"Within this complexity it is not easy to visualise how technology could shape the retirement journey."
This set me thinking about the onset of ‘self-driving vehicles’, which are likely to be with us within a decade, and to ask the question: What will be the 'Uber effect' on bus journeys in our cities?
The reason we love the car is the freedom it gives us. We go where we want, when we want. We are not constrained by predetermined routes and timetables. Yet, Mark Fields (Chief Executive of Ford) is planning his business on the basis that private cars will soon be banned from our city centres. From this premise, I began to imagine a world where buses responded flexibly to consumer demands – like an Uber ‘call up’ - if people are unable to use their cars.
So, for instance, I want to travel from A to B within London so I tell Transport for London through my contact device and they tell me which bus to get on at the start of my journey. In the background algorithms are calculating the most efficient way to transport all bus users in London to their destinations in the shortest time. This means that bus routes are being adapted in real time to passenger demand. It does not mean that I will not have to change buses but connections will be almost seamless; in this future public transport is the mass transport medium not personal transportation. The latter comes at a premium cost by using taxis which will operate on a similar basis.
The pace at which the necessary technology is progressing means this vision could begin to come into being within a decade. So, why am I writing about future London bus operations in Financial Reporter? Well, quite simply, I see parallels with later life financial advice but the solutions do not appear so simple.
As with people moving around a City there are many different retirement journeys going on at the same time. Pension Freedoms have firmly put paid to the days when most provided their retirement income by taking an annuity with a minority of the more wealthy using income drawdown. Changes to the State pension age, particularly for women; abolition of the default pension age; and how society views retirement are all changing when and how people are moving into retirement.
However, without the above changes, we have a number of different points from which the journey into retirement begins. The reduction in those who have significant defined benefit pensions; the increase in those with inadequate or no defined contribution pensions; accumulated housing wealth beyond what was ever expected, but on the flip side there are those who have outstanding mortgages with no means to pay them back. I need to add to this those who are on State benefits before they begin their journey into retirement.
Then there are those later life events: a reduction in energy spending needs; unexpected large bills; receipt of a windfall; need of care or support; or the death of a partner, that will all cause detours to the route originally envisaged.
There are many other factors that will have a financial impact on an individual. Risk attitudes; different product terms; sustainability of income; cognitive capability and desires to leave bequests also need to be taken into account. The number of different retirement journeys could create something as complicated as a London Bus Map.
Within this complexity it is not easy to visualise how technology could shape the retirement journey – certainly not compared to how it might revolutionise London’s bus services over the next decade.
For financial journeys into and through retirement what I visualise instead is the steady development of a number of technological advances that provide more support to individuals in understanding their choices and helping advisers become more efficient in guiding them through their choices.
In that sense, I would expect to see 'robo-buses' on our city streets long before we see full later life robo-advice.
