Abolishing silos!

 

Unity in Europe has unfortunately become a scarce commodity. The financial crisis, the gap between North and South, and differences between East and West are standing in the way of a united Europe. Today’s world is dominated by short-term thinking, and focusing on our own backyards. 'Power House Europe’ is now the sick man of the world.

What is the best way forward? The usual economic drivers of finance, ICT and telecom have all been hit hard. There are, however, some signs of revitalization in traditional manufacturing industry, although primarily in the form of creativity, flexibility and a purely international focus. Europe is also promoting knowledge-intensive developments and structural R&D, mainly through smart deployment of young technology talents in multinational teams. But Europe is also ageing rapidly. Migrants from Eastern Europe, India and China will soon be our new intelligence workers. EU politicians, however, remain largely stuck in their ways, making it very difficult for new entrants. Many member states, for example, do not allow double nationality, while camera surveillance at national borders is common.

What we need is to take a mental and maybe even physical leap out of our silos. To open up and create a new Europe, with new forms of creative partnership. Information technology is creating new opportunities for us to live and work together, with 3D printers creating instant production 'at the source’. Unique forms of collaboration will break open the traditional bastions in science and industry.

We are currently going through a period of social and economic transformation. And slowly but surely bidding farewell to the established order. From now on, metropolitan hubs, not countries, will decide on the direction of the economy. And groups of individuals, not institutions, will steer developments and determine the ‘new frontiers'.

It is now time to abolish the silos and establish new relationships and new values. That is how I see the transformation currently facing us in Europe. And it is up to Europe to retake control of its future by accelerating this transformation, even as its population ages.

 

Harry Smorenberg (harry@smorenberg.nl) is an independent strategist and columnist, and the founder and chairman of www.worldpensionsummit.com and www.nieuwenormwerken.nl.

 

The next step in Financial Literacy

Fortunately Financial Literacy is becoming ever more central. People often think that it’s only an issue for developing countries with a primitive payment infrastructure and a general lack of knowledge on how to handle money. Yet attention is also being increasingly drawn to the situation of consumers in more prosperous nations. It would seem that Financial Literacy is a major concern for these more affluent countries too. Driven by the ongoing financial crisis, more and more people are being forced to take active control of their personal finances. The years of 'pampering' by governments, employers and other institutions are well and truly over. As a result, the public are being increasingly exposed to risk. Consumers need to focus on budgeting, planning and book keeping. And take more control of their personal financial affairs, which requires enhanced knowledge and insight in the short, medium and longer term. Many, however, are too "caught up in their daily financial reality" to be able to effectively plan ahead.

"Financial Literacy" should begin with (primary) school education, under the subject of "personal economy." That knowledge will act as a potential stimulus to greater discipline in finance, budgeting and financial planning later on. Unfortunately though, I still see too much 'rumour around the issue." Many organisations and governments launch purely promotional schemes, such as "Money Week" and brief courses for schools, covering only savings and payments (often sponsored by financial institutions). This might increase young peoples’ knowledge levels to some extent. But structural "repair" doesn’t come from well-meaning PR. That’s way too optional!

The market requires a much more intensive intervention. The current crisis could be the perfect trigger for a far more structured approach to Financial Literacy. Naturally, with a sustained focus on providing a suitable curriculum during the entire educational process. But also with the aim of developing universal, standardised reporting from all of the 'financial players' active in the market. Banks and insurance companies often provide position information (budget info) from their own, individual systems and package these as unique propositions (USPs) in order to bind customers to their brand. You only have to look at the confusing selection of budget planning programs from banks, pension statements, investment reports etc that are available today.

A central aggregation of this information and a standardised reporting format from all of the Financial Services providers involved, is essential for everyone. After all, this consumer data is "non-competitive". The (commercial) decisions are made​​, the only requirement is that these institutions deliver the correct information in the right format, as part of a collective "planning & budget control" program. This information could become real-time input and might be offered as an additional service (tab) on the various web banking programs or via a direct governmental channel. This would create standardisation and clear, uniform reporting on key financial information for all. An end in other words, to the plethora of different reports from banks, pension funds, mutual funds, insurers, employers, pension fund administrators and payroll administrations etc. Standardised reports would offer direct insight into both the consumer’s current and future financial state. Eventually planning tools could also be incorporated. This way it becomes an immediate and permanent benchmark for providers and consumers, in the context of a balanced duty of care. After all, every individual can and must be able to account for their true financial position at all times. Customers and financial institutions know what’s possible, both financially and technically ... I therefore urge the Ministries of Finance to take the appropriate initiative on this. Look to countries such as Singapore and Canada. Think about efficiency too, the 'win-win' for the processing of financial data (e.g. for the tax authorities) and for the financial sector (through the elimination of countless administrative silos and duplication of reports).

harry@smorenberg.nl

Harry Smorenberg (harry@smorenberg.nl) is a strategic advisor for the Financial Sector and Chairman of www.WorldPensionSummit.com.

People power: Don't expect the politicians to tackle retirement

Apart from trade union rigidity and politicians' inability to take decisions, we ourselves are the biggest barriers to longer working lives, argues Harry Smorenberg.

We are all getting older and staying in good health for longer. But even though carrying on working for longer would seem a logical next step, we've stayed where we are for decades, with no change in the official retirement age. So many vested interests in so many countries see the age of 65 as sacred and an acquired right that is not up for negotiation. Indeed, one thing that helped François Hollande win the recent French presidential election was his irresponsible promise to reintroduce a retirement age of 60, after it only recently rose to 62.

In most Western countries, people stop work at between 60 and 62, while the 'workability index' for most European countries is 75. According to the OECD, a retirement age of 70 would currently be realistic, while working for longer has also been shown to result in people living longer and remaining in relatively better health. In other words, society is letting eight productive years go to waste.

Apart from trade union rigidity and politicians' inability to take decisions, we ourselves are the biggest barriers to longer working lives. Employers are doing too little to anticipate longer life expectancies in their workforce, with salary structures still based on rising salaries. Opportunities for retraining and updating skills so as to make more flexible use of older employees are being used too little and too late. Similarly, working environments are not being adapted to accommodate older people, while pension, tax and insurance products are not yet equipped for longer working lives. We need to rid ourselves of the perception that 'old is expensive'.

But employees, too, are doing too little to anticipate change. Few people are taking responsibility for planning their personal financial future, whereas doing this properly is a way of anticipating the need to continue working into the fourth quarter of your life. The challenge now is to devise a series of cohesive measures to massage society into making better – and obviously responsible – use of those eight years of extra productivity. I can already hear politicians claiming a special status for people in physically demanding jobs. There, too, anticipation – and at a younger age – is vital. Although there will, of course, always be some groups of people deserving special care, the fact remains that we need to accept that working until you reach an average age of 70 should become the norm.

The question now is what employers should be doing to anticipate society's need for change. What is the government actually doing? How flexible are trade unions being in helping to devise solutions? Who is educating citizens – particularly young people – to be more aware of the need for financial planning? The results of a recent 'stakeholder' survey disappointed me. People obviously see what is happening, but there are absolutely no signs of any cohesive policies or combined efforts to create the right conditions. There is not even any basic research into what kind of action employers and employees could and would be willing to take.

I would suggest it's now high time to get that done. The various stakeholders seem trapped in a web of agreements, with the change needed in the retirement age simply being swapped for another issue in the political game. No one dares take that vital first step, with everyone looking at someone else to avoid having to step outside his agreed circle of manoeuvre. Some people are happily looking at France and the plans to reverse the increase in the retirement age, with 'growth' as the new magic word. But who's going to invest and come up with the money at this stage of the crisis? The missing eight years of extra productivity all too easily get forgotten when policy for responsibly lengthening working lives is being devised.

I sense there's little point in waiting for action from politicians. Perhaps we should talk about 'making existing pension plans more flexible' rather than 'increasing the retirement age'. Insurance companies, pension funds and social security systems will need to anticipate people wanting to work longer. That means coming up with new products to allow delayed retirement on conditions that are satisfactory to all parties. In other words, finding a way of rewarding people who contribute to society for longer.

Perhaps those accepting hybrid retirement will be able to persuade governments, employers, unions and others that many people will be keen and able to remain in the workforce – providing the conditions are right and efforts are made to accommodate the different parties' wishes. There are also, of course, substantial numbers of older people whose provisions for retirement are inadequate and for whom continuing to work – possibly on a part-time basis – will simply be a necessity.

Harry Smorenberg is an independent strategist in the financial services industry and chairman of the WorldPensionSummit.

Domino-Day

Een exit van Griekenland, nog voor de zomervakantie, is bijna de enige optie. Met de verwachte verkiezingsuitslag voor de boeg kiest het Griekse volk voor de laatste strohalm; hun eigen trots. Daarmee zetten de Grieken de hakken in het zand en willen zij opnieuw  onderhandelen over de schuldpositie.  Daarmee krijgt  Europa vanzelf haar "Lehman moment".  Met het uittreden van Griekenland valt de eerste steen. Spanje en Italië wankelen al en op enige afstand staan Portugal, Frankrijk en België op rij. Op of vlak voor deze "domino-day "zal Europa drastisch moeten ingrijpen.

De lange weg van 'pappen en nathouden' en politieke zetten is dankbaar voer gebleken voor de toch al emotionele handelaren op de financiële markten. Zij hebben intussen geleerd dat elk genomen besluit achteraf weer teniet wordt gedaan door interne meningsverschillen of condities 'in de kleine lettertjes'. Ook een krachtige financiële buffer, grotendeels gestut door garanties van Eurolanden waarvan de ratings bureaus elke maand weer een plusje wegpoetsen, maakt nauwelijks meer indruk. Staan we dan toch voor de grote klap? Wat kunnen we nog in het geweer brengen tegen een emotionele markt waar alle vertrouwen is weggelopen?

Intussen praat men al driftig over de opzet van een Europese Bankunie. Centraal toezicht en absolute onderlinge steun kan in ieder geval de huidige bankrun van Zuid naar Noord (en daarbuiten) beperken.  Verder is er sowieso al sprake van een ware tsunami aan wet- en regelgeving waar de financiële services industrie zich aan moet confirmeren. Dit vergt overigens al maximaal tijd en zeer veel geld van diezelfde industrie, waarbij de focus dus primair naar binnen gericht is en niet naar de markt, de klant en dus groei.

De enige manier om het vertrouwen nu nog te herstellen is door een absoluut commitment te geven aan een aanstaand federatief Europa. Een samenwerking die zal moeten starten met de vorming van  een strakke en ondubbelzinnige financieel -economische eenheid. Deze financiële crisis wordt de aanzet tot DE versnelling van de Europese eenwording;  wellicht tegen wil en dank.

Hoewel men nu grappend spreekt over "slowbalicering", wordt juist ook de concurrentie positie van 'een Europe' de centrale uitdaging. De krachten in deze wereld vragen om een ander niveau van concurrentie dan locale prikkels en prijsvechters uit het Europese achterland. `Neue Kombinationen`zijn nodig op het gebied van Europese economische samenwerking in de verschillende sectoren en op het gebied van R&D. Het talent en de kracht van de losse expertise in Europe moet sneller worden gecombineerd. Multinationals doen dat al op zekere schaal, maar ook de brede laag van MKB bedrijven zal efficiënter cross border moeten kunnen (samen)werken. Daarmee moeten bedrijven en instellingen keuzes maken ten koste van locale posities, moet de Europese wet- en regelgeving nog flexibeler en eenduidiger worden afgestemd. Een Europese Federatie komt zo sneller dan wij misschien zouden willen op basis van cultuur en nationalisme.

Het is 1 voor 12. De emotie van de markt giert door het EU lijf en het realisme dat er maar een uitweg is,  wordt pijnlijk duidelijk. Die weg is naar verdere ingrijpende samenwerking. De prijs wordt een stevige, waarbij het rijkere noorden het arme zuiden zal moeten helpen. Maar delen is goed; het geeft juist kracht aan de gewenste samenwerking en de verdere ontwikkeling van Europa.

harry@smorenberg.nl

Hybrid Retirement

We are all getting older and staying in good health for longer. But even though carrying on working for longer would seem a logical next step, we’ve stayed where we are for decades, with no change in the official retirement age. So many vested interests in so many countries see the age of 65 as sacred and an acquired right that is not up for negotiation. Indeed, one thing that helped François Hollande win the recent French presidential election was his irresponsible promise to reintroduce a retirement age of 60, after it only recently rose to 62! In most Western countries people stop work at between 60 and 62, while the 'workability index' for most European countries is 75. According to the OECD a retirement age of 70 would currently be realistic, while working for longer has also been shown to result in people living longer and remaining in relatively better health. In other words, society is letting eight productive years go to waste!

Apart from trade union rigidity and politicians’ endless inability to take decisions, we ourselves are the biggest barrier to longer working lives. Employers are doing too little to anticipate longer life expectancies in their workforce, with salary structures still based on rising salaries. Opportunities for retraining and updating skills so as to make more flexible use of older employees are being used too little and too late. Similarly, working environments are not being adapted to accommodate older people, while pension, tax and insurance products are not yet equipped for longer working lives. We need to rid ourselves of the perception that "old is expensive". But employees, too, are doing too little to anticipate change. Few people are taking responsibility for planning their personal financial future, whereas doing this properly is a way of anticipating the need to continue working into the fourth quarter of your life.

The challenge now is to devise a series of cohesive measures to massage society into making better – and obviously responsible – use of those eight years of extra productivity. I can already hear politicians claiming a special status for people in physically demanding jobs. There, too, anticipation – and at a younger age – is vital. Although there will of course always be some groups of people deserving special care, the fact remains that we need to accept that working until you reach an average age of 70 should become the norm.

The question now is what should employers be doing to anticipate society’s need for change? What is the government actually doing? How flexible are trade unions being in helping to devise solutions? Who is educating citizens – particularly young people – to be more aware of the need for financial planning? The results of a recent 'stakeholder' survey disappointed me. People obviously see what is happening, but there are absolutely no signs of any cohesive policies or combined efforts to create the right conditions. There is not even any basic research into what kind of action employers and employees could and would be willing to take. I would suggest it’s now high time to get that done.

The various stakeholders seem trapped in a web of agreements, with the change needed in the retirement age simply being swapped for another issue in the political game. No-one dares take that vital first step, with everyone looking at someone else to avoid having to step outside their agreed circle of maneuver. Some people are happily looking at France and the plans to reverse the increase in the retirement age, with “growth” as the new magic word. But who’s going to invest and come up with the money at this stage of the crisis? The missing eight years of extra productivity all too easily get forgotten when policy for responsibly lengthening working lives is being devised.

I sense there’s little point in waiting for action from politicians. Perhaps we should talk about “making existing pension plans more flexible” rather than “increasing the retirement age”. Insurance companies, pension funds and social security systems will need to anticipate people wanting to work longer. That means coming up with new products to allow delayed retirement on conditions that are satisfactory to all parties. In other words, finding a way of rewarding people who contribute to society for longer. Perhaps those accepting hybrid retirement will be able to persuade governments, employers, unions and others that many people will be keen and able to remain in the workforce, providing the conditions are right and efforts are made to accommodate the different parties’ wishes. There are also of course substantial numbers of older people whose provisions for retirement are inadequate and for whom continuing to work, possibly on a part-time basis, will simply be a necessity.

harry@smorenberg.nl