My name is Frank van der Linden, 25 years old and raised in’s-Hertogenbosch. In October 2014 my student life came to an end, as I obtained my master degree in finance. Currently, I am working as young professional at Eiffel, located in Arnhem. In 2009 I started the bachelor business economics at Tilburg University, which I completed in 2013. During my third year of the bachelor the first problems arose. I realized my English skills were still insufficient, which wasn’t very practical as the bachelor thesis finance and master finance were completely in English. Therefore, I decided to extend my bachelor phase with an additional year. This gave me the opportunity to improve my English skills by participating a summer school in Ljubljana (Slovenia) as well as joining study association Asset | Accounting & Finance. In 2012 former board member and good friend of mine Marjan Martens, puts me under pressure, in order to join A&F. At that time, I thought that members of study associations were a bunch of geeks lacking social capabilities. Nevertheless, I became member of A&F by joining the iFinance 2013 committee responsible for organizing a finance symposium. I shortly noticed that my opinion was completely misplaced, as I met a lot of wonderful people, which are nowadays still good friends of mine. Being chairman of iFinance 2013 definitely helped me developing my personal skills, which would never be the case by only attending college. Moreover, I was totally convinced that being member of A&F was a valuable addition to my student life. Therefore, after organizing a successful edition of iFinance, I joined the third lustrum committee, were I started as treasurer for the lustrum trip. Shortly, I also became the chairman of the general lustrum committee consisting of 10 people. Although, this was a huge challenge, I think we made it a great success. People are still talking about the classy gala, beer cantus in Bruges and the other exciting days during that week. It makes me still very proud, that I was part of the organization. I can say that joining A&F definitely enriched my student life, as it were one of the most exciting years of my life. Moreover, I can say that these extracurricular activities helped me a lot during job interviews. Although, I attended a lot of recruiting activities during my master phase, I wasn´t convinced about what kind of company and job fits best to me. Therefore, I thought it would be useful to join a detachment company such as Eiffel. Eiffel gives me the opportunity to work for various companies and functions, which is very exciting. Additionally, it helps me explore what type of company and functions suits best to me. Currently, I am working for McKinsey & Company in Amsterdam to support the finance department. During four months I am responsible for setting up a staff and salary administration and the transition of this administration to a shared service center in Poland. Before this assignment, I worked for municipal Veenendaal, where I assisted the internal audit department. Most assignments have a duration of less than 8 months, which give me the opportunity to obtain a lot experience at various companies. Moreover, I think this job is very useful for my network, as I will meet many ambitious people. I am convinced that when I am ready for the next step in my career, my Eiffel experience will be crucial in order to find a job that suits me best.
Investment Night 2015
On April 30, 2015 the third edition of Investment Night will take place at the Klasse Theater in Tilburg. The Investment Night 2015 is an interactive symposium where experts in the field of Finance will discuss the main objective of Investing: How to beat the market? Below you can read an interview with Erik Jan Poelen, External Affairs Investment Night 2015. Could you give a short introduction about yourself? Hi, my name is Erik Jan Poelen, I’m an MSc Finance student at Tilburg University and responsible for the External Affairs for Investment Night 2015. What and when is Investment Night? Investment Night will take place on April 30th at the ‘Klasse Theater’ in Tilburg. The name says it all: this event will be all about investing. Investment Night guarantees a night full of discussion and interaction. We found highly motivated guest speakers who are in the middle of the financial world and are willing to share their passion for the art of investing. Moreover, they have a strong view upon financial topics and are not afraid to engage in discussions with students and co-speakers. Besides individual presentations, the night contains different propositions, quizzes and Q&A’s with the speakers. I personally believe that the Investment Night is a must-see for every student that bears a serious interest in the fields of investments: after all, every one of us will face an investment decision at some point in time, like buying your first home or investing some of your savings for your future retirement. Which guest speakers will be present at Investment Night? The investment Night is built upon the guest speakers, therefore it was of major importance that we selected professionals that have a strong view about the financial world we are living in. I would like to introduce you all to our guest speakers for the upcoming Investment Night. San Lie San is Head of Equity Research of Morningstar Benelux, where he is responsible for the Morningstar Analyst Ratings. Previously, he was head of the Investment Strategy at ABN AMRO and worked for Insinger de Beaufort and Fortis MeesPierson. San studied Economics at the Erasmus University Rotterdam. San’s passion is to translate context to useful ingredients for investors, which combines a unique intellectual challenge together with a strong communicative role. Simon van Veen Simon is Senior Portfolio Manager at BNP Paribas and is responsible for the Europe Global High Income Equity Fund, as well as for the ‘’Parvest Europe High Dividend Equity Fund’’. Formerly, he was an Equity Trader at ABN AMRO Asset Management, before being promoted to the position of Portfolio Manager. He holds an MSc in Economics as well as an MSc in Financial Analysis from the University of Amsterdam. Simon uses both quantitative tools and fundamental analysis to find potentially interesting companies for the fund to invest in, but also assists with the sale of the funds to retail and private clients’ networks as well as institutional clients and consultants. Simon’s strong view on valuing equities will be of great value during the profound discussion and proposition rounds. Ben Steinebach Ben is head of Investment Strategies and is responsible for advising private investors with investment recommendations on behalf of ABN AMRO. He studied Economics in Groningen with a specialization in Macro-economics, International Economic Relations and Public Financing. In 1999 he started at MeesPierson, being responsible for Investment Advisory towards his clients for both MeesPierson and Fortis, before being promoted to head of the department in 2010. Hans Betlem Hans is the Chief Investment Officer of IBS, which provides asset management, fiduciary management, alternative investments and advisory services. Before co-starting IBS, Hans was Senior Vice President Investments at Merrill Lynch, where he worked for 27 years. Hans holds an MBA from Warrington College of Business of the University of Florida and a BBA of Nyenrode Business University. Moreover, Hans is a frequent campus speaker and often shares his vision in blogs. Hans is someone you just want to have at a night like this: he has got decades of experience and knows how to bring difficult subjects to an audience. Koos Henning Koos is an economist affiliated to the ‘’Vereniging van Effectenbezitters’’. He analyses listed companies, engages in fundamental economic research and attends shareholder meetings of Dutch stock funds. Koos holds an MSc in Investment Analysis at Tilburg University and is currently doing the MSc Investment Management at the University of Amsterdam. Koos was also the Chairman of the former two editions of the Investment Night and has proven to be a great Chairman and therefore we are very excited to have him with us again. All together, I believe that the Investment Night will be very interactive and informative, which should result in a wonderful night nobody should miss. You can register on the following website: https://asset-accountingfinance.nl/events/investment-night.
The New Economy
Business community is undergoing a rapidly changing world with new upcoming trends every year. What trends are underlying the current state of the economy and how will this affect the economy on the long-term? Should we fear or should we welcome such trends? How will this consequently work out for the future job market environment? Multinationals massively reallocate their executive teams mainly to Asia and the United States. In Volkskrant’s edition[1] of February 28th, Professor Henk Volberda, teaching Strategic Management at RSM, expresses his fears about the ongoing trend[2] of reallocating management layers to upcoming markets worldwide. Not only low-skilled work is outsourced, but also human capital is slowly moved across national borders. A sensitive issue, which could harm the economy badly on long-term. Reallocated executive teams lower the importance for multinationals to invest in R&D in the Netherlands. There is no need for human capital, so why bother to invest? The economic focus within globally branched concerns is changing rapidly. With management teams on site, multinationals can more easily sell their products implying larger profits for their shareholders. However, the negative consequences are heavily underestimated. It is common for expats on site to lose overview due to cultural and language barriers and consequently lose sight on the interests at the HQ in the Netherlands. Moreover, most of the Western companies react rather convulsively on this ongoing trend. They keep cutting back on costs and are short-term thinking. More of the same doesn’t improve one’s position. How should multinationals react on this trend? Social innovation[3] is the key. More and more organisational structures are arising making decentralized working possible. One of the major problems that multinationals experience, isn’t the lack of innovation, but rather the implementing of such innovative ideas. However, smaller companies and new entrants are able to implement this appropriately. Organisations should engineer their structure to best fit the technology, in which it will be more conducive to innovation. Increased levels of innovation will eventually have disastrous consequences known as the ‘disruptive innovative thought’, wherein innovation is that far advanced, that old systems will be blown away and will disappear. 2015 will be another year experiencing new disruptive innovations.[4] There will arise new ‘Ubers’, though this time not within the taxi segment but rather within the financial sector. New entrants will challenge the large, established banks. For example, large players like Google an Amazon are slowly moving into the financial direction, as the introduction of payment methods shows. In fact, the Netherlands is an interesting market for such players, as adoption of new technology is rather advanced. As a result of new developments, trends such as ‘the internet of things’, big data and robotics, new business models arise. This technology existed already five years ago, but it isn’t all about technology. Rather it is about how one can create value by means of these technologies. For the Dutch manufacturing industry, this new technology provides new opportunities. Rather slowly, it’ll get more economically profitable, to move production facilities back to the Netherlands. However, the source of production is all about customized production and focused on the knowledge-based manufacturing industry. For example, Philips is producing the newest robotic complex razor blades in Drachten and even though this kind of production is exciting at this very moment, more production alike will be observed in the upcoming years. This implies that production can once again be brought back to the Netherlands, however, in a different setup. Demand for employment will increase more and more within the IT-department. Therefore, demand for employment will shift due to the impact of robotics. Step by step, robotics will gather more prominence. Only smart companies, those whom invest in human capital, will be able to keep on growing at a steady rate. By adoption of new technologies, the production process will change, causing the mid-segment of the labour market to decline. A break-up will arise; on the one hand companies will invest in upgrading employees to specialize them further, but on the other hand one will observe companies competing on costs thus rather employing downgrading of their employee base. This way, the labour market will be split into two extremes. Highly-paid knowledge-based jobs and low-paid jobs with almost no need for education. It’ll be sectors that cannot be outsourced abroad. For example, a barber one cannot outsource to China, so every bit that cannot be outsourced, will remain here in the Netherlands. However, this will all be low-paid jobs and the magnitude of the job will get smaller. Looking at the health sector, one can clearly observe how this sector is robotised. More and more work will be replaced by robots, meaning robotising will move faster that you’ll expect. In 2014, several companies announced they will split up parts of the companies and this trend will continue in the upcoming years. Under pressure of their shareholders, splitting up the company is a discussion that gains more relevancy. However, this isn’t a positive development, as this will reinforce the aforementioned reallocation of HQs to overseas economies due to the smaller head offices caused by splitting up the company. Another risk will be that these smaller companies will be more attractive to be taken over by other companies and therefore this will weaken their competitive advantage. Nevertheless, the trend of the growing start-ups in the Netherlands will continue to strengthen. New entrants like Blendle, Peerby and Vandebron will stand up, providing the opportunity to establish new, large, globally powered companies from within the Netherlands. Therefore, we have to look into the development of human capital, invest more into the width and depth of the necessary skills. Nowadays, universities are too focused on knowledge production, but rather they have to focus more on the appropriate application of all this knowledge. From that point onwards, eventually, we will end up in a knowledge-based economy in which we will lead and excel. Thus, for all future job seekers, the key to success is not creating new technology; it is applying it
Interview Gijs Vereijken
Gijs Vereijken just received his Master of Economics, Netspar track, from Tilburg University. He completed his thesis project at the Dutch pension provider PGGM and Rabobank on the topic of “Balance sheet alliances between Dutch banks and pension funds.” Gijs is currently traveling through China while he decides exactly what he wants to next. China is a very interesting country, especially given the ageing problem. Why did you choose it as a travel destination? “It’s true that it wasn’t entirely coincidental,” Gijs says with a smile. “As part of my master’s program, I wrote a paper on the Chinese pension system, which triggered my interest in the country. One of the major findings was that a tremendous number of people fall outside the scope of the pension coverage. Indeed, during my trip I saw many elderly people living in poverty or still working in their old age to make ends meet.” Gijs met many other backpackers (including economists) from around the world and discovered that it is with good reason the pension system in the Netherlands is the third best in the world. “That experience gave me a broader perspective and changed my opinion of the Dutch pension system,” he admits, “but I still think we need to reform it.” How do you think the pension system will change over the next ten years? “I think there is going to be a shift in the Dutch pension system from collective pension schemes to more individual plans,” he says. “As the job market becomes more flexible, there is a growing need in Dutch society for more flexible, and more transparent, pension plans. So, as opposed to collective defined benefit pensions, which were the most common type of scheme in the past, I think we are moving more toward individual defined contribution pensions.” Gijs adds another argument for this change: “There is an inherent transfer of wealth from young to old in the current system. You cannot justify that to my generation, in my opinion.” What do you think you learned with the Netspar track above and beyond what you would’ve gotten in a standard Master of Economics program? It turns out it wasn’t all about academics. “I learned a lot about pensions, in both theoretical and practical terms,” he says. “With the company visits and possibility of writing your thesis while working at one of Netspar’s partners, you see how things happen in real life, and of course, you are given a unique opportunity to network.” As part of his thesis project, Gijs researched a possible win-win collaboration between pension funds and the banking sector. The main conclusion of this was that, in today’s market conditions, it is very attractive for pension funds to invest in the mortgages from banks. On the one hand, the banks maintain their customer relations, while achieving balance sheet reduction; on the other, the pension funds obtain a more optimal return on investment. “It could be very beneficial for pension funds, partnering with the banks, to gain control of the liquidity premiums,” he points out, “since pension funds could use the banks’ screening expertise and thus gain access to a category of assets with very attractive risk and return characteristics. You are already seeing an increase in activity in terms of transactions between banks and pension funds. A good example of that is the transaction between the health workers pension fund Pfzw and Rabobank, in which Pfzw assumed a portion of the risk for one of Rabobank’s loan portfolios.” Your trip through China must certainly also be yielding new insights. What are you going to do once you’re back in the Netherlands? Gijs ponders this seriously for a moment. “It has definitely taught me a lot and expanded my horizon,” he says. “I have put off looking for a job until after my trip: I want to work in the pension industry. Due to the fact that, in my opinion, the industry is going to experience tremendous change in the next few years, I think it would be a great challenge to be part of that. I believe the pension industry needs an influx of more young people to make the pension system in the Netherlands future-proof, generation-neutral and more flexible.”
Finance and Innovation
Dr. Alberto Manconi has the reputation of giving interesting and interactive lectures; a perfect fit for Chairman of the Day during iFinance 2015. The following article, written by Dr. Manconi, is his consideration of the topics discussed during the event. Whenever I face the trite refrain that finance is “too large,” I observe that it was likely the largest industrial sector in Renaissance Florence (Medici bankers ruled the city!), the cradle of cultural renewal which got us out of the Dark Ages. So I do believe finance affects innovation, mostly in a good way – today we discuss whether it can also hinder it, how, and what we should do about it. Among the general public, much blame for an alleged innovation slowdown (and many other ills) goes to investor short-termism:[1] Shareholders expect quick results, but innovation is all about the long-run, so excessive reliance on external finance hampers progress. While this view has its merits, I’d like to raise two caveats. First, not all shareholders have equal horizons: There are deep, “structural” reasons why a pension fund may have longer horizon than a mutual fund (e.g. their respective retail investor pools). Innovative companies might simply turn to longer-horizon investors. Second, shareholder horizon affects corporate investment in a less direct way than, say, managerial incentives. For instance, a recent study[2] finds that managers are more likely to innovate when they face weaker labor market penalties for failure – i.e., when they have a freer hand to take risk. Risk, of course, is a double-edged sword. Yes, we want companies to take risk to innovate. However, we don’t want to promote risk-taking to the point of creating instability. Hence the debate on the recent changes in bank regulation and supervision, which we also discuss today. Will Basel III limit banks’ ability to lend, thus placing a constraint on corporate innovation? I admit, that is a possibility. However, banks are not necessarily the primary source of financing for innovative firms – just think of venture capital.[3] Further, addressing risk in credit markets, especially in the aftermath of the recent financial crisis, promotes trust – a second, essential ingredient to innovation. The topic of regulation brings me to my last point, the first we discuss today, and potentially the most controversial: What is the government’s role in all this? As an economist, my “Pavlov reflex” is to say that the government should simply create a good set of institutions, and then stay well out of the market. The question is just what is a good set of institutions? Does it involve additional channels for financing innovation, e.g. concessionary loans, tax breaks, etc., or are the existing channels adequate? Should the government promote innovation in certain sectors deemed more relevant, or should it let the market decide? Or, rather, should it focus on the premises of innovation, e.g. education, developing an entrepreneurial culture, etc.? These are very broad and deep issues, way too broad and way too deep to address in this short note – but I look forward to our discussion of them today. [1] E.g. Denning, S., 2014, Why Financialization Has Run Amok, Forbes 3 June 2014, available at the URL: http://www.forbes.com/sites/stevedenning/2014/06/03/why-financialization-has-run-amok/ (last accessed: 29 December 2014). [2] Custódio, C., M. Ferreira, and P. Matos, 2014, Do General Managerial Skills Spur Innovation?, Working paper, Arizona State University. [3] Cf. Kortum, S., and J. Lerner, 2000, Assessing the Contribution of Venture Capital to Innovation, RAND Journal of Economics 31, 674-692; or more recently Popov, A., and P. Roosenboom, 2012, Venture Capital and Patented Innovation: Evidence from Europe, Economic Policy 27, 447-482.
‘Just Graduated’ Bastiaan van de Laar
My name is Bastiaan van de Laar and I graduated from Tilburg University with a Masters degree in Accountancy last June. After completing the Bachelor’s track of Business Economics and the master’s track in Accountancy, I now work as an auditor for one of the Big 4 accountancy firms that lead the worldwide accountancy industry. I now follow the Post-Master Accountancy course at Tilburg University in order to obtain a CPA-degree within a few years. Working in the accountancy business provides great opportunities to work for companies from various industries with a great variety of people at a great variety of locations. Since every company simply needs an accountant, you are able to visit companies from all industries in the world and to have a very close look at the financial situation of a great number of companies. Big or small, listed or unlisted, domestic-based or foreign-based companies: the demand for accountants is huge. For me, one of the advantages of working in this sector is that I have the opportunity to work in many different countries, amongst which some of the so-called ‘Emerging Market’-countries. For one of my major clients, I currently spend a lot of time working in Singapore. Singapore is known as one of the fastest growing emerging industries, amongst other South-East Asian countries like China, Indonesia, India, and Malaysia. Many American and European multinationals outsource substantial elements of their operational processes to these emerging countries, where human resources are available in large quantities and where operational processes can be performed in a relatively efficient way. Especially for Western European countries, a clear trend can be noticed; many of the operational elements of the production processes are relocated to countries with Emerging Markets, while the organizational hearts of the companies remain located in Western Europe. Directing and monitoring business activities in countries with Emerging Markets happens more and more easily and efficiently due to online technologies and company-wide targets and guidelines. However, it can be quite a challenge to work with or provide work instructions to co-workers from different cultures and with different backgrounds. As you might understand, it is hard to find a typical Dutch lunch break-conversation at the vending machines in Singapore; hierarchical structures are very important in many of the Emerging Market countries, so mouth-to-mouth communication takes place on a very different level and even written (email) communication is often used and interpreted in different ways. One of the typical aspects of companies in Emerging Market countries like Singapore, is that a crystal clear hierarchical separation exists between blue-collar operational employees on the one hand and white-collar financial and managerial staff on the other hand. Whereas Dutch organizations usually encourage a lot of vertical communication between the implemented management levels, the situation is different in countries like Singapore. Within all management levels, hierarchy and respect for people with higher functions are regarded as very important ethical values. Talking to your boss in an informal way – like you would do in the Netherlands – is not much of a much prevailing matter in Singapore. Inherent to this is a no-nonsense mindset of hard work and striving for results, which is generally wide-spread across organizations in Emerging Market countries. Typical for the situation in Emerging Market countries is the street view on Singapore’s main nightlife and shopping avenue, Orchard Road. While the local taxi drivers work 14-hour shifts with far below-average hourly salary rates, they transport the thousands of wealthy tourists and business visitors to the never-ending row of expensive Gucci, Rolex, and Armani designer stores. Although the cultural differences are unmistakably there, working with colleagues and clients from Emerging Market countries can also be a great pleasure. It is both challenging and informative to enter a work environment that is driven by different rules and values. Working in the accountancy or financial service industry can give you this great opportunity to work in different settings all over the world and understanding what emerging markets are really all about.