Hard facts kick crystal balls to touch

Professional futurist Ian Yeoman makes predictions but likes cup-winning surprises on the football pitch, reports Tom Pullar-Strecker

British-born academic and football fan Ian Yeoman is a professional futurist at Victoria University in Wellington, where he specialises in predicting the future of tourism and travel.

Yeoman believes investing in commodities seems a sensible decision in the light of the world's growing population, but cautions that no experts predicted the current oil price slump, or Sunderland's shock win of the 1973 FA Cup final.

Does being a futurist give you a different perspective on investing?

An important aspect of "futuring" is understanding the drivers of change; the reasons why companies would invest, the types of investment decisions, returns and time periods.

I have always taken a long-term perspective, in particular about changing population structures. Pensioners post-2050 will be economically less well-off compared with previous generations. Across the world countries are changing pension benefits because of ageing populations and falling birth rates.

Do you think people fully take into account the way the world may change when managing their money?

I think people take into account the way the world is changing, whether it is fully taken into account is another matter.

Most of us use a balanced portfolio approach to long-term planning because of the risks and changes occurring in the world. That balanced portfolio is usually outsourced and managed by an expert. Investment managers need to achieve a return on investments, and this means taking risks.

The larger the risk, the greater the potential for losses or gains. The global financial crisis has changed portfolio management and legislative frameworks have modified risk-taking behaviour. The problem is that individuals need a higher rate of return than the banks' savings rate to fund retirement.

So what does our collective financial future look like?

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Trying to predict an exact future usually leads to getting it wrong. Using the process of scenario planning in which we construct multiple futures allows us to prepare.

There are issues in New Zealand, as the majority of over-50s became homeowners before 2001, and therefore have retained much of the equity growth they enjoyed due to the boom, whereas those aged under 25 are burdened with student loans and unemployment.

There is a new class in society of those over-qualified and under-employed. Our nation has issues with child poverty and growing inequality. If the Government raised the superannuation age to 67 tomorrow, the average Maori male would never collect it.

On the other hand, every generation does get richer. In real terms children will be 2.5 times better off than their parents. Each generation is always better educated, lives longer and travels further.

Do you believe then that future generations can continue to expect real increases in their standard of living, or not?

I can't say either way.

Do your theories about the different ways in which we may live in future influence the way you personally invest?

The theory I hold about consumers is called "fluid identity".

Increases in disposable income allow a real change in social order, living standards and the desire for quality of life with tourism at the heart of that change.

Effectively, consumers want an improvement year by year, as if it is a wholly natural process like ageing. For me, I want to be comfortable in retirement and to be able to do the above without worry.

However, I think the concept of retirement has itself retired. In addition, we need to keep our minds busy to keep dementia at bay.

I think I will still be working at 92, but only part time.

 - Sunday Star Times


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