Six possible financial futures

I still remember the terror I felt at the age of 29 when I realised I might not have been as prepared for my financial future (post-40s) as I’d have liked to. Partly because of advertising ageism. Partly just life stuff. I decided then and there I needed to learn more about the basics of money and investing. I was good at saving, but savings alone won’t cut it when you get interest rates of 1.5% and inflation rates tend to be 2.2% or above. It’s a ticking time bomb.

Fast forward to late 2023 and I find myself consulting on brand and comms strategy for a B2B payment terminals business, and shortly after working on the brand and comms strategy for a new investment app in Europe. You’d think this is the stuff you want to run away from (the ‘unsexy’ work, if you will), but I absolutely loved it. There’s just something about your job being about simplifying the complex, instead of dramatising simple things, that really works for me.

The more I worked on financial services, the more research I was exposed to, the more interesting questions came up around what we might expect to happen at a cultural level around how people relate to money. So, I asked Salmon Crew member Hemal Gill to help me unpack some of the most interesting areas we could find. Here are six core areas we’re into.

1/ Cashless childhoods

Remember being a kid and learning about money by pretending to sell strawberries in a stall, and someone giving you money and you giving them some money back as their change? This is how we’d begin learning about the value of money, and to some extent how maths works.

But when only 10% of payments in the UK are now done in cash, and on a steady decreasing curve, what does a cashless society mean for how children perceive the value of money? Or indeed the value of anything? And if cashless payments correlate with less control over what you pay, there is a series of questions that emerges around how money and self-control and the physical texture of services are connected. We’re more likely to remember what we read by reading physically, and we’re more likely to value money if we feel some part of it in our hands.

As this disintermediation of money accelerates, what will our children associate with what money is and how it works? Will they learn about the value of money through conceptual thinking (two minus one equals one), instead of by doing (I give you two coins, you give me one back)? And does this influence their critical thinking skills more or less than the alternative? The blur between where your money is, and who teaches you about the basics, gets quite blurry.

2/ Forever action bias

9% of UK baby boomers have no intention to stop working beyond the age of 66. 14% of baby boomers and late Gen Xers have already returned to work after retiring. 20% of Americans don’t think they will ever retire, and 70% cite financial reasons. Retiring is becoming a luxury.

The pessimistic view here is that the social safety net systems that were designed to help us in older age are failing, and the bi-furcation of wealth building trajectories (also known now as a K-shaped economy) creates a generation of retired have vs have-nots. But it’s equally true that some folks may choose not to retire because they actually enjoy what they do, or might see retirement as a chance to do what they enjoy without the pressure to make it profitable.

It’s also possible that the second point is a way to cope with the learned helplessness that emerges from the first. When you know you might not be able to retire, to build a narrative in your mind that perhaps you didn’t want to anyway, and it’s actually an opportunity. What feels pressing to me is that what we define as the side hustle culture might be perpetuated until we literally die. People in their 20s and 30s are into having side hustles not because they want to, but because they have to. Or they feel safer if they know they have options. Classic action bias. Doing something will always inherently feel safer to us than doing nothing. Even if it’s not true.

What are the psychological needs and drawbacks of feeling like your life will be forever defined by action? As you get older, you do need to find ways to stimulate your mind and body to manage the inevitable decay that we all go through. So staying active is brilliant for you the older you get. But will this result in a generation of retirees that stop knowing how to appreciate things because there’s always a next thing they need to do, or want to do? Post your 70s, will every exchange be a potential business deal in the making, which means the social fabric of pure friendships gets a bit more eroded? Or will the wisdom of old age help balance it out?

3/ Debt as self-promise

I remember reading Yanis Varoufakis’ excellent Talking To My Daughter About The Economy, and it dawning on me for the first time in my life that debt might not be an inherently bad thing. For example, if you’re repaying a mortgage, congratulations, you’re in debt, but it’s also good debt because owning your home is generally speaking a good thing (though attitudes might be splintering on this!). The argument is simple: debt is good because it fuels growth.

In this sense, national debt is a future promise to your citizens that you expect a return. It’s also how it works for corporations. But is this how it works for individuals, especially since the rise of Buy Now Pay Later (BNPL) services? 42% of UK adults have used them. 49% in the US. 34% of under-34s do it on a regular basis. The catastrophiser in me feels this is the sub prime mortgage crisis all over again. All this consumer debt, broadly un-regulated, and no significant questions being asked, because no one wants the party to end when the party’s this good.

But there is another part of me that is fascinated by the psychological drivers behind all this. Debt as a promise to the self, where each new deferred payment is another possible building block for what future me might hold. Consumption as religion leads to this conclusion quite naturally. We consume to get closer to some sort of deity, and the deity is a better version of who we think we are, want to be, or ought to be. There are no institutionalised rules for who this version of us should be. We’re either too early, or too late. Klarna is consumer paganism.

And if this is the current trajectory, will we further accept debt as part of building a better self? An important self-promise in the project of optimising who we are and who we can be? Will we ever treat lack of debt as an actual stigma, because to not get into debt is to not invest in yourself? Is this a potential new era of “growth at all costs” but for individuals? I like to think not, because profitability is sustainability and we’re there now on the business front. But that hasn’t stopped us before, as history tends to rhyme. And we love to promise things to ourselves.

4/ Wealth dysmorphia

About a year ago, I was interviewing a relatively famous journalist who writes a lot about personal finance, and she introduced me to the idea of money dysmorphia. Essentially the idea that we think others have more than we do, even if that’s based on perception not reality.

But similarly we could argue the same psychological drivers apply to the concept of wealth, which in itself is changing. It used to be that wealth was about accumulating more, but now we see more signals around the importance of having enough, and indeed feeling enough.

So the lines between finance and self-help blur here too, and we’re now in a place where the best financial advice might start by grounding yourself with some School of Life videos first. Once you know the foundational technical skills of personal finance management, you get into the social, psychological and indeed psychotherapeutic ones. The stuff that can break you.

Will we start seeing more finance-related therapy services, where the issues you want to talk about are less about whether your dad or mum gave you what you needed, and more about whether the wealth porn you see everywhere is even real and consequential for your life.

5/ DIYstopia

One of the great lessons I took from working on the brand positioning for a retail investment bank last year is that democratisation is a double-edged sword. You have on the one hand wealth management services who promise to do everything for you, and on the other hand a lot of self-serve apps where the power is completely in your hands. But there’s a problem.

When power is completely in your hands, so are the consequences of that power being used in ineffective ways. Kierkegaard spoke about anxiety being the dizziness of freedom, and this is what he was talking about. Everything’s now in your hands, including the mistakes. And if you pair the proliferation of self-serve trading apps with the fact that only 23% of UK adults pass a financial literacy quiz, and 49% of US adults being able to answer basic financial questions.

This is a DIYstopia, where well-funded companies strip back the middle person and put the onus on the customer, but in reality a consequence of that is customers need more educational support to know what the hell they’re even doing in the first place. You’re seeing the wizard for the first time, but turns out he’s infinite wizards in the form of potential financial instruments you cannot begin to fully understand.

One potential consequence of this might be a new form of generational trauma, in the shape of financial concerns being inherited by those who tried to put financial matters into their own hands and made enough mistakes to never want to do it again. Sure, this increase in wanting to control our own financial destiny comes as a way to cope with complexity and lack of safety nets, but we need the basics in place to avoid simply spawning a new form of overwhelm.

6/ Heuristicocracy

On the other hand, there’s another bifurcation here around financial literacy where to get deeper into its complexities is another form of status. Being into finance, basically, is kinda cool now. And actually knowing how these systems work, and how to take advantage, carries not only social capital but also allows you to benefit in real capital terms. Buying and holding forever is a new form of “living happily ever after”, a financial fairy tale for the ages.

But to truly navigate this complexity, you need the right values in place and the right ability to make decisions not based on pure data analysis (which is an actual job that people do, and it’s probably not your job), but more based on mental shortcuts to help you cope with the financial cognitive burden. Heuristics go up in value, because in complex systems often only they’ll do.

This creates a new form of financial knowledge smugness, where not only do you understand the basics of the system where your money flows, but you also have enough mental models, heuristics and shortcuts to signal a new form of cultural capital. It’s cool to be into the right bands, watch the right films and wear the right clothes, but there’s also deep status gains to come from having the right mental shortcuts that show you’re closer to seeing The Matrix.

What next?

This was the result of a joint research and sparring exercise I did with Hemal, coupled with some deep research to quantify some of our assumptions. This isn’t an end product, or a research report, or nothing close to completion. Instead it’s something that can frame future questions around financial services, without simply falling on the trap that all people want is “access to good information and good value for money”. If only it were that simple, and cultural pressures, social status and deep psychological drivers weren’t always percolating.

If you want to discuss potential implications of this research for your business, we should talk.