What we spoke about at our annual Members’ Summer Drinks in London

At our recent summer drinks we asked some of our Thinking Ahead researchers what they thought would be the big themes or major disruptors for the investment industry in the next 5-10 years. We also asked them to hide the name of a popular band in their short speeches (see if you can figure it out)! Here is what they said…

Isabella Martin- Artificial Intelligence

Hi, I’m Issy. I’ve been with Thinking Ahead since February 2022 and in that time a lot has happened. I moved to Hove in the UK – as an Australian, my happy place is close to the sea.

I also transferred to TAI full time, from a split role with WTW, because I just wanted to spend more time with all of you.

Now I love reading (hence the move to TAI) and I love the beach which means when I started hearing more about AI, I dove straight into every article I could find.

I believe that AI will be very disruptive for the investment industry in the next 5-10 years. At TAI we will be exploring this more deeply in the Investment Organisation of Tomorrow working group later this year.

Now, I could easily stand up here and talk about the risks and very real ethical issues associated with AI. Elon Musk has warned labs to temporarily STOP RIGHT NOW AI development, stating: “The risk of something seriously dangerous happening is in the five-year timeframe”.

BUT I am going to be my more hopeful self and describe one way AI will solve a very real problem in the investment industry- data.

Currently data, specifically in sustainability is uneven, it’s weak on substance and has limited decision-usefulness.

In 5-10 years research suggests that AI algorithms will be able to quickly analyse vast amounts of data, both financial and sustainability related. These algorithms will scrape the web for conventional and unconventional sources – think trends in the market, news, social media sentiment and satellite imagery. And all of the insights and patterns will be accessible to you and me. It’s called no-code AI and it exists today.

I am very convinced this data future will be realised. I am also very convinced it will be accompanied by severe data inaccuracy, bias, privacy and security issues.

But let me push further into hope. AI will mean that the drudge of finding data and manipulating reporting will no longer be YOUR job. You will have all the data you could ever need to make AND actually implement smart decisions.

This will be the power of the AI (Artificial Intelligence) + HI (Human Intelligence) model.

Anastassia Johnson The future of pensions

Hi, I am Anastassia. When I grow up, I would love nothing better than a safe, secure – positively boring – pension. Unfortunately, I am a researcher at the Thinking Ahead Institute, and I have a DC pension.

This year we have been looking at the future of pensions. According to research, half of the working-age population doesn’t understand enough about pensions to make decisions about saving for retirement nor do they have any plan for their retirement finances. 

Behavioural research also suggests that people, in general, tend to live for today. We find it hard to make trade-offs between spending now, saving for the short-term and planning for later life.

So, working on this particular topic was really interesting for me.

Younger generations don’t have access to the same kind of benefits that older generations had so there is definitely a need to re-think what would the best retirement plan in current circumstances.

After a few months of research, literature review and discussions with our working group members, we are coming to the conclusion that broadly, there are significant concerns in the areas of pension design, effectiveness and affordability.  

Pension provisions in the future will need to navigate the demographic transition and the disruption threatened by climate change. The rising proportion of older people needing to be supported by the economy is likely to strain public finances and erode the real value of state pensions. While climate change may well threaten the value of existing assets and create a challenging investment environment over the next 10-20 years.

I would love pensions to be boring, but I worry that pensions of the future will be sure to SPICE UP YOUR LIFE!

Andrea CaloisiClimate

Hello everyone!

For those who don’t know me, my name is Andrea. I’m one of the latest additions to the team.

So, what do I bring? Well, I increase the average height, lower the average age, and increase diversity – I’m Italian. Unfortunately and unexpectedly, I can’t contribute much to the team’s cooking knowledge as I’m a bad cook (my wife is the go-to in the family!). But I’m a good fork, as we Italians say, meaning I’m a good eater.

I’ve got an 8-month daughter who, by the way, is my best ally in the eaters’ squad. But current consumption is not what keeps me up at night. Instead, I do care more about her long-term opportunities to thrive on this planet.

The next decade is crucial. You have heard some of the other topics today but over the next 5-10 years there is no other challenge and opportunity more pressing than ramping up global efforts and commitment to achieving net zero emissions. And the time that separates us from the first interim target of 2030 is rapidly running out.

To meet the 1.5C goal, the global carbon intensity of GDP needs to drop 77% by 2030.

The investment industry has done a lot in this regard. However, it has taken just tiny actions compared to the scale of the problem. What is needed beyond the current efforts and actions is – allow me to say – almost unthinkable.

To operationalise an energy transition that is more and more looking like a transformation, AOs and AMs will need

  • to mobilise capital by thinking and acting less like individual human beings and more like ecosystem living beings; thinking and acting less like investors and more like actors of change
  • to engage in “skills and knowledge stretching”, as the transition is not going to be a conventional one
  • if you WANNA HAVE SOME FUN, it’s time to learn how to undo things to learn new things. Think about the disruptions and the revolutionary impacts coming from AI, as Issy described.

Jess GaoGeopolitics

Hi, I’m Jess I have been with TAI since the beginning. But I also count as young enough to speak with you tonight.

Being a Chinese person living in the UK, I can’t help but think about the geopolitical risks we are facing. It seems that we are more politically and socially divided than ever, but remain deeply interconnected economically. Unlike my awesome colleagues who shared their perspectives and ideas, I have some questions and would love to have some answers.

1. My first question: are we witnessing a turning point in history with globalisation, and what does that mean for the investment industry?

Just to give you some data points:

  • Trade openness peaked in 2008 and has since fluctuated.
  • Import distance has been falling especially with new trade (excluding Brexit)
  • Although the pandemic has impacted trade, evidence suggests that regionalisation started before it.

With the rise of nationalism and populism, are these indications of a systematic shift?

2. My second question is China-specific. A few years ago, there was talk about China overtaking the US. Now the question is, has China missed its chance to become a US equivalent superpower – economically, and politically?

  • China’s demographic dividend is waning
  • Growing concerns associated with political risks
  • As the tension increases, we are seeing asset owners shy away from direct investment in China. However, what about indirect exposure? The global supply chain is incredibly connected to China in almost all sectors and at every level.

3. My third and final question is about us all. Given TAI’s recent work, which has included

Thinking about all the potential threats, risks, emerging issues and opportunities thrown up by this work, my final question is: as organisations (our business models, investment models, people models), are we ready, are we STRONG ENOUGH for what lies ahead?