It is unusual to see advertising with nothing tangible to sell.
But that is just what the Canada Pension Plan Investment Board is rolling out with a new campaign that launches on Wednesday. The fund wants to connect with more Canadians, beginning with online ads and establishing a presence on Facebook as the start of a multiyear marketing plan.
The choice to invest money in advertising might seem a strange one for a firm that does not appear to need to build brand loyalty: the CPPIB has a captive investor base because contribution payments are compulsory for working Canadians and set at fixed rates with no possibility for redemptions.
However, the board, which is the largest pension fund in the country and manages the Canada Pension Plan's $328.2-billion portfolio, sees advantages to explaining its operations and building up its reputation ahead of the next market downturn.
"The fact that they are forced to save with us – the fact that they can't take their money out – is absolutely not a reason to not work really hard to maintain their trust," said Michel Leduc, global head of public affairs and communications at CPPIB. "Especially if you're a public organization with a mandate that eventually will become one-third of the average person's retirement savings."
The fund is fighting the perception that it is unstable. Currently, a majority of Canadians – 64 per cent – are not convinced the CPP will be around to pay out benefits when they retire, according to research commissioned by the board. That polling also indicates that many Canadians do not have a good understanding of what CPPIB does.
"Those two together is worrisome to us," Mr. Leduc said. "We take the view … that the time to build your reputation is never in a crisis." The fund will watch for signals that this perception is changing as proof of the success of outreach efforts. "Building and maintaining that confidence is important for our charter – just like any other financial institution has to care about the trust and confidence of their customers."
The fund is also trying to get out ahead of potential losses that could shake public opinion. CPPIB is making changes to its investment risk profile, which is adding a measure of instability to its returns. A few years ago, CPPIB management determined that the fund could withstand more volatility in its investment portfolio because of its size, the certainty of contributions from working Canadians and the long-term nature of the CPP fund.
The CPPIB reasoned that the strategy should earn higher returns for pensioners in the long-run. That would allow the fund's overseers to decrease contribution rates, increase paid benefits or just safeguard the plan against future unknown forces.
But that strategy also means CPPIB expects to take large losses in some years as a result of all its exposure to equities and other similar investments.
"We know that one year in 10 we will lose 12 per cent," Mr. Leduc said of the fund's returns, stressing that this is part of the plan, but it may lead to negative headlines.
Fund officials believe investment returns will continue to be the most visible risk factor for the CPP, even as changes to demographics, fertility rates, immigration and wages could have a larger impact on the plan's growth and stability in the long-term.
CPPIB is concerned that trust and confidence could take the biggest hit among risk-averse millennials when the next downturn hits. It next phase of advertising efforts, in 2018, will be more focused on the millennial cohort.
The first round of ads will feature mosaic-like shapes somewhat reminiscent of the famous 1989 British Airways campaign that had people dressed in various colours coming together to form the shape of a smiling face when seen from the air. The pension fund will also launch a new website and a Facebook page to interact with any of the 20 million contributors and beneficiaries that may want to weigh in on investments or ask questions about the way the fund operates.
Other organizations and companies have made use of "brand building" ads without an explicit sales pitch. It's part of a spectrum of advertising designed to establish recognition of a brand or even goodwill toward it in the minds of consumers. The federal and provincial governments regularly engage in this type of advertising, purportedly to spread the message about your tax dollars at work – although sometimes coming under criticism.
The CPPIB, which operates as a Crown corporation at arm's length from the government, already has public reporting and outreach activities, including annual meetings in every province and reporting quarterly financial results. Mr. Leduc said connecting with Canadians digitally is a more updated interpretation of public accountability expectations set out in the act that established the fund. The fund has not yet determined how much extra it will need in its communications and marketing budget for the campaign.