Wednesday, September 21, 2011

Teaching employees how to fish

Money Matters

By: Efren Ll. Cruz
Philippine Daily Inquirer


Question: At what age should companies start preparing their employees for retirement?-HR practitioner
Answer: As soon as they are hired!

What?!

Oh yeah. Have you ever experienced asking for directions while already traveling? Don’t you just hate it when a person tells you that if you have gone past a certain landmark then you have already missed your turn? Why can’t they give a landmark before you hit your turn?

With the average life expectancy getting longer, retirement planning five years before retirement age is now too short and risky. While retirement planning at 40 still seems reasonable, doing it for employees who are just hired is much better as it is like giving PDOS (pre-departure orientation seminars) to OFWs.

Firstly, why should companies even care about employees’ welfare in retirement? When I started in the trust industry, I quickly learned that companies set up retirement plans not only to better fund retirement benefits mandated by law but also to attract talented employees and foster loyalty. Why, who wouldn’t want to be working for a company that provides financial security even after employment?

We have done a lot of retirement planning training programs. Many of the participants, usually in their 40s and 50s, would always reply that they wish they had taken the training much earlier. Why? These individuals may have raised their cost of lifestyle so high that it would take years to unwind such high living.

Consequently, little is left for retirement planning. They may have taken on huge mortgages (car or home), racked up so many charges on their credit cards, kept insurance coverage to below what is necessary for them and forgotten about investing entirely. The worst part is that such individuals try to play catch up by planning to set up their own business upon retirement. We tell these people that what they are planning is a very dangerous thing as the money they are paid on retirement is their last. A business, on the other hand, bears the highest level of risk among all investment alternatives.

But would the newly hired even pay attention to retirement planning when the lure of consumerism is so strong? Surprisingly, they do. In fact, our online discussion group is composed more of people who are younger than 40. And we credit this to the growing popularity of financial planning.  Even magazines devoted to mothers, babies and the like feature personal finance articles. The Philippine Daily Inquirer is one of the first to feature personal finance among broad sheets, both in print and on the Internet.

One other thing we noticed is that employees treat company benefits like entitlements and get so addicted to them. Company loans in particular are normally “maxxed” out. An emergency loan is contracted even though the real purpose is not for an emergency. If there are loans from a cooperative within the company, these too are taken out. Once the addiction sets in, loans outside of the company are contracted. So how does the addiction to loans arise? The answer is fairly simple. In our programs, we ask people to list down their expenses in a year. Then we ask if, before the program they knew they were spending that much. The answer is invariably no. People prefer to remember fewer things, like the amount of monthly salary. But they shut out of their minds the myriad of things they spend on. And when another item is up for spending now, the normal reaction is that future salary or wage will take care of it.

So in our training programs, we help participants develop the habit of monitoring their cash flow through our unique 30-day EnRich Financial Milestones Journal. Here they actually list down daily their beginning cash, sources of cash and uses of cash for the next 30 days. Beginning cash + sources of cash – uses of cash = ending cash for the day and beginning cash for the next day. So they will not forget to do their journal, we send text messages to each participant every single day for the duration of the 30-day program. The text messages contain not only words of encouragement but also reminders of the lessons in the training program. Text messages are sent very early in the morning.

One more thing, it is more effective if a company teaches employees financial planning using a third-party trainer that is not selling any financial product. That training will be perceived as objective and a true caring action on the part of the employer, and not just a tactic to subdue requests for pay increases. As a result, deeper loyalty is fostered.

If you want to see how we train people for their retirement in particular and other major life events in general, join us on October 27 for another EnRich program. And as a special treat, we are giving away five free seats to the first HR practitioners who will attend. Visit www.personalfinance.ph or www.income-tacts.com or call (02) 216-1541 for details.

Here’s to a long and healthy retirement for all of us.

(Efren Ll. Cruz is a registered financial planner of RFP Philippines, personal finance coach, investment adviser and best-selling author. Inquiries may be sent by SMS to 0917-505-0709 or e-mailed to efren@personalfinance.ph. To learn more about the RFP program, visit www.rfp.ph or e-mail info@rfp.ph.)

http://business.inquirer.net/20477/teaching-employees-how-to-fish

Tuesday, September 20, 2011

47 listed firms must sell more shares

By: Doris C. Dumlao
Philippine Daily Inquirer


Forty-seven companies are racing against time to meet the 10-percent minimum public ownership required by the Philippine Stock Exchange to remain publicly listed and enjoy preferential tax on stock trades as the November 30 deadline draws near, based on a list obtained by the Inquirer.

Companies that fail to comply with the requirement will have 36 months more before facing trading suspension and eventual delisting from the PSE but they will have to pay monetary fines until then. Investors who will trade the shares of non-compliant companies after the deadline, however, will have to brace for higher taxes.

The Bureau of Internal Revenue has indicated that it would slap the 5- to 10-percent capital gains tax on trading of shares issued by non-compliant companies simultaneous with the lapse of the PSE’s grace period. This means that investors will no longer enjoy the preferential tax rate of 1/2 of 1 percent of gross selling price if they are trading shares of non-compliant companies.

Some companies led by large groups like San Miguel, First Pacific, Lucio Tan, Ayala, Andrew Gotianun, George Ty, Henry Sy, Alfonso Yuchengco and Roberto Ongpin were among those with inadequate public float.

The biggest companies in the list in terms of market capitalization are those led by diversifying San Miguel Corp. These companies and their respective percentage of public ownership are: Petron Corp. (7.5 percent), San Miguel Brewery Inc. (0.6 percent), San Miguel Pure Foods Co. Inc. (0.1 percent) and San Miguel Properties Inc. (0.1 percent), based on the PSE’s list.

Ayala-led Integrated Micro-Electronics Inc., which listed by way of introduction or without a public float last year, also falls short of the requirement with its public float of 9.7 percent.

Two companies led by the First Pacific group also fell below the requirement—PLDT Communications and Energy Ventures Inc. (0.5 percent) and Metro Pacific Tollways Corp. (0.2 percent).

Within the group of tycoon Lucio Tan, several companies also need to improve their public float: Eton Properties Philippines Inc. (5.6 percent), Tanduay Holdings (2.9 percent), PAL Holdings (2.3 percent), Allied Banking Corp. (0).

Two companies led by former Trade Minister Roberto Ongpin—Alphaland Corp. (7.8 percent) and Atok Big Wedge Co. Inc. (4.2 percent)—also need to widen their public ownership to meet the 10-percent minimum requirement.

Other companies affiliated with taipans that need to address insufficient public ownership are: the Yuchengcos’ Bankard Inc. (8.3 percent); Gotianuns’ Filinvest Development Corp. (7.3 percent) and Tys’ First Metro Investment Corp. (1.9 percent).

http://business.inquirer.net/19965/47-listed-firms-must-sell-more-shares

Cha-Ching: Money-smart kids

By: Michelle V. Remo
Philippine Daily Inquirer

HONG KONG—Most successful investors would say that their skills in handling money were learned at an early age. Usually, their parents or guardians have a big role in instilling in them sound values related with money management.

Prudential Corporation Asia (PCA), which operates life insurance and asset management businesses across countries in the region, says it believes in the crucial role of financial literacy for the very young ones in helping economies perform well. For this reason, the multinational company has invested in a worthwhile project involving money-management education for kids.

In particular, PCA embarked on a multimillion-dollar investment that involves the production of a television show for kids that airs on Cartoon Network. The cartoon television show, titled “Cha-Ching: Money Smart Kids,” is geared toward teaching very young viewers the concept of money and how to manage and prudently use it.

PCA is encouraging parents to introduce the program to their kids, saying the show will aid in the parents’ teaching of money management for the kids.

Cha-Ching, an English slang for “cash,” is a 10-episode program, with each episode running for three minutes, that has started to air this month and will continue to be aired repeatedly until January 2012. The program focuses on the four concepts related with money management, namely, earning, saving, spending, and donating.

The show, which is in English, is aired in Hong Kong, Singapore, Malaysia, Thailand, Vietnam, Indonesia and the Philippines.

Children have to learn early that money is not something that fall on trees and does not simply come out of automated teller machines,” PCA chief marketing officer Julie Lyle tells Asian journalists during the launch of the television show earlier this month.

At an early age, they have to be taught that money is something that is earned,” Ms. Lyle adds.

Besides the value of working hard to earn money, Lyle says, the program also teaches children how to save, how to properly spend, and the value of giving back to society through donations. All these values will be taught using interesting cartoon characters, catchy musical lines, and easy-to-digest story lines, she says.

Cha-Ching has six main characters who introduce to young viewers the traits that they should either adopt or avoid to become good in money management. The characters include Justin, Charity, Pepper, Bobby, Prudence, and Zul.

Con Apostolopoulos, director for Turner Media Solutions that is in charge of production of the Cartoon Network show, says the company is thrilled to partner with PCA for the production of Cha-Ching. He says this is the first extensive financial literacy program for kids that Cartoon Network is airing.

Apostolopoulos says producing a financial literacy program is a bit more difficult than coming up with any other type of cartoon show. This is because a financial literacy program is aimed at not only entertaining kids, but also ensuring they learn the concept of money management by simplifying even technical concepts. Apostolopoulos says it is important that story lines comply with the objectives of PCA.

“We communicate with PCA in every step of the production process to make sure we achieve the objectives,” he says.

Apostolopoulos adds PCA made the right decision to partner with Cartoon Network given the latter’s wide reach in several Asian countries, including the Philippines. Cartoon Network is, in fact, the No. 1 television station for kids as far as audience reach is concerned in the Philippines and neighboring countries.

Barry Stowe, the chief executive officer of PCA, says that investing in the show falls under PCA’s corporate social responsibility (CSR) function.

Stowe says that while the company invested a significant amount of money for the show, the intention is not to actually generate profit from it. He says the key objective is to promote financial education for the very young ones and to teach of children proper money management.

“This is not an investment for our business, but an investment for the communities we operate in,” Stowe says when asked how the company expects to recuperate its investments from the show.

He adds that if the show would eventually encourage parents to buy financial instruments from PCA for their kids, then that would just be a bonus.

“This project may actually benefit not only PCA but even our competitors,” Stowe says, explaining that if the TV show would indeed encourage households to buy financial instruments, then the industry in general would benefit.

Lyle says that if the TV show proves to be a hit, then PCA may consider financing the production of more episodes and make the program run for the long term.

A survey conducted by Oracle Added Value and commissioned by PCA showed that most Asian parents agree that the value of money management should be taught to kids at an early age, and that they believe they have the biggest role in making that happen.

However, teaching children money management is not always easy. The survey results further showed that most Asian parents just give money to their children every time the latter ask for it, without explaining the value of working hard to earn it.

Stowe says Pru Life, in investing in the TV show, would like to help parents in their role of honing the money-management skills of their children.

We developed this financial literacy program in response to the growing need of parents to teach children sound financial management,” Stowe says.

Stowe says that through the show “Cha-Ching,” PCA hopes to make teaching sound money management to kids to be easier task.

http://business.inquirer.net/19979/cha-ching-money-smart-kids

Exec molds next generation of values-oriented Filipinos

By: Charles E. Buban
Philippine Daily Inquirer

MANILA, Philippines—Teaching morals and values to children is important at a time when distractions abound in a generation lost in a maze of technological advancements and environmental struggles.

But it is always best to know the ripe age for kids to adopt such teachings—when a child’s mind is impressionable.

These things considered, the “Value of Hard Work and Discipline Advocacy Project” was launched recently, targeting third graders or schoolchildren aged 8 to 10 years. The project entailed the use of a workbook packed with easy-to-understand principles for life improvement.

Proper timing is important if you want to effectively impress morals and values on young children, and we believe that those in third grade is the right age,” explains D. Arnold Cabangon, president of Fortune Life, the firm initiating the project with the Department of Education and advocacy group Mary Lindbert International for the welfare of impressionable children.

The Value of Hard Work and Discipline workbook will be used to teach Grade 3 pupils initially in select public schools in Metro Manila and Bulacan.

Lessons learned

Evelyn Carada, EVP and GM of Fortune Life, explains that curriculum experts of the DepEd sat with Fortune Life executives to discuss the appropriate topics to be included in the workbook.

“This is important because we are provided with a unique, never-to-be-repeated opportunity to mold our children’s minds,” says Carada.

Apart from the workbook, Education Undersecretary Yolanda Quijano says that the department will also integrate topics such as lessons of good manners, respect for parents and elders, and even financial etiquette in a number of subjects.

“She said initiating this project among Grade 3 pupils has a huge chance of succeeding as schoolchildren in this age range will likely imbibe the lessons learned and grow up to be model citizens,” explains Quijano.

In her keynote speech during the launch, Quijano also expressed her sorrow that such values are now seldom observed by today’s youth.

Odd jobs

The project is close to Cabangon’s heart because the project was inspired by his father, Fortune Life’s chairman emeritus and founder, Antonio L. Cabangon Chua, a self-made multimillionaire and former ambassador to Laos.

Cabangon relates that when his grandfather, a rich Chinese businessman, was killed during the war, his father and grandmother were forced to live with their wealthy relatives who often mistreated them.

“My father could not just accept their plight and do nothing. He promised his mother that someday, they will have a better life. He took an assortment of odd jobs, from shoeshine boy to fish vendor. He often tells us, as well as his other friends how, while shining an American soldier’s shoes, he was suddenly kicked by this man [who] threw a half-eaten apple to his face. Angry and insulted, he vowed that whatever happens, he will do his best to improve his sorry plight and rise from poverty,” says Cabangon.

Enough capital

From then on, Cabangon-Chua and his mother worked hard enough to earn capital for a small sari-sari store.

During the project’s launch, Cabangon-Chua says poverty did not deter him from dreaming big.

“It pushed me. It motivated me. So we scrimped and saved and, with our meager earnings, I was able to go to college and complete my accounting course. Indeed, the values of hard work, perseverance and discipline are ‘the only spring from which to drink true power.’ And apart from prayers and faith in God, one should have that burning desire to succeed in life. Do not wait for things to happen.”

The former ambassador says this project is meant to inspire a new generation of children to succeed like him.

Carada notes that discipline is a value Cabangon-Chua champions as an important aspect in the lessons that the project imparts, as highlighted in the workbook.

Quijano adds that teaching these values of hard work and discipline supports the DepEd’s current moves to strengthen basic education through its K+12 program, or the extension of the basic education curriculum from 10 to 12 years.

http://business.inquirer.net/19973/exec-molds-next-generation-of-values-oriented-filipinos

Wednesday, September 14, 2011

LBC Express caused bank’s fall

Tuesday, 13 September 2011 22:03
Jun Vallecera / Reporter 


NOW it can be told: The failure of LBC Express, the remitting affiliate of LBC Development Bank, to honor billions of pesos in advances caused the bank’s downfall, regulators disclosed on Tuesday.

It was also revealed, to refute insinuations the bank’s closure was precipitate, that the regulators discovered something wrong with LBC Bank’s operations a year ago and gave it time to correct the situation; it failed, however. 

Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. said LBC Express Inc. regularly accepted money-transfer transactions from millions of customers in the country and abroad but never bothered to settle the advances.

Espenilla said LBC Bank extended billions of pesos in cash advances to LBC Express for several years as part of its role as payout agent. Each time a customer remitted money to beneficiaries through one of the many offices of LBC Express in the Philippines, and abroad, LBC Bank advanced the money to the beneficiary, effectively extending the affiliate another credit. The problem is the credits were never settled.

And because LBC Express failed to settle what it owed the bank, the steady buildup of cash advances became unmanageable and eventually too large that it broke the bank.

“The constant need to make cash advances slowly eroded the bank’s capital. Eventually, the capital deficiency resulted in the bank posting a negative capital account,” Espenilla, head of the BSP’s supervision and examination sector, said but without citing numbers.

The state-owned Philippine Deposit Insurance Corp. (PDIC) earlier said LBC Bank accumulated deposit liabilities totaling P6.09 billion at the time the Monetary Board, the policy-making body at the BSP, issued the order putting the bank under receivership by the PDIC.

LBC Bank assets are worth P5.5 billion only, based on data obtained from the BSP, which were clearly insufficient to meet the bank’s outstanding liabilities.

Espenilla said the BSP also issued a cease-and-desist order stopping the bank from making advances on behalf of LBC Express clients to prevent a further deterioration of the situation. 

Espenilla also acknowledged having placed LBC Bank under the prompt corrective action (PCA) program, which, in essence, is a rehabilitation framework that attempts to spot a bank’s problems long before these became irreversible.

“We placed them under the PCA program for well over a year and they failed to make the grade. They’ve been trying to fix the bank’s problems and that failed, as well,” he said.

Espenilla also said LBC Express does not fall under the sphere of influence the BSP has over bank and nonbank financial institutions. The BSP has some residual authority over the remittance unit only on issues pertaining to anti-money laundering issues and not much else.

He said while some of the smaller and weaker lenders eventually fall by the wayside, all the other banks in operation have posted significant improvements in the quality of management and the amount of capital they have in their vaults, among other considerations.

“There are a few that may be mismanaged by their owners but, by and large, the thrift- banking system in the country is financially healthy,” Espenilla said.

The BSP earlier ordered the closure of Banco Filipino Savings and Mortgage Bank and the operations of Express Savings Bank organized under the charter created for the Local Water Utilities Administration and headed by former legislator Prospero Pichay.

Monday, September 12, 2011

LBC Bank placed under receivership

By: Michelle V. Remo
Philippine Daily Inquirer

LBC Development Bank, a unit of the LBC Group, has been placed under receivership of the Philippine Deposit Insurance Corp. (PDIC).

In a statement over the weekend, PDIC said it took over the assets and liabilities of LBC bank after the Monetary Board of the central bank determined that the institution was plagued by liquidity problems.

“All valid accounts and deposit insurance claims will be paid as soon as possible,” PDIC said in a statement.
LBC Development Bank, with head office on JP Rizal St. in Makati City, had 19 branches nationwide.

As of end-June this year, total deposits placed with the bank amounted to P6.09 billion. Of the amount, P3.73 billion is covered by insurance, PDIC said citing bank records.

In terms of number of accounts, there were 321,516 as of June, 99.4 percent of which are fully covered by deposit insurance, said PDIC.

The government insurance agency said the placement of the thrift bank under its receivership would not significantly affect its resources. PDIC noted that the insured deposits with LBC Development Bank made up only a tenth of one percent of total deposits in the country’s banking system.

Under PDIC’s charter, deposits worth P500,000 or below are covered by insurance. Deposits in excess of the amount may or may not be paid depending on the amount to be raised from the liquidation of a closed bank’s assets.

PDIC will conduct forums in areas where branches of LBC are located so that depositors of the bank will know how to claim insurance.

Owners of deposit accounts worth P10,000 or below need not apply for insurance claims. In their case, PDIC will simply mail notices to them and they can withdraw from designated redemption offices, like branches of Land Bank of the Philippines.

The placement of LBC Development Bank under receivership may come as a surprise to the bank’s depositors given the institution’s track record.

LBC Bank was previously awarded the “superbrand” status by Superbrands Philippines Council, which cited it for being one of the most reliable and trusted brands.