ lunch – a plate of the Chef’s best at 1901, a tranquil restaurant in the Andaz Liverpool Street hotel, and a welcome escape from the hustle and bustle of the area – passes quickly and Pretty needs to dash back to the office.
The hour has gone by so quickly, aided by Pretty’s entertaining anecdotes and easy manner, that I almost forget to ask her the obvious question: her name – where does it come from? “Oh it’s actually Preeti – which is Hindi for ‘to love’ or ‘joy, delight’.
“When I was little they just called me Pretty – I think they were just winding me up. As you can imagine, when I started going to school that was just awkward. But I have come to realise it’s actually an advantage – no-one ever forgets my name.”
I smile – both names are equally apt descriptions of this lady. But whatever her name, I doubt anyone who meets her will easily forget it.
WHERE WE ATE
1901, ANDAZ HOTEL, 40 LIVERPOOL STREET, LONDON, EC2M 7QN
“Not as busy as one would expect”
This is becoming a regular haunt for my business breakfast, the restaurant has a great ambience and the tables are well spaced for talking business, shared laptop screens etc. Excellent buffet breakfast with significant selection. Have used it twice in the last month. A lot of people assume that Eastway is the only option for breakfast at the Andaz which is probably why the 1901 is not as busy as one would expect.
LADIES WHO DON’T LUNCH is a regular feature in which Maike Currie profiles a woman working in the City. All interviews are conducted at a restaurant table – as an exception, nothing is eaten within the proximity of a PC, with a plastic fork or out of a cardboard box. Maike writes about investments and money matters for Fidelity Worldwide Investment, following a career in financial journalism.