The fabric of society and its associated systems—economic, political, technological, and cultural—has seen profound transformations over the centuries. These changes have not only reshaped human interaction and governance but have also significantly influenced the methods of savings and investing. This article explores the key stages of societal systems, weaving in the evolution of savings and investing methods, with a focus on the shift from investment as products to investment as a service, and the move towards consumer-centric investing structures.
Past Stages of Societal Systems and Savings & Investing
A quick summary of the key past stages is:
- Hunter-Gatherer Societies: The concept of investment was inherently communal, focusing on immediate survival rather than financial growth. The surplus was shared, reflecting a rudimentary form of consumer-centric thinking, albeit out of necessity rather than strategy.
- Agricultural Societies: Land ownership introduced the first significant shift towards product-centric investing, with land being the primary asset. However, the community’s welfare still played a crucial role, indicating early traces of balancing product and consumer-centric approaches.
- Industrial Societies: The emergence of banks, stock markets, and insurance marked a pronounced shift towards product-centric investing. Financial products became more sophisticated, but the focus remained largely on the products themselves rather than the needs or preferences of individual investors.
- Information Societies: Mutual funds, retirement accounts, and the democratization of financial information began to shift the focus slightly towards the investor. However, the market was still predominantly product-driven, with a one-size-fits-all approach to financial services.
Current Societal Stage: The Digital Society and Financial Evolution
The current digital era has catalyzed a significant transformation in savings and investing, emphasizing investment as a service and consumer-centric structures:
- Fintech Innovations: The rise of fintech has been pivotal in moving from product-centric to consumer-centric investing. Robo-advisors, for example, offer personalized investment advice, tailoring portfolios to individual financial goals and risk tolerances, marking a shift towards investment as a service.
- Cryptocurrencies and Blockchain: These technologies have furthered the consumer-centric approach by providing more control and transparency to investors. Decentralized finance (DeFi) platforms empower consumers to engage directly with financial markets, bypassing traditional intermediaries.
- Social Trading and Investment Apps: These platforms have made investing more accessible and tailored to individual preferences, fostering a community-oriented, service-based approach. Investors can now choose investments that align closely with their values and interests, such as social impact bonds or ESG-focused funds.
What these transformations are doing is opening up what has been a fairly established industry characterised by products and traditional assets, into an industry characterised by broad ranges of asset classes, and services that can blend assets in portfolios in a way formulated to each and every investor rather than traditional ‘categories’ or ‘types’ of investor.
Anticipated Future Stages
Some of the key anticipated (and increasingly relevant) stages in both societal development and investments are:
- Sustainable Societies: The focus on sustainability is driving a more profound shift towards consumer-centric investing. Investors are increasingly demanding products that not only provide financial returns but also align with their personal values regarding environmental and social governance. We are seeing this growing and a key part of many investor considerations already.
- Post-Truth Societies: The challenge of navigating misinformation will necessitate a more personalized, service-oriented approach to investing. Trust in investment services will become paramount, with a premium on transparency and tailored advice to navigate complex markets. With sagas like the Gamestock share ride, understanding and having trust in information is increasingly important.
- Transhumanist Societies: The potential for biotech and AI advancements to transform human capabilities will likely lead to new forms of investment services, focusing on enhancing human ability and use of time. This era will likely see a blend of service-centric models, with a strong emphasis on personalization to each and every investor.
The evolution of societal systems and savings & investing methods reflects a significant shift from product-centric to consumer-centric structures, emphasizing investment as a service. This transition is driven by technological advancements, changing consumer preferences, and a growing emphasis on personal values and sustainability. As we look towards the future, the continued integration of these trends will likely redefine the landscape of savings and investing, making it more responsive to the individual needs and aspirations of investors. Understanding these shifts is crucial for navigating the complexities of modern finance and the design of future investment propositions.
It is this whole history and projection into the future that is factored into Financial Simplicity’s methods and technologies meaning our clients cannot only create awesome investment propositions for how they see the world today, but also the worlds and transitions in the future.