Is your occupation on a hit list for robotisation?
A couple of weeks ago, I was walking down Greville Street, Melbourne and a man silently breezed past me on a segway. I felt like I had been plunged into the movie set of Back to the Future.
A few weeks back, our resident Financial Planner, Ben Crowe returned from a research expedition, his bag laden with new insights and information to ensure our team at AJ Financial Planning remains at the cutting edge of our field.
In our debriefing, we discussed a broad range of topics. One of the points that was raised was the idea that 70% of today’s ‘human’ occupations have the potential to be replaced by robots or robotic intelligence.
Of course, the question of ‘when’ is unknown, and the word ‘potential’ also leaves some uncertainty as to which specific occupations might be ‘robotised’. However, I think you can be fairly certain that as we move into the future, there is a risk your occupation might no longer be around in 20 or 30 years’ time.
If there is any element of truth to this, consider the implications:
The impact on your earning power in the future.
If you are self-employed, the value of your business (if it still exists) at retirement.
The impact on your retirement plans.
Which companies you might invest in to protect or take advantage of these trends.
At AJ Financial Planning, considerations such as these are crucial when constructing long-term plans for our clients.
Many people might scoff at the thought they could be replaced by a robot. It seems too fanciful or futuristic. Yet trends such as these can evolve in different sequences and for some, the immediate risk might simply be the outsourcing of their job to another country. Once this transition has played out, technology can often be the next step in the chain of developments for some sectors to eliminate labour costs.
Interestingly, Ben’s findings correlate nicely with a recent report by Tim Rocks, Head Market Strategy Research Analyst at BT, which was released a few weeks ago- click here . Tim makes three interesting conclusions about technology, namely:
The latest wave of technology innovation is forcing prices lower.
This has caused a structural reform, potentially leading to lower wage growth.
This has resulted in inflation rates being below normal levels.
Our interpretation of Tim’s report is that technology has the potential to have a deflationary impact on some economies. Now, this can be disputed but it does create some interesting insights into how Australians might invest in the future.
So what does this all mean for you, the investor? We think it is important to look for investments that will stand the test of time. If you are investing in shares, you need to be looking not just at the financials of a business, but also its management, ensuring they are taking steps to remain relevant, as innovation will need to become—and remain—a core foundation of any successful business in the future.
Oh, and a parting word of caution: If you are at work and are tapped on the shoulder by a robot, it might be your new boss, so make sure you are nice! Please also remember, before embarking on any investment decision, you should always seek professional guidance from a licensed financial planner. Of course, I recommend our friendly team at AJ Financial Planning.