What You Should Know About The Current Technological Disruptions And How It May Affect Your Retirement
At SNP Financial Advisors our mission is to guide clients through the coming technological disruption and to a successful financial future. I believe there are several disruptions starting to take place, and picking up steam because of covid, that will profoundly change our world. In this transition, I believe we the people can face our own personal disruptions. The biggest being to our financial lives. I believe if you understand how these disruptions take place and have a financial strategy to plan for them you can reduce the stress in your life significantly and maintain or increase your wealth. If you don’t understand them, you may hit some hidden financial land mines.
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The first thing to understand about disruption is it happens in an S curve. It starts with societies interest in the new technology, then goes down as people dismiss it. After that it takes off in a rapid increase of adoption. This happens because suddenly people realize the new technology is faster, better, has more uses, saves money or time, or both, and becomes more comfortable. A simple way of looking at it is to look to the past. Would you rather drive around a horse and buggy or an automobile? The automobile is faster, more comfortable, cheaper, saves way more time, and provides more freedom.
The second thing to think about with disruption is it usually does not arise within its own industry. For example, the smartphone needed several technologies to converge for it to be created. It needed the computing power, broadband capabilities, touch screen, and data storage to be able to put all these items together; and sell it for around $600 in 2007 dollars to make a nice profit. Nokia, Motorola, and Blackberry were not able to put all these ingredients together fast enough to retain their existing market share. Almost overnight Apple and then Google-owned the smartphone market. I believe Apple got the edge because of the intuitive nature of their phone.
The third thing about disruption is most people looking at the disruption in their mind believe it will be a more gradual adoption process, but it can happen relatively quickly. After my first iPhone, I wasn’t even somewhat interested in looking at a different phone and have continuously upgraded my iPhone over the years. The Carriage industry was almost started by how quickly people quit buying carriages. Newspapers wrote stories about it, and how the best carriage makers would still have a market. But eventually, everyone moved on to enjoy their cars. Even the best-run carriage company was doomed because the total addressable market shrunk at a very rapid pace.
The area that concerns me as a financial advisor is that many people are currently holding investments in their mutual funds, exchange traded funds, variable annuities, and if they have one, in their pension system. This is like having money invested in the horse or the carriage industry in the early 1900s. We will look through your portfolio to help identify the potential disrupted companies that you may be holding.
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The opinions expressed herein are those of the firm and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of author, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated.
