Guest: Ric Edelman. Ric is widely regarded as one of the top advisors in the advisory field. He is the 2017 recipient of the IARFC’s Loren Dunton Memorial Award, awarded to an individual who has made a substantial contribution to the financial services profession and/or financial interests of the public. He is also a member of the Financial Advisor Hall of Fame, sponsored by Research magazine, has been named among the “15 most transformative people in the industry” by InvestmentNews, and voted by readers of Wealth Management as one of the “four most influential people in the financial services field.” Ric is also a #1 New York Times bestselling author. With more than 1 million copies collectively in print, his nine books on personal finance have been translated into several languages and educated countless people worldwide.

Date Recorded: 4/6/17

Run-Time: 57:37

Manufacturing Jobs Ric Edelman
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Ric Edelman

Topics: In Episode 47, we welcome New York Times bestselling author, Ric Edelman.

We start with some quick background on Ric, but then jump into the main topic: the future of technology and how it will affect our lives.

In essence, the future is going to look far different than what we’ve known. The tendency is to believe that the future will be similar to what our parents and grandparents experienced as they aged. A linear progression – school, work, retirement, death.

Ric Edelman tells us this is going to change. The linear lifeline is going away. It will more resemble school, work, back to school, a new, different career, then a sabbatical, more school, and so on… Think of a lifeline that’s more cyclical.

What’s the reason? Well, we’re going to be living far longer. Technological and health care advances mean we’re going to be far more vibrant much later in life, so this will change everything we know about retirement and our traditional life-paths.

The guys then dig into the role that technology and robots will play in all this. Robots are going to eliminate numerous existing occupations. On the other hand, new jobs and skill sets will be created, but we’ll have to go back to school to learn them.

Meb ask Ric to dive deeper into this “loss of jobs” forecast, as it’s a common source of concern for many people.

Because of computers’ increased capacity, robots will be able to do jobs that humans do – and not just “factory line” type jobs. Any jobs that are repetitive in nature are at risk – which means white collar jobs too; for example, certain types of legal work. As another example, did you know that computers are already writing news articles? There’s a program that currently writes sports stories, and apparently, readers can’t tell the difference between a human and computer author.

Ric tells us “According to Oxford University, 47% of the occupations in America will be gone within 15 years.”

So what can you do to protect yourself from being replaced by a robot?

There are 4 skill sets that will give you an edge: thinking, managing, creating, and communicating. These four things will be the most difficult for computers to do.

The conversation bounces around a bit before the guys dig deeper into how working has changed over the years – and how it will continue to change. This leads into a conversation contrasting the “New York model” with the “Hollywood model.”

In essence, the New York model is “one job.” You do a given thing with same people for the same customers for decades. With the Hollywood model, you have a group of people who come together for one project, though they’re likely working on multiple projects at the same time. You’re using your skills in a wide variety of activities at the same time. We’re moving toward a Hollywood model.

Meb asks how this view of the future impacts asset allocation.

There are two big ways: One, we need to increase our allocation to stocks far more, and maintain it for much longer. Most peoples’ asset allocation models are flawed in this manner.

Two, we need to re-think the types of companies that are in our portfolios. Most of these businesses were likely built for the 20th century – and if so, they’re at risk of failing in the 21st century. As an example, think Kodak that went bankrupt when it couldn’t transition and monetize newer technologies. Ric Edelman mentions Tesla and AirBnB as two examples of 21st century companies.

This leads into a discussion about an ETF that targets only 21st Century companies. You’ll want to hear this topic.

There’s way more in this episode: behavioral challenges for investors and the role that an advisor should play in helping… an irrevocable trust, created by Ric, that’s helping parents save money for their children… the challenges facing Social Security given our much longer life-spans… Even why personal finance isn’t taught in schools, despite being one of the most critical skills our kids should learn.

So why isn’t it taught? Hear Ric’s thoughts in Episode 47.

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Links from the Episode:

2:55 – The Truth About Your Future – Ric Edelman

9:50 – ROSS (Robotic Lawyer) 

14:20 & 19:20 – The New York Model vs. The Hollywood Model

15:53 – CRISPR DNA editing tool

29:00 – Morningstar Exponential Technologies Index

29:15 – Blackrock iShares Exponential Technologies ETF

32:56 – Vanguard: “Putting a value on your value: Quantifying Vanguard Advisor’s AlphaKinniry, Jaconetti, DiJoseph, Zilbering, & Bennyhoff

33:17 – Morningstar: “Mind the Gap” – Russel Kinnel

34:11 – Edelman Online

38:00 – RIC-E Trust

43:40 – “What if 8% is Really 0%? Pension Funds: Investing with Fingers-Crossed and Eyes Closed” – Faber

Article by Meb Faber, read the transcript here.