“Let’s All Learn How to Fish… To Sustain LT Economic Growth ” Michael Falk, CFA, CRC Partner @MSFALK
Let’s all learn how … synopsis Today’s economic growth challenges will become greater in the future if only due to the world’s agedness, fertility levels and entitlement policies. However, those same challenges could be overcome with more thoughtful policies along with a culture of responsibility and appreciation . The book reconsiders what makes us “healthy, wealthy and wise,” and focuses on how we might re -imagine health care, retirement and education policies to usher in a new ERA of sustainable, long-term economic growth.
Good policies… have both
A little perspective…
NPV OF IMPACT ON FISCAL DEFICIT OF 2008 CRISIS AND AGE-RELATED SPENDING TO 2050; % OF GDP Crisis (2008) Age-related spending 28 ADVANCED G-20 COUNTRIES 409 34 UNITED STATES 495 29 335 UNITED KINGDOM 12 204 TURKEY 652 35 SPAIN 261 6 MEXICO 14 KOREA 683 28 JAPAN 158 28 ITALY 169 14 GERMANY 280 21 FRANCE 276 14 CANADA 726 26 AUSTRALIA 482
Clarity… Growth = % Δ Workers + % Δ Productivity On the number of Workers On the amount of Productivity Fertility Health Employment / Participation Education / Skill relevancy Net migration Capital Retirement … will the robots be our rescue?
Workers will work longer … To solve their (our) shortfalls So sayeth so many…
See…
BUT… BLS Civilian Labor Force Participation Rate, > 16yrs, 1/85-11/16 67% 66% 65% 64% 63% 62%
… NOT all workers are able 27% of workers who are ≥ age 58 perform physically demanding jobs that cause them to age faster than those with less physically demanding ones. Another 18% perform jobs in difficult working conditions that also place strains on their health. … these “less capables ” do NOT include “job - unables ”
Workers MAY work longer … To solve their (our) shortfalls IFF… they have: 1. Healthy aging and the 2. Requisite skills
Let’s retire retirement (as we know it) Work saves us from three great evils: boredom, vice, and need. Voltaire (1694 – 1778) Candide 1759
What will work? 72-73 Got Jobs or compassion or… ?
Proper netting… MATTERS! Social Security provides… 2014 data / September 2016 SS release
Bigger/deeper pools… PLEASE!
“Super” solutions exist… The futur ture e of retireme tirement Three big ideas that could reshape the U.S. retirement system Russell Investments July 2015
A cure for health care The only way to keep your health is to eat what you don’t want, drink what you don’t like, and do what you’d rather not. Mark Twain, Following the Equator, 1897
Curing today’s sick care Incent health Personal, catastrophic policies with HSAs; Free, required routine care; improved “marker” discounts; 1 system, multi-faceted local access, distant services; … Technology
Palliative & hospice care Cost, coverage limits beyond “xx” age EOL docs Atul Gawande, “ . . . our decision making in medicine has failed so spectacularly that we have reached the point of actively inflicting harm on patients rather than confronting the subject of mortality”
Learn to learn (and never stop) Education is the most powerful weapon which you can use to change the world. Nelson Mandela, speech given 16 July 2003
Ages 0-8!
Goodbye to the bottom… 5% and… HELLO +$250,000 6-10% and… HELLO +0.87 GDP
Why Fish?
Demographics do NOT have to be destiny
Give a person a fish and you feed him or her for a day; teach a person to fish and you feed him or her for a lifetime. My paraphrase of the proverb attributed to Maimonides (1135 – 1204)
Michael Falk, CFA, CRC is a Partner with the Focus Consulting Group. Michael specializes in helping investment teams with improving their investment philosophy, process and execution techniques, and investment firms with their strategic planning. He has been a Chief Strategist on a global macro hedge fund as well as a CIO in charge of manager due diligence and asset allocation for a multi-billion- dollar advisory. His background includes extensive asset allocation research, portfolio development expertise and a multi-faceted understanding of behavioral finance and retirement issues. Apart from his FCG work, Mr. Falk is the author of the CFAI Research Foundation Monograph “Let’s All Learn How to Fish… to Sustain Long - term Economic Growth.” He is also part of the CFA Institute’s Approved Speaker List, and teaches on behalf of the CFA Society of Chicago in their Foundations of Investing program. In the past, he had been a contributing member in the Financial Management Association’s (FMA) practitioner demand driven academic research initiative (PDDARI) group and taught at DePaul University in their Certified Financial Planner (CFP) Certificate Program. He is frequently quoted in the financial press. mfalk@focuscgroup.com Twitter – @Msfalk
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