Alberta Government Shakes Up AIMCo

In a surprising move sending shockwaves through Alberta's financial sector, the provincial government has dismissed the entire board of Alberta Investment Management Corp. (AIMCo) and relieved CEO Evan Siddall of his duties. This drastic action comes in response to what officials describe as "significant" increases in operating costs and management fees that have outpaced investment returns.

AIMCo Under Scrutiny

For years, AIMCo has managed pensions, government funds, and endowments aimed at securing the financial future of Albertans. However, recent reports indicate that from 2019 to 2023, AIMCo saw a staggering 96% hike in third-party management fees, alongside a 29% rise in employee numbers and a 71% jump in salary, wage, and benefit expenses. This spike in costs occurred despite a reduction in the percentage of funds managed internally, raising serious concerns about the organization’s efficiency and effectiveness.

Nate Horner, Alberta's Minister of Treasury Board and Finance, confirmed the dismissal in a media scrum, stating, “I did relieve the CEO of his duties.” He emphasized that the government had been monitoring AIMCo's situation “with concern” for some time and noted that a recent meeting underscored the ongoing cost escalation, warranting a necessary reset to the organization's approach.

Leadership Changes on the Horizon

The Alberta government has pledged to appoint a new board chair within 30 days. Until then, Minister Horner himself will serve as the sole director and chair of AIMCo. Following this major overhaul, all prior board member appointments are considered canceled, and a fresh board will be constituted once a permanent chair is secured.

Horner underlined the importance of AIMCo's role, stating, “AIMCo’s work has direct consequences for Albertans. Although they have achieved returns for their clients, we are acting to bring a renewed focus on the best possible returns and low operating costs.”

AIMCo's Troubled Waters

The upheaval at AIMCo follows a series of troubling events, including the recent departure of Chief Investment Officer Marlene Puffer after a brief tenure of less than two years. This follows a disastrous incident in 2020 where AIMCo saw a staggering loss of $2.1 billion stemming from a volatility investment strategy. Following that debacle, a review was conducted, and AIMCo pledged to adopt a series of recommendations for improvement.

With investments crucial to pensions for teachers, judges, and public service employees, alongside those for government funds and endowments, the pressure is on for AIMCo's new leadership to stabilize the organization and restore investor confidence.

As Alberta embarks on this new chapter for AIMCo, the focus remains keenly fixed on how effectively the new board and leadership can navigate the financial landscape while ensuring better returns and financial prudence in the years to come. Will this shakeup lead to a brighter future for Alberta's investments? Only time will tell.