A Turning Point in the Market?

So you’ve done all that work on yourself – what’s next?  If taking your hard-earned learning out into the world and putting it to good use appeals to you, then read on…

This week’s blog is about discovering the power that lies in a (slightly) higher stage of awareness – where you can look at something in the world that doesn’t seem right – and suddenly make sense of all those contradictory views and arguments that seem to produce a lot more heat than light.

I’d like to start by asking how you ever got into personal development.

People usually look for personal development programs because of a sense that something is lacking in one or more of four perspectives on life.  The first perspective is about Engagement in life – internal processes that determine our experiences of stress, love, passion, meaning, creativity, etc – the stuff of the Turning Point.  The second perspective is about Effectiveness in life – our experiences of quality and equality of relationships, optimism, fun, family, network of friends, etc – the stuff of Mastery & Service.  The third perspective is more about Efficiency in life – making a difference, getting a good income, achieving measurable results, progress towards goals etc – the stuff of Breakthrough.  And the fourth perspective is about Sustainability, about purpose in life – our experience of seeking a secure future, a meaningful bigger picture, making a contribution in society, a sense of continuation etc – the stuff of Life, Death & Purpose. 

Where were your strongest growing experiences – check the course and the life perspective that it primarily addressed.

The interesting thing is that those four perspectives include every possible human experience.  The courses are all history now, but the four perspectives are eternal and universally applicable – to individuals, relationships, organisations, society, business and government.  If you can grasp the essential and distinctive energy of each perspective, then you have the power to see the deeper causes and effects that elude most people.  The key to growth in any entity is in balancing those four perspectives – not in doing more of the same and hoping for a different result.

Balancing these perspectives works like magic, because any under-developed perspective undermines the other three and soon becomes a limitation that won’t go away.  They are like the four legs of a table.  The magic is, that bringing balance doesn’t require much effort – it mostly requires awareness of what is and what isn’t lacking.  Which table leg is short?

Here is one big, broad example drawn from the market economy we live in.  Markets work well when they include 100 or more competing businesses.  A market quickly determines the best value for money and thus rewards Efficiency; it considers the longer-term likelihood of continuing profits and thus rewards Sustainability within that ecosystem; it considers the current sentiment of participants and thus rewards collective optimism (Effectiveness); and finally it considers those who create innovation and those who invest in it, thus rewarding Engagement.  These four elements (the four perspectives) create a natural and healthy balance for evolutionary development and when all four are in balance, optimal growth occurs.  We create various indices to track overall market growth and it's so important that we announce it every night on the news!

Markets are about commercial endeavours, but society as a whole also benefits from a healthy market – innovation (Engagement) creates opportunity and jobs; Efficiency keeps a focus on productivity and measurable progress; Sustainability ensures future employment within that ecosystem; and genuine collective optimism (Effectiveness) means less stress and a better quality of life experience.

I’ll use the banking sector as an example of the effects of perspectives out of balance, and how to discover what’s really going on…

A “four-perspectives diagnostic” would track the symptoms to locate the imbalance. Most obvious is the diminished collective customer sentiment and quality of life with regard to banks – the Effectiveness of customer relationships is generally poor.  Why has that diminished?  Because the banks can’t lose – at the very worst case performance, we bail them out – so Sustainability is very unhealthy!  How did that become so unhealthy?  Because they don’t have to compete to survive – cost of money + overheads + profits + bonuses = fees and interest passed on the customers – so Efficiency is diminished.  How did it become like that?  That would be from lack of innovation – for some reason banks haven’t had to Engage customers.  Why not?  Because as our society became more sophisticated – in today’s world every member of society has to use a bank – the market became “inescapable”. 

So Engagement is the weak quadrant – the perspective that is undermining the other three.  When one of the essential elements is lost, in this case innovation-focussed Engagement, then the natural evolutionary process stalls and the consequent over-focus on investor profit becomes unintegrated – “How can we extract more profit without adding more value for customers?”  The recent history of financial institutions in general attests to this – announcing record profits and raising interest rates in increasingly difficult and uncertain times – and the no-choice public gets a gut feeling that they are being screwed.  How much do you trust the financial institutions that you are forced to deal with, to act in your best interests?  That’s the measure of Effectiveness.

To restore health to that banking ecosystem example is simple in principle – if a market is “inescapable” it must either be regulated or made “escapable”.  For example, set up a government-regulated, not-for-profit, basic banking service with the single objective of maintaining the lowest possible customer fees for essential services.  It might only offer personal savings and home loans tied to RBA rates, and it would leave the hundreds of other non-essential banking products and services to market forces.  A hypothetical example perhaps, but imagine if the general public never had to use the big four commercial banking services for normal daily life. 

Innovation would suddenly spring from the need to Engage customers and a healthy banking ecosystem would be restored very rapidly.

Now, one example may not provide all the tools to equip you to fix the whole world.  But the same principle, combined with a VitallyMe report, can equip you to fix your own world – by discovering your own imbalance on those four perspectives and recommending restorative practices. 

Then you can fix the world ;-)

Argue for your limitations and sure enough – they’ll run the country!

I've always been fascinated by the extent to which our internal, ‘subjective’ experience determines our apparent ‘objective’ perception – especially since I discovered my own!

What we don’t want to accept in ourselves we project ‘out there’ and then proceed to spend our life energy struggling with those projections. 

We can't help but notice those situations that touch our own ‘stuff’, far more often than other things - and we even notice them when they’re hardly there at all!

Nowhere does this seem more evident than in politics.  Perhaps it's because the process of politics takes up so much of our day-to-day environment and thus provides a broad and colourful canvas for our projections.

I have always taken pride in being a ‘swinging voter’ – not being embedded in one ideology or another – even though that actually makes little practical difference, since I reside in a ‘safe’ seat that consequently gets little political attention.

While we each have our own story, we share common areas of projection based on our common human nature.  Broadly those areas of projection are:

• How people should be treated, lit up by personal issues around self-worth
• How things should get done, lit up by personal issues around personal power, and
• How information should be processed, lit up by personal issues around intelligence

Projections around self-worth may cause us to see ourselves and others as victims of uncaring authority figures, and so we see a world filled with struggles against unfairness, injustice and inequality.  We see solutions in upholding people’s inalienable ‘rights’.  So naturally we identify with the underdog, we join unions, and we develop a lean to the left in politics.  At the same time we remain blind to the fact that rights don’t come without responsibilities, that underdogs need to learn about personal power, that unions need to learn responsibility instead of resistance, and that the political left are typically hopeless managers.

Projections around personal power may cause us to see ourselves and others as competitors in a never-ending win-lose battle, and so we see a world filled with the challenges of responsibilities, achievement, independence and personal freedom.  We see solutions in going to war – against poverty, cancer, the evil doers etc.  So naturally we identify with the battler who finally succeeds, we become independent professionals or entrepreneurs or rebels and we develop a lean to the right in politics.  At the same time we remain blind to the fact that ‘war’ is a non-workable analogy, that not everyone started on a level playing field, that independence often comes at the cost of depth in relationship, and that the right in politics are typically arrogant and out of touch with the masses.

Projections around personal intelligence may cause us to see ourselves in a permanent classroom where our report card is constantly on public display, and so we see a world filled with the need to understand, win arguments, fashion ideals and to convince others of the validity of our views.  We see solutions in consensus-based, clear conceptual frameworks.  So naturally we identify with the thinkers who can hold the bigger picture of the future, who can fashion ideals for the whole of society, who can present academically sound, well researched arguments – and if we are pure in that view – we find little on offer in either the right or the left in politics.  So we would have found the Australian Democrats appealing, or perhaps the Greens depending on our deeper projections.  At the same time we remain blind to the fact that most people don’t have ability or interest in higher concepts, and that most decisions are emotionally based, and that in the world of competition the imperative is always on short-term goals over long-term ideals.

Now each of these paradigms produces results that are both positive and negative – none is either good or bad in its own right.  Given even a moment’s thought, it seems obvious that all three paradigms are essential to our common prosperity.

But when one side of politics gets in with a strong margin, they set about implementing everything they see as positive while ignoring their blind spots, to the detriment of the majority.  So at the next opportunity the electorate swings to make up for those deficits and the cycle continues!  Maybe we do get the governments we deserve.

So it might be a good thing, and it's certainly seems inevitable, that over time the difference between political parties must diminish.  That allows the possibility that we could define the best common vision, and implement it with the best managers, for the greatest common good.  In other words it would be inclusive of all views rather than arguing for one at the expense of the others.   

Yet, while a government with a small majority could theoretically be a good thing, instead it seems to become self-destructive when strong egos can't point to the chasm between opposing views.  And instead of a well-managed vision of common prosperity we get arrogant, hopeless leaders with no clue about longer term futures – the worst of each paradigm.

So what I'm asking is that you consider your own projections.  How do you tell the difference between a projection and a considered opinion?  By the amount of energy that you find drives you to justify yourself.  The more energy that comes from you automatically, the more it’s your stuff!  If you consistently vote for the same party then you should consider those projections in even more detail.  

Do you really want a government that offers to protect you from your own unintegrated personality?  Most people do!

Of course the big opportunity here is to discover your own projections and leverage them for your own personal development.  Life without projections is free from those deficit passions, from compulsive responses – a life where you're free to choose emotions, actions and thoughts and where not being involved at all holds the same excitement as arguing for your own limitations.  But then there’s no one to blame!

How to get there?  Naturally we recommend VitallyMe for self-managed development, and its big sister Q12 for coaching with a professional.  We also recommend Narrative Coaching as a professional group, or if you prefer a workshop environment, then we highly recommend Keep Evolving.

Are our collective limitations running the country?  What do you think?

The Illusion of Superannuation

This is one of a series of blogs aimed at raising awareness of the everyday external reality we take for granted (the matrix) and then considering how well it really works for our collective well-being, both short and long-term.  This week the lens is focussed on Superannuation.

Should we save up for our retirement?  Back in the mid-90s Paul Keating decided on our behalf that we should, because projected tax revenues would not be sufficient to fund pensions for the huge numbers of baby boomers approaching retirement age.

Thus launched an industry, drawing most people (including me) into the illusion that it was primarily for our ultimate benefit.  There’s one born every minute and I was sure one of them!  I find investment management, interest rates, the stock market and similar gambling pursuits to be about as exciting as root canal therapy.  So I duly paid out the required amount every year to a large retail fund and got on with life.  Now that I’m eligible to take a lump sum I find that it’s significantly less than the sum of the contributions I made.  I would have been better off putting cash under my mattress than paying into the super fund!

There are currently a number of action groups attempting to garner public persuasion in order to change the law to allow an opt-out from mandatory contributions, but here’s the kicker…  Initial financial discussions determined that the Australian economy would be at risk if citizens were allowed to immediately access and withdraw superannuation. 

Ah-ha!  The matrix is exposed.  The implication is that Superannuation Funds exist to maintain the economy – not for your benefit.  If such action would put the economy at risk then surely that confirms a general belief that our money would be better employed elsewhere.  

In fact if you are in a retail fund it is quite likely that your money would have been better off over the last 14 years in a bank savings account.

“Over the 14 financial years from June 1996 to June 2010, retail funds averaged a return of 3.66% pa.  It is instructive to note that no retail funds rank in the top half of the 130 fund dataset.”

Source: Industry Super Network Report RP1103 September 2011

Let me put it more simply – if your money is in a retail fund you’re being screwed! 

This chart from the same report shows the bottom line on net returns.

 I have selected 11 commonly recognised retail funds from the report to show the spread of results – is your future disintegrating there?

Sample Retail Fund	7 yr rate of return %	Ranking
Perpetual*	5.4	73/130
MLC/NAB/Plum*	4.9	90/130
State Super Retirement Fund	4.8	95/130
Macquarie*	4.7	100/130
ASGARD*	4.5	105/130
BT/Westpac*	4.4	109/130
CFS/Commonwealth*	4.3	112/130
AMP*	4.1	114/130
ING/ANZ*	4.0	117/130
AXA*	3.6	123/130
Suncorp Master Trust	3.1	127/130

* indicates a family of funds
So why do retail funds perform so poorly compared to everything else?  Interestingly the funds are not required to disclose what they make from fees or pay in bonuses. 
The following chart shows that returns grow significantly with the size of the assets invested, which you would expect, due to market forces.  It also compares “for profit” funds (FP) which includes retail funds, with “not for profit” funds (NFP) and shows that the retail funds return between 1.5% and 3% less than NFP funds.  

That margin on one $25 billion fund yields an additional $750 million per year that does not go towards investors’ retirements.  So who is really benefitting from compulsory superannuation?

Over 40 years, $100 invested with a public sector fund would be worth $1150.  The same $100 invested in a retail fund would be worth only $421.

Retail Funds are screwing you!  If your money is in a retail fund, I hope that it is not part of your retirement plans…

Now we are fully entitled to be ripped off by any scheme we choose – that’s our right as citizens – the problem is that with mandatory superannuation there is no choice.  It’s compulsory to be part of the matrix. 

The real choice is obvious – root canal therapy is preferable to retail funds!  Thanks Mr Keating for forcing us to fund organisations that grow the economy and ensure their own futures!  

Oh, and welcome to the matrix!

What’s your experience?

The Economy and You - a sleeping pill or a wakeup call?

This is one of a series of blogs aimed at raising awareness of the everyday external reality we take for granted (the matrix) and then considering how well it really works for our collective well-being, both short and long-term.  This week the lens is focussed on the economy.

It seems fundamental to human life on earth that we can only prosper in a growing economy.  Every country seeks it; politicians are determined to stimulate it; bankers count on it; we’re told our livelihoods and our futures depend upon it; national success is measured by it.

Now I am not an economist – though I consider myself reasonably able to understand complex things.  I have given it some thought and read some books in my desire to understand, but I'm still left with some basic questions…

When the economy grows, exactly what is it that is getting bigger?  How big is it now?  How big could it possibly get?  How big should it be?  I had expected that these fundamental questions would be addressed in the first few pages of any economic text – but alas, that's not the case.

It seems that one thing that gets bigger is GDP – the annual flow of goods and services in the market.  Goods are produced using natural resources and energy, and then they are purchased, used and eventually discarded or recycled.  Services are purchased and used straight away.  So there is no accumulation of assets over the longer term – and the prosperity that GDP purports to represent is in fact, just ever-increasing levels of production and consumption.  

It seems to be a cash flow measure with no Profit-and-Loss or Balance Sheet.

And this model upon which our well-being is balanced seems to assume that natural resources and energy are in unlimited supply, and that waste products and pollution are at no cost to us once outside of the economic system.  Logically there must be a point where an ever-growing economy overwhelms and destroys an ever-diminishing ecosystem on which it relies.  We must eventually run out of productive farmland, non-renewable energy, a myriad of other natural resources and accumulate sufficient waste and pollution to make the environment unsustainable.  Where is that point and how far away is it?  It seems to me that we’re going to find out the hard way!  GDP does not separate costs from benefits, so there is no way that we can tell when the cost of growth exceeds the benefits derived.

Some writers claim that there is much evidence that some countries have already passed the break-even point and entered an era of uneconomic growth – which means that further growth is actually making them poorer, not richer.  If I was running a country I would want to know how we were tracking towards that point, and what we planned to do before we reached it.  But we can't even agree on whether or not there should be a carbon tax, or indeed if there is actually any problem at all!  And if a carbon trading scheme does eventually get up, is it wise to hand it over to the same market forces that drive an ever-growing economy and an ever-growing carbon problem?

But then, I'm not an economist!

I have found books by highly experienced (and politically unbiased) people who identify the true causes and offer well-considered solutions for implementation at the political level.  They don’t however offer hope on how we find the political will to do what is necessary instead of what is politically expedient.

The book that left me with the greatest hope for creating a sustainable future, that is grounded in the political realities of today is “Prosperity Without Growth” by Tim Jackson, published 2009 by Earthscan.  If you want to read just one book on the subject, I recommend this one.

The good news is that general solutions have already been thought through by highly experienced experts and many more precise solutions can be evolved as we progress.  There is no doubt that we must transition to a whole new economic model, with enormous ramifications for our current way of life.  The consequences of doing nothing are an inevitable disaster.  The core problem is that no politician has yet dared to ask those simple questions publicly – that would be questioning the matrix!

So what can we do as ordinary citizens?  It seems to me that we can publicly ask those simple questions of our politicians at all levels – and demand the simple answers (which they will not be able to provide). 

• When the economy grows, exactly what is it that is getting bigger? 
• How big is it now? 
• How big could it possibly get?
• How big should it be?

Remember, if you can't understand their answer, then they have a problem – not you!  When enough politicians start asking the same questions…

So why not ask someone new every day?

The No-insurance Policy

This is one of a series of blogs aimed at raising awareness of the everyday external reality we take for granted (the matrix) and then considering how well it really works for our collective well-being, both short and long-term.  This week the lens is focussed on Insurance. 

The insurance industry is a licence to print money!  Simply locate a general area of psychological insecurity, collect statistical data on it and employ a number-cruncher to calculate the odds, then employ a bunch of high-charge, commission-based sales people and promise customers that you’ll make that area of concern secure for them.  Now in principle I don’t have problem with that – every business would like to operate in such a risk free environment, and is entitled to strive for that.

But I wonder how many of us really appreciate why we’re buying these products.  Of course at one level it’s to allay our fears of misfortune and help us cope with feelings of insecurity.  But fears of misfortune and feelings of insecurity are for the most part internal experiences that will not be soothed for long by a piece of paper promising to turn any misfortune into a cash benefit.  If we were more aware of the real transaction that we were entering, then we might choose more wisely – but we generally don’t understand the odds we’re dealing with.

For instance Life Insurance, or if you remove the spin, “Death Insurance” is probably the shining example.  Typically, people take out a Life Insurance policy out of a desire to provide security for their family.  The first two years of payments go in commission to the salesperson who sold you the policy; the next two years of payments go to the insurance company to cover their overheads; and the next two years of payments are straight out profit.  After six years the majority of people quit paying and cancel the policy, realising just how much it’s going to cost them over a lifetime, and probably feeling more secure within themselves after surviving well for that six years.  The number of policies that end with a death cheque is less than 2%. Go figure!  (These stats are about 10 years old now, but I doubt that much has changed in that period.) 

Probably the most “matrix-embedded” insurance is Heath Insurance, or if your remove the spin, “Sickness Insurance”.  Firstly note the spin, such that we don’t even query the misnomer any more.  If we insure against flood, it’s called “flood insurance” – against fire, it’s called “fire insurance” – against a personal or motor car accident, it’s called “accident insurance” – but against sickness, it’s called “health insurance”!  (As my good friend Dilbert notes, “The purpose of marketing is to prevent customers from realising what they’re buying”.)  But I digress…

Health Insurance isn’t actually insurance at all.  For a start there are only two categories – ‘single’ and ‘family’ so there’s no scale of risk involved.  Whether you take personal responsibility for your health and fitness or not, the rates are the same.  So let’s examine the odds.  In Australia some 40% of total health care expenses are spent on preserving the last couple of years of life.  Interestingly however, an aging population does not increase total heath care costs (we are staying healthier and living longer and then dying more quickly as many of our bodily systems now shut down at the same time).  From another angle, 5% of the population consume 49% of all health care expenditure, whether insured or not.  Are you in the 5% with chronic serious illness or in the last couple of years of your life?  Health Insurance is in reality a scheme in which the healthy are going to pay for the sick. 

So if you are in the 95%, reasonably healthy category, then (apart from government imposed penalties) surely only a deficit need for security would drive you to take out private health insurance! 

Now it may be fair enough that the healthy should pay for the sick – but let’s state that openly and address it honestly.  Better models of health care could be developed – ones that reward health and fitness rather than penalising it, but that is not the point here.  The point here is that deficit needs (as opposed to genuine needs) cause us to support the matrix that both plays on them and reinforces them in order to maintain a status quo of vested interests.

When I first stood on my own as an independent consultant 30 years ago, it was scary having no regular income, no paid sick leave, no public holidays, no annual leave, no company car, no worker’s compensation, no superannuation etc.  So I thought it would be a good idea to take out income insurance – and I did take it out for a few months, before I realised that my real motive in doing that had been to try to off-load some of the responsibility for my own life and well-being.  I realised that the motive and the policy were, in themselves, demeaning to one’s character and not in keeping with healthy personal development.

So look at what insurance you carry – and more importantly a little deeper to the real reason why you carry it.

Life is risk – you’re not going to get out of it alive!  Do you try to avoid the risk in living fully – and along with it, the risk of growing fully?  My only policy is “Comprehensive Life” – and it’s not with any insurance company!


What's yours?