Ron Elmer

Candidate for State Treasurer

April 18, 2012
Ron Elmer
Ron Elmer

Full Legal Name: Roger Ronal Elmer, Jr. (note: there is no "d" in "Ronal")

Name as it Appears on the Ballot: Ron Elmer

Office Sought/District: State Treasurer / State-wide

Party: Democratic

Date of Birth: 04/18/1967

Campaign Web Site: www.ElmerForTreasurer.com

Occupation & Employer: former investment manager at First Citizens Bank and BB&T, author of 4 investment books

Years lived in North Carolina: 12 years

Email: Ron@ElmerForTreasurer.com


1. What do you see as the most important issues facing the Treasurer's office? If elected, what are your top three priorities in addressing those issues?

The biggest issue facing the Treasurer's office is the $3 billion hole in the state pension fund caused by poor investment management. For the first time since 1998 our state pension is under-funded.

The single biggest impact the State Treasurer can have on North Carolina is by increasing the investment returns within the $75 Billion pension fund. We can reduce the burden placed on state tax payers and still secure the rightful benefits earned by our faithful public servants.

First, I will stop and reverse the current flow of funds into the very high cost alternative investments such as hedge funds and private equity.

Second, I will massively reduce the exploding annual cost of investment manager fees of $300 Million that is paid to external managers that essentially funds 3,000 high-paying jobs outside our state. I will "in-source" these investments at a fraction of the cost of the current policy of out-sourcing the investment management. We can save hundreds of millions of dollars each year and create a few investment jobs right here in North Carolina.

Third, I will increase the use of low-cost passive indexing as an investment strategy. At $75 Billion, our pension fund is the 10th largest in the US. The fund is so large that once we add up the portfolios managed by the 200 external managers, the pension fund looks a lot like a very expensive index fund.

In summary, by eliminating or reducing Wall Street's $300 Million drain on our pension fund, the State Treasure could easily reduce the burden to the State by more than $1 Billion over the course of 4-year term. There is not another public official that has the ability to increase State coffers by $1 Billion without raising a single tax or cutting anyone's budget except the State Treasurer. But, it will take an experienced investment manager to do that. I am the only candidate in the race with any true investment management training and experience.

2. What in your record as a public official or other experience demonstrates your ability to be effective on the issues you've identified? Please be as specific as possible in relating past accomplishments to current goals.

Shouldn't our State Treasurer be a professional investment manager?

Who do you want managing YOUR investments?

  Elmer Cowell
Bachelors Degree Major? Finance History
Masters Degree Major? Finance & Accounting Marketing & German
CFA? Yes No
CPA? Yes No
CFP? Yes No
Prior Investment Management Experience? 15 years None
Investment Books Written? 4 None
Taught College-Level Finance? Yes No
Career Politician? No Yes
Investment Strategy? Bring YOUR money back to North Carolina Outsource to Wall Street
Number of Campaign Fund-Raisers in New York? None 4

If you fire Janet Cowell for me, I'll fire Wall Street for you!

I am the only candidate for State Treasurer that has had a career as an investment manager.

I am the only candidate that has previously managed pension fund investments.

I am the only candidate to have attained the CFA designation – the gold standard in the investment management field.

I am the only candidate to have taught college-level finance.

I'm the only candidate to have written and published 4 books on investment management.

When I ran the Equity Division at First Citizens Bank I managed $2 billion for the North Carolina Retirement System pension fund as an external manager. We were the lowest cost investment manager for the State. I will do the same thing on a bigger scale inside the Treasurer's office.

3. How do you define yourself politically, and how does your political philosophy show itself in your past achievements and present campaign platform?

I am a Democrat, but lean toward fiscal conservatism.

I believe in low taxes through the elimination of government waste.

Being a CPA, I know how to save a penny.

Being a CFA, I know how to turn one penny into two.

Being a CFP, I understand the importance of a solid retirement plan.

4. The Independent's mission is to help build a just community in the Triangle and North Carolina. Please point to a specific position in your platform that would, if achieved, help further that goal.

I will push for a law to prohibit the State Treasurer from handing Wall Street YOUR money with the right hand while simultaneously accepting campaign contributions with the left.

Unlike Treasurer Cowell, I WILL NOT hold campaign fund raisers in New York City.

Unlike Treasurer Cowell, I WILL NOT accept campaign contributions from Wall Street.

Unlike Treasurer Cowell, I WILL NOT accept campaign contributions from individuals whose employer is seeking to do business with the Treasurer's office.

Unlike Treasurer Cowell, I WILL NOT raise hundreds of thousands of dollars in campaign contributions from outside North Carolina.

5. Identify and explain one principled stand you would be willing to take if elected that you suspect might cost you some popularity points with voters.

As a professional investment manager, running for State Treasurer on a platform that I will fire many external investment managers makes me unpopular within my own circles. Pledging not to accept campaign contributions from individuals doing business with the state puts me at a $1.7 million disadvantage to Treasurer Cowell who will take money from anyone. Currently there are hundreds of individuals that are willing to contribute to Treasurer candidate campaign funds in hopes of gaining an advantage when it comes to obtaining lucrative state contracts. Obviously, those folks won't vote for me since I won't "play ball." But, I wouldn't want to be State Treasurer if I had to sell my soul to get there.

6. If these issues haven't been addressed above, would you please comment on:

a. State investment policies: How should they be changed, if at all, from the practices under the current Treasurer?

Our pension fund is the 10th largest in the US. It makes no sense to outsource the management of our pension at a cost of more than $300 million each year. If we had a professional investment manager running the Treasurer's office, we could manage the investments ourselves and save at least $250 million each year! We will utilize low-cost indexing investment strategies everywhere possible.

b. State spending: Will you attempt, as Treasurer, to influence the pace and composition of state spending? If so, how?

I will fire as many of the 200 external investment managers as possible. I will put an end to the $300 million annual payments to Wall Street firms. If we can stop this drain on our pension fund, this will reduce the burden of the pension fund on our state's finances.

The $300 million annual payments to Wall Street firms are just the tip of the iceberg. The annual underperformance of our state's pension fund, relative to the average public pension fund, amounts to $900 million each year. To put that into perspective, the annual corporate tax receipts for the entire state amounts to $850 million. If we can just stop the bleeding within the state pension fund, our state will have many more tax reduction and spending options.

c. State borrowing: What policy changes will you recommend on bond issues and other forms of state and local debt?

If our citizens want certain services or capital projects that cannot be completely funded by current tax receipts, these items must be funded by borrowing via bond issues. The service or project should be bundled with a tax increase, or a budget cut elsewhere, that is sufficient to pay off the debt incurred.

The service or project, the tax increase or budget cut, and the bond issue should be presented as a package to be voted on by the people. Increased spending should be tied to either increased taxing or budget cuts elsewhere. If we want something bad enough, we should be willing to pay for it, or give something else up if we can't afford it. After all, this is how we all run our own family finances.

7. To what extent, if any, should the Treasurer's policies on pension fund investments be geared to strengthening the North Carolina economy and/or addressing specific North Carolina issues?

62% of our pension fund investments are "outsourced" to over 200 external investment managers – almost all are outside North Carolina.

The cost of this outsourcing is a staggering $300 million each year!

YOUR money funds 3,000 high-paying jobs outside our state.

I pledge to bring YOUR money back to North Carolina.

We can manage YOUR investments here, and create jobs in North Carolina instead of Wall Street.

Diversification of our pension assets is vital to the long-term success of the fund. Tying the pension fund's success to the North Carolina economy would not be prudent for the pensioners whose lives are already dependent on the North Carolina economy.

By law, the pension fund was created to benefit "the pensioners" who will rely on the fund in retirement and have put a significant amount of their own money into the fund. No matter how good the intentions, using money from the state pension, to fund investments for the sake of "North Carolina's economy" would be a violation of the fiduciary duty owed by the State Treasurer to "the pensioners."

8. Should public employees have the right to bargain collectively in North Carolina?

Yes. All employees should have that right.

9. In light of the number of foreclosures and other economic hardships in North Carolina, what is the state government's role in its citizens' financial literacy? What can the treasurer's office do to increase that literacy and how would you measure the results?

Having taught finance at Strayer University and NC State University, financial literacy is near and dear to my heart. I have written personal finance books that are purposely short to help the average employee navigate their employer's 401(k) plan and another on how to roll an old 401(k) into a low-cost IRA upon leaving an employer.

Many foreclosures and personal bankruptcies are caused by predatory sales practices by rogue employees at certain lenders that encourage and enable our citizens to live beyond their means.

A basic class in personal finance should be required for all high school seniors, in order to help our citizens avoid such problems.

We could measure the effectiveness of such a program by tracking the number of foreclosures and personal bankruptcies in the state over time.

10. As member of the Council of State, you would have input on the issue of the death penalty. Do you feel qualified to vote on such issues? If so, how would you vote on the execution protocol and other death penalty matters that may come before the Council? And is the Council of State an appropriate body to deliberate these issues? Do you think the Racial Justice Act should stand? Why or why not?

We have had several high-profile cases in North Carolina where individuals convicted of capital offenses were exonerated 10-20 years later. While we cannot return 20 years of freedom to those wrongfully convicted, we can let them out of jail. However, we cannot resurrect the dead. Also, several financial studies have shown that enforcing the death penalty is far more expensive than imposing a life sentence. For these reasons, I favor sentences of life without parole for serious crimes.

If we had no death penalty, we would have no need for the Racial Justice Act. But, as long as we do have a death penalty, we should have the Racial Justice Act in place.

Regardless of my personal beliefs, as a Council of State, I will always uphold and abide by North Carolina's current laws.

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