The technology with the most radical impact on advisors’ businesses isn’t robo-advisors, according to Ric Edelman, founder and executive chairman of Edelman Financial Services. It’s the exponential technologies they may know little or nothing about: artificial intelligence, robotics, 3-D printing, nano- and biotechnology, bioinformatics, big data, materials and science.
These technologies may sound a little outside the realm of an advisor’s practice. However, writing them off as not something they need to dedicate time and attention to is moving in the wrong direction, according to Edelman. These exponential technologies will have a profound effect on their clients and will force advisors to eventually address their impact.
Edelman recently published a new book, “The Truth About Your Future: The Money Guide You Need Now, Later, and Much Later,” exploring these themes.
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Exponential “sciences and technologies are going to alter virtually every aspect of life on the planet,” Edelman told ThinkAdvisor on Thursday. “I’m not talking about the latest software upgrade from people who make financial planning software. I’m not talking about Apple’s new iPhone. I’m talking about technologies that are going to upend all of the assumptions that financial planners use in their financial planning models and in the advice they give to their clients.”
For example, Edelman said that among the most significant change resulting from exponential technologies is in life expectancy. “The typical planner today is assuming that his client has a life expectancy of age 95. When I first started in this business in the ‘80s, we used to assume 85.”
Experts in health care and other fields, though, are predicting that today’s 60-year-old will more likely die at age 110 or 120, Edelman said. “If that’s true, most of the financial plans that planners have produced will blow up. They aren’t contemplating that the client will have a 50- or 60-year retirement.”
Edelman said that the notion of retirement itself is going away as people will continue working long into their 80s, 90s and 100s.
Advisors today have worked very hard to prevent that very scenario for their clients, but because morbidity is improving as well as life expectancy, Edelman said, the 85-year-old of the future who continues working will have more in common with a 55-year-old today.
He referred to research where scientists successfully reversed the effects of aging in mice. That means that “at age 95, you’ll probably be healthier than you are at 55 today.”
Some experts predict that today’s leading causes of death — heart disease, respiratory illness, diabetes, cancer — will have been cured by 2030, Edelman said. Older people won’t be working long after they want to stop, but because they aren’t forced to stop by their health.
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That means that advisors have to help their clients plan for much longer lives and, for clients who do want to retire early (whenever “early” is in the future), retirement. A big problem that will be wrought by exponential technology for people who want or need to keep working is that automation will make a lot of today’s jobs obsolete.
“Over the next 15 to 20 years, about half of all jobs in America will no longer exist,” Edelman said.