First Published in Pension Funds Online
Matthew Binnington delves in to the possibilities of the technological future.
I was pondering this profound question only this morning, as my toothbrush conducted a routine health check before sending the results directly to my coffee maker.
I'll spare you the details, but the infection markers alarm went off, so the resulting brew came with a distinct aftertaste of Tamiflu. Better safe than sorry, I guess.
Now that facetious anecdote isn't true, but I feel that what it tells us about the future is true.
The internet of things – where everyday objects will be embedded with sensors, networked together and able to collect and share unprecedented amounts of data – is going to change fundamentally the way we live, work, spend money and save.
It has been described as the third industrial revolution; and a technological paradigm shift of this magnitude will demand responses from all businesses, not least in our industry.
The future, of course, is already here. Fitbits and the like – discreet wrist bands that link to smartphones, which monitor movement, activity and sleep patterns – are fast becoming ubiquitous.
We don't need Philip K. Dick to paint a picture of a near future where this information will be used to inform a much more nuanced view on the health and longevity of our pension scheme members.
Consider also Wealthfront, a Californian "robo adviser" using technology, proprietary algorithms and a Silicon Valley mindset to take on Wall Street head on.
They have grown from managing $500 million to $2 billion in only a year, and claim to have saved their clients $10 million in fees in the process.
Another interesting case from across the pond is that of Acorns, a start-up that runs an innovative saving app designed to help people get started in investments.
Users link their bank accounts to the app, which then automatically rounds up transactions to the nearest dollar, and invests the difference in a range of exchange traded funds.
People are already spending money differently, with contactless payment, Apple Pay and so on have been widely adopted in a relatively short space of time. In the new era of big data, it will be much easier for those with access to this information to see how, and where, we are earning and spending our money.
Taken a step further, we'll also know what emotional state we were in when we bought that Taylor Swift album. (It was for the kids, darling, honestly!)
Those businesses at the bleeding edge of the revolution understand how the young think and relate to the world, and are delivering solutions that better meet their needs.
We all know that member engagement with defined contribution (DC) pensions is crucial, and also that millennials will be the first generation wholly dependent on DC for their retirement savings. The internet of things is therefore a challenge, but also a huge opportunity, for the pensions industry.
On the one hand, competition for attention and engagement will be fiercer than ever. On the other, the potential quality of insight into our members will be of a much higher order.
The era of longevity statistics referring to the "average member" and defaults being set for entire schemes may soon be over. Moreover, bid a fond adieu to the artificial distinctions between our work and leisure, business and social networks, and pensions and the rest of our lives.
What should we be doing to prepare for this brave new world? Now there's a question. I'll check in with my salad spinner and get back to you.