Maaike Riesthuis describes the establishment of their company named TopFem. Could you briefly describe what the business is and what it is doing? TopFem is the network that brings talent and ambition together with business opportunities. We are doing this by for example organizing network drinks, business dinners, consultancy and mentoring. This way companies can meet a group of motivated, ambitious and talented girls. Girls get the unique opportunity to get to know the business, develop their soft and hard skills, and build a network for life. When did you come up with the idea of starting your own business? Geneviève and I always had a big interest in leadership and are both very ambitious. We were looking for networking opportunities, mentoring and the opportunity to meet with the business before starting our career. There were a lot of opportunities for guys already (what is fantastic!) so we decided to develop this also for girls. We soon discovered that a lot of ambitious girls and companies were very interested in this. In which way has the company evolved since its inception? Apart from the growth in the Netherlands we started TopFem in 2014 in London, New York and Paris. Can an own business be combined well with your studies? It is fair to say that it is difficult in some stages and parts of your studies. But I think universities should see the added value of students starting their own business and support them. Which skills you have acquired during your studies, also come back to your daily business activities? That must be a combination of knowledge and critical thinking with the inspiration and motivation to change things. What are the skills you have gained from the establishment of your business until now? The most important lesson: there will be a lot of no’s before a yes. There will be a lot of failing, falling and struggling but that is how you develop. There will be a lot of small steps before you reach bigger goals. Then there are the obvious entrepreneurial skills: Networking, organizing and pitching. How do you see the future of the company? We will focus on creating more opportunities to bring talent and business together by growing both geographically as online. Finally, what would you like to say to students who are also planning to start their own business? Do it! Find the right business partner. Develop a clear vision and big goals. Then it still takes a million small steps but you will get a lot of satisfaction and a lot of opportunities from the first moment. General information Founders: Geneviève van der Veen & Maaike Riesthuis Study: Business & Law Company name: TopFem Location: Amsterdam Employees: As Geneviève works at Rabobank and I moved to London to work for Apple there are 6 fantastic girls in the NetherLands running everyday activities. In London, Paris and New York there are also 2 girls who run the city activities. Then we have a huge amount of people who support our goals in various ways. Activities: Networking, Mentoring, business dinners, TopFem on Tour, Consultancy for Companies & Talent development Website: www.topfem.nl & www.topfem.eu
STUDENTS WHO PAY FOR THEIR STUDY THEMSELVES PERFORM BETTER IN THE CLASSROOM AND ARE MORE MOTIVATED
In this campus life we pose four different students a topical, interesting and important question. We inquire if students who pay for their studies themselves perform better in the classroom and if they are more motivated. Fanoes Bayat (20) International Business Administration I am a strong believer that incentives to perform better in your studies do not arise from financial reasons. Money is not the ultimate motivator, as it is an external factor. I think that internal factors, like wanting to take responsibility or the aim for personal growth create much stronger incentives. As someone whose parents are paying, I can say that it has never affected me negatively in my performance. In fact, it has even made me more motivated to perform well as it was not my own money that was being spent. The fact that my parents are doing this for me automatically makes me feel like I have to give something back, in terms of good results. Vaidotas Banys (23) MSc Marketing Management Yes, I agree with the statement. If you pay for something you will eventually just try harder for it. I think you are already motivated at the moment you start with your program. But when you have to pay for it yourself you become more motivated to succeed. I did my bachelor in my home country and I did not have to pay at all, but later they changed the system and now students have to pay for their whole studies. Now they choose the place of studying much more carefully just because they have to invest in it. When you pay money you feel more responsible, but at the same time you have more stress, so you end up not concentrating enough. That could work negatively. Julius Joosten (25) International Business Administration I think that is absolutely right, because it serves as a motivator to finish your study in time. If you have study delay, it will cost you more than expected and if you cannot pay for it anymore you are obligated to graduate in time. When your parents decide to pay your tuition, you do not have a part of the motivation you get when you have to pay for it yourself. You will not perform optimally if your studies will be paid for compared to when it is your own responsibility and you have to work or borrow money from the bank. You do feel a little more pressure during exams and crucial moments, but that could have a different outcome for each student. Daan Peters (22) MSc Finance I also pay for my study myself, in the sense of paying it from my monthly grant. I started in my program together with many friends from high school who were funded by their parents, while I had to pay for myself. Eventually, I am the only one left. This is why I strongly believe that there is a truth in this statement. People tend to switch programs more often if they do not have to pay for their study themselves. When they do not like their study they are not motivated to still make something out of it. It will also raise the pressure. Because you have to finance your study yourself, it is of great interest to you. On the other hand, when receiving allowance from your parents, there may be some social pressure. If your parents pay, they will push you more and have more social control over you.
A Dutch Perspective from Down Under
A contribution by Faces editor Georgie Watson. She is an exchange student from Melbourne, Australia and studies Finance and Economics at TiU. She writes about the highlights and surprises she discovered in Netherlands and around Europe. A reoccurring question that has been proposed to me, is why as an exchange student from Australia, did I chose to study in Tilburg, of all places? Let me start by stating the obvious: speaking a foreign language is not a current talent of mine. When considering my options, it was the Dutchmen’s ability to communicate in English with such affluence that sparked my interest in the country. Globally, the Dutch are renowned for being “ahead of the times” in their English speaking ability and this I can confirm. What’s more, the feedback I received from friends who had previously lived in the Netherlands made me realise that this country could be an exciting place to learn, travel and socialise. My first impressions, having just traveled through the Mediterranean the previous month, I landed in Schiphol Airport and there were three things that stood out immediately. Obviously, the high degree of English-speaking locals, the mass of generally well-dressed and well-groomed men, and finally, the unbelievably heavy rainfall outside (given it was August!), which particularly shocked me as I dragged a twenty-eight kilo suitcase full of summer clothing behind me. Three months on, I can confidently say that I have had the most amazing experience, have met fabulous people and have been surprised by such vast facilities available in Tilburg and at the University itself. It was the Economic School and its strong global reputation that drew me to Tilburg University. The emphasis on economics and world trade in my chosen subjects has been challenging yet incredibly relevant and rewarding, particularly given the current hype around European economic instability. It has been enlightening to live in a country within the European Union and simultaneously study fiscal and monetary issues that align with news headlines. Coming from Australia, it makes you realize how isolated we really are. The combined effect of living and learning within the European Union has given me invaluable insight. It is clear to me that The Netherlands, despite its small size, is a big player and contributor to the European economy. Professors here (taking note that they are teaching in their second language) are incredibly thorough and passionate about what they are teaching. I have adapted to the strict emphasis on arriving on time to lectures, though conversely, have not been so flexible in adjusting to the coffee, which does not compare to Melbourne’s high standards. Of course, the people I have met have been the highlight. Living in international student accommodation, I have been exposed to so many different cultures, religions, perspectives and cooking styles, which create an environment that is conducive to learning something new every day. In Tilburg there have been countless opportunities for exchange students to meet new people. From the international student associations to Dutch study organizations (ASSET being one of them), they provide a setting to meet interesting characters, make friends and create networks that wouldn’t otherwise be possible. The Netherlands is clearly an international hub attracting thousands of students from around the world. Unlike some countries, the diversity of people that you interact with daily creates a foundation of insight into a variety of cultures that you cannot experience anywhere else. From Colombia to South Korea, we share stories and contribute to heated debates at the dinner table, which provide a platform of continuous development within a social setting. The combination of these daily interactions, along with studying international economics truly makes for an invaluable time abroad. Some highlights for me also include the overwhelming ease of international travel. Given Australia’s inaccessibility from the rest of the world, popping over to Barcelona for your birthday weekend would be impossible. I have loved how proximate European countries are to one another. The nightlife has also been memorable, however, adapting to the bike ride home at four am in the morning is still a struggle. I have additionally loved being able to run in any direction to find yourself bound by dense forest or rich agricultural landscapes. This contrasts’ strongly to the typical Melbourne run: heavy traffic, modern skyscrapers and artificial noises. Finally, there was one thing I had to do before my time was up: learn to ride a bike without hands. The achievement was a memorable occasion and I will be taking this trendy skill back home to Australia! With only a few months left, I cannot imagine what life will be like when I have to depart. Upon graduating from my Bachelor of Commerce in July 2015, I will be applying for graduate positions in finance and I hope to one day return to work in Europe, whilst always knowing that my second home is right at my doorstep.
Interview Maarten van Bijsterveldt
Dennis and Joost spoke to Mr. van Bijsterveldt, Interim Commercial Manager at RKC. He gives his insight about the financial world around football. He explains how football clubs earn their revenue and how they manage in their market. The interview is especially focused on the financial position of RKC Waalwijk and gives some interesting insight in this sector. Could you tell us something about your career? I started as a banker twenty years ago, at first mainly for private clients. I continued my career at Rabobank as a financial planner. Here I managed to build a large network what helped me with the financial and legal planning for more wealthy clients. Thanks to that network I became director at Fortis Oisterwijk, where I was responsible for entrepreneurs and enterprises. I also worked at Fortis Tilburg and at Fortis Oss. At the time I worked in Oss, Fortis Belgium got bankrupt, what resulted in a nationalization of Fortis Netherlands. Because of the nationalization I had to unite two offices of ABN Amro and Fortis where I had to integrate and reorganize. I ended my banking career at Rabobank as a private banker. 2 years ago I helped my brother in law Joonas Kolkka with the start of the Quality Options Foundation, where I got into contact with Remco Oversier. He was interested in my methods and offered me the job of Interim Manager at RKC Waalwijk. At the moment I have my own company Klix,a company which guides organizations through the changing market. At the Quality Options Foundation, we make a worldwide network with football clubs to improve the quality of young players. Could you tell us something about your education? As a student I have chosen a challenging road. I finished HAVO and went to Eindhoven to do HTS Bedrijfskunde, but I did not finish that education and started working when I was 21. I figured that without thorough education, especially in banking, I couldn’t get anywhere. That is why I started to attend evening school commercial economics, continued with post HBO financial planner and finished with all the banking courses available. You have worked at several banks, but did those experiences help you to do your work as an Interim manager at RKC Waalwijk? Let me first point out that going from a banker to Interim Commercial Manager was not a logical career move, although past experiences helped out a lot. My biggest contribution is the wide diversity of clients I used to deal with. I was used to provide clients with a very specific product. I am also able to see what my added value will be in numerous occasions. Furthermore, I have a wide network and because I understand what companies want, I was able to give added value for sponsors of RKC Waalwijk, which was a great part of my job description. The changes I made within Fortis ABN Amro, taught me to deal with a different way of working and dealing with customers. I also have a lot of management experience and because of banking, a broad view on financial structure. Which revenues and costs are the most important for RKC Waalwijk? Structural revenues are the most important, because you cannot build a financial plan based on non-structural revenues such as player transfers. At RKC Waalwijk, total revenues were 5.6 million last year. The key revenues are television rights of FOX-Sports (35%), sponsors (50%), ticketing (15%) and merchandising. With exception of Ajax, Feyenoord and PSV, television rights are the most important revenues for Dutch football clubs. How much a club gets depends on the time you play in which league and the average rank you have had in the last five years. When RKC played in the first league last year they got 2.1 million euros, but this year they will only get around one million since they degraded to the second division. The loss RKC incurred could not be fixed with extra sponsors; because, sponsors went away because there is less exposure of their companies in the second division, which resulted in a loss of one million. The average football club spends about sixty percent of their entire budget on salaries. RKC spends 13 percent of their budget on training and costs incurred for matches. The municipality of Waalwijk owns the stadium; therefore RKC has to pay rent which contains twelve percent of their budget. What is the Influence of Municipality’s on Football Clubs? The municipalities do not voluntary spend capital on their local club. They do not have personal interest in football clubs so they are not actively involved in them. The main reason why most of the municipalities spend capital on their club is to maintain the community belonging with the club. How is the ratio between the budgets of the smaller and larger clubs in the Eredivisie? The large clubs, Ajax, PSV and Feyenoord, are all-determining in terms of television views and attractiveness. The problem is they cannot just play against each other. They need the entire competition to exist, especially now when they are not doing well in European tournaments. The large clubs get a lot of income from television, merchandising, ticketing and sponsors. The medium-sized clubs e.g. Utrecht and Vitesse, gain a lot of income from private investors. The clubs below them e.g. Heereveen, Hercacles and Cambuur, earn their income by executing a solid and clever policy. Clubs like Willem 2 and RKC, who went through financial difficult times, need a long time to recover from their low budgets. The ratios between the larger and the smaller clubs are growing every year. Ajax had a 65 million euro budget last season, while Cambuur Leeuwarden had only 4 million. The television income for this season fluctuates between 1.66 and 8.68 million euros. How important is Youth Training for Clubs in the Eredivisie, in particular RKC Waalwijk? RKC has consistent youth training. Together with FC Den Bosch they form Brabant United. Due to the current crisis at RKC, it is
Why Index Tracking in the Netherlands is catching up just now…
Long time trader Martijn Rozemuller discusses the evolving nature of exchange traded funds and their growing popularity. Martijn gives insight into the issues that have made breaking into the fierce and competitive market of actively managed funds more difficult than one would expect. With experience in building his own company, Think ETF is on its way up as investors begin to appreciate the benefits associated with low risk tracking products. For hundreds of years the stock market has appealed to society’s imagination, particularly here in Amsterdam where the first stock exchange in the world once took place. In the last decade, financial institutions have used marketing mechanisms to induce society to join the world of trading, comprising easy money and glamor. The investment community promises society attractive returns and experts with hands-on experience hold the power to attain these appealing returns- however it is not as easy as it seems. Of course, investing is a very complex process and therefore it is not wise to let every day citizens make these important decisions on their own. Here, experts take over the work and get paid handsomely in the process. As long as returns are positive, everyone benefits and therefore investors neglect the large fees associated with active investment funds. This all changed when returns in the last decade suddenly contracted. During my employment as an options trader at the Dutch trading company Optiver, I slowly realized the great difference between trading, speculation and investing. I too have made rookie mistakes before. This was when I started investing privately, but luckily I have learned from my mistakes and have adapted my behavior based on these learning experiences. I discovered that investing involves a lot more than most people would suggest. The process of searching for superior stock and the precise timing of a trade was exciting, though not effective. Over time my preference became clear towards investing by tracking indices with ETF’s. It appeared that this form of passive investing was not a highly glamorous investment vehicle per se, but rather simply tracked the market index allowing for a low cost structure. In contrast, active investing aims to beat the market while in the process attracting high costs- all despite the low probability of success. No longer was I required to search for specific shares and make decisions about when I should enter and exit the stock market. With an ETF we simply track the market as a whole and returns will more or less match the market index. There is little value in poring funds into expensive investment managers that charge high transaction costs and sometimes other hidden costs. However, unfortunately the first ETF’s weren’t completely perfect either. Reclaim Dividend Taxes There is a specific aspect that features in the use of ETF’s that I am opposed to; missing the opportunity to reclaim dividend taxes. This is also known as a dividend leakage. This is completely unnecessary as dividend taxes can be easily reclaimed in the Netherlands. My awareness prompted research into whether this could be done better. After thorough investigations and with the help of a known tax specialist, we found the solution to this flaw. The problem appeared to be the ETF’s country of establishment. By choosing the Netherlands as a country of establishment and to request for the so-called FBI-status (Fiscale Beleggings Instelling) -implying that the institution has special rights with regards to its corporate income tax- the possibility of the investor reclaiming dividend taxes withheld in advance could be possible. On an annual basis, assuming a dividend yield of about 3% to 4%, this would give additional returns to the investor of about 0.5%. This looked to me like an undiscovered business opportunity and hence, Think ETF’s emerged. ‘Success Will Follow Naturally’ Think ETF’s was established in 2009 with a belief that with the best product, success will come automatically. Unfortunately, growth was less prosperous than expected as it was very difficult to convince investors of the advantages that we, as Dutch ETF issuers, could provide them with. For decades, marketing mechanisms within banks have promoted active fund management and this concept appeared difficult to break into. Additionally, payment for providing these products is required. Banks are accustomed to investment funds paying them a fee for their services as an intermediary, this is the so-called ‘kick-back fee’. For example, an investor pays 2% in costs to an investment fund, where 1% flows back as compensation to banks. Therefore, banks experience a financial advantage in selling an active investment fund rather than selling an ETF. Hence, the difficulty we experienced in the early years. Ironically, this situation was prompted by an initiative named ‘open architecture’. With the best intentions, this system was developed to prevent banks from selling primarily their own funds. Even though the intentions were good, in practice it resulted in adverse effects. As the market ‘opened up’ foreign banks were given the opportunity to enter the market and compete with domestic banks. To stimulate the sale of their products, foreign banks started to pay distribution fees. This placed upward pressure on prices and consequently had adverse effects for the investor, as distribution fees were passed on to the final investor. Instead of reducing costs and stimulating competition and innovation, the open architecture system resulted in increasing costs. Transparency Costs and Return Thankfully, a clear change has been observed in the last couple of years. A number of factors have caused ETF’s to grow in popularity. Academic research has been a major contributor to this growing demand in investment style. Research has shown that only 20% of active fund managers are capable of achieving a higher return than the overall market index. One of the biggest challenges is to predict which fund managers that will be. In addition, the crackdown of the AFM (Authority for Financial Markets) and ESMA (European Securities and Market Authority) has brought significant change. Here, the AFM has carried out extensive research into the portfolios of actively and passively managed
Freaky Thursday
Marcel Pheijffer, is Professor Accountancy, Nyenrode Business University and professor Forensic Accountancy, Leiden University, elaborates on the often-discussed recent reports concerning the accounting profession, its findings and recommendations. He reflects on the issues surrounding the profession in the past years and discusses its future. Introduction Recently, on the 25th of September 2014, three reports concerning the accounting profession were published. The first report, ‘Build to trust’, from the Erasmus University, is a report that refers to the evaluation of the Audit Firms Supervision Act (also known as: Wet Toezicht Accountantsorganisaties) and the operation of the Authority of Financial Markets (AFM), the supervisor of audit firms. The second report is written by this supervisor and concerns the ‘Findings inspection quality of statutory audits Big 4 firms’. The last report that was published that same day was titled ‘In the public interest’, written by the working group ‘Future Accounting Profession’ (hereafter: working group); a report with a large number of measures to improve the quality and independence of the audit. The Financieel Dagblad, a Dutch financial newspaper, named the day of the publication of the reports ‘Freaky Thursday’, a day with a terrifying message for the accounting profession, namely that they do not deliver sufficient quality and that it should be improved. Later, I will discuss why quality needs to be improved, as evident from the above-mentioned AFM report. I will also discuss the measures that the aforementioned working group provided to solve the quality problem. Finally, I will finish with a short reflection. AFM report The AFM report outlines a gloomy picture of the quality of the audit within the Big 4 audit firms resulting from a review of several selected audit files at Deloitte, EY, KPMG and PwC. The companies incurred respectively 4, 3, 7, and 4 fails. An audit file is qualified insufficient if the external accountant has not obtained sufficient and appropriate audit information to underpin the audit report. Ultimately the AFM tested 40 files, of which 18 (45 percent) were qualified as insufficient, not a number to be proud of. The qualitative analysis of the AFM is also rather depressing. The supervisor determined that, in several cases, external accountants performed insufficient proceedings to establish if the internal controls of the audit client work effectively and performed no or insufficient substantive tests substantive analytical procedures or relational checks for material accounts. Additionally, the external accountants did not evaluate the control information provided to them directly by management or experts sufficiently critically. The AFM also outlines the causes of the failures. They requested the audit firms to analyze these failures. The Big 4 provided a number of explanations regarding the problem files, including the following: -The external auditor insufficiently supervised the audit team and inadequately reviewed the work of the audit team; -The external auditor himself was involved too little or too late in the execution of the audit; -The external auditor relied too much on the internal audit department of the audit client, without performing sufficiently many activities himself; -The external auditor and the Assignment Focused Quality Assessor (Opdrachtgerichte Kwaliteitsbeoordeelaar (OKB’er)) focused too much on the headlines and the final result of the audit; -The external auditor focused on his general knowledge of the sector and the client, instead of on the actual and specific risks; -The external auditor is only familiar with the operational processes of the client at a too high level; -The external auditor did not involve experts (e.g. IT specialists) in the design of the audit at an early stage to keep the price of the audit low; -The audit team lacked sufficient professional skepticism; -There was no business culture in which people addressed each other on breaching agreements; -During the audit the question asked often was ‘Is this correct?’ instead of ‘Is this the right thing to do?’; -The external auditor was responsible for too many assignments at once; -Because of further automation, there was less communication between senior and junior members of the audit team and less training on the job occurred; -Solid project or process management lacked within the audit organization; -The external auditor was not aware of the fact that the quality of his audits was insufficient, because his audits had always been reviewed relatively positively in OKBsand internal quality surveys. Each cause can be removed by paying attention to the audit, the audit team, the client and the acquisition of knowledge. Each cause, if eliminated by quality-enhancing measures, would cost the owners of the audit firm, its partners, income. Working group ‘Future Accounting Profession’ The constitution of the working group is the response of the Netherlands Institute of Chartered Accountants (also known as NBA) on the motion of Sir Nijboer, PvdA member of the House of Representatives. He requested the government to engage in conversation with the accountancy sector, in order to come up with a report containing proposals for improvements in the profession and to inform the parliament about these. The report should be published simultaneously with the report of the AFM in September. The working group provided over fifty measures of various kinds. They proposed to limit the power of the partners at the largest audit firms (those with a so-called OOB permit) by setting a Board of Supervisory Directors with external members. This board appoints and evaluates management and, next to her general tasks, specifically supervises the safeguarding of the public interest, using control quality as a guiding principle. Furthermore, the reward and earnings system of audit organizations is firmly addressed: profit independent remuneration directors, limited variable remuneration component and the introduction of a claw-back.The most important measure, however, is the redevelopment of the so-called ‘leverage model’ (the number of employees that a partner manages). Measures are also taken in the field of culture and behavior. For instance, the introduction of a professional oath, similar to the oath bankers have made after the crisis. In addition, the terms ‘attitude of professional skepticism’ and ‘quality’ will be embedded in the rules of professional conduct and a system
