“Let’s All Learn How to Fish…

To Sustain LT Economic Growth”

Michael Falk, CFA, CRCPartner

@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…

26

14

21

14

28

28

14

6

35

12

29

34

28

482

726

276

280

169

158

683

261

652

204

335

495

409

AUSTRALIA

CANADA

FRANCE

GERMANY

ITALY

JAPAN

KOREA

MEXICO

SPAIN

TURKEY

UNITED KINGDOM

UNITED STATES

ADVANCED G -20 COUNTRIES

NPV OF IMPACT ON FISCAL DEFICIT OF 2008 CRISIS AND AGE-RELATED SPENDING TO 2050; % OF GDP

Crisis (2008) Age-related spending

Clarity…

Growth = % Δ Workers + % Δ Productivity

On the number of Workers

Fertility

Employment / Participation

Net migration

Retirement

On the amount of Productivity

Health

Education / Skill relevancy

Capital

… will the robots be our rescue?

Workers will work longer

So sayeth so many…

… To solve their (our) shortfalls

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

IFF… they have:1. Healthy aging

and the2. Requisite skills

… To solve their (our) shortfalls

Let’s retire retirement (as we know it)

Work saves us from three great evils: boredom,

vice, and need.

Voltaire (1694–1778) Candide 1759

72-73

What will work?

Got Jobs or compassion or… ?

Proper netting… MATTERS!

Social Security provides…

2014 data / September 2016 SS release

Bigger/deeper pools… PLEASE!

The future of retirement

Three big ideas that could reshape the U.S. retirement systemRussell Investments July 2015

“Super” solutions exist…

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

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 ofmortality”

Palliative & hospice care

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

mailto:mfalk@focuscgroup.com