Favorite stocks in an SMSF that provide reliable growth and cashflow today won't be here in the next decade or two – at least not in their present dominant form.
Think banking, insurance and utilities – the bedrock of all retirement investments in this country – as technological changes are sure to leave most of today's leaders as tomorrow's laggards.
Lots has been written about how industry disruptors such as peer-to-peer lenders and new payment technologies are threatening the cozy business models of the big banks and my colleague Tim McArthur has written about the threats facing power utilities like AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG).
A report by Bloomberg New Energy Finance has gone further to quantify the earnings risks facing utilities as its analysts are predicting that more than half of Australia's electricity generation will come from "behind the meter" by 2040.
This includes solar panels on our roofs and revolutionary batteries to store power for the times we don't get enough sun.
What is particularly significant about the forecast is that this trend will unfold despite the federal government's less than friendly policies towards renewable energy and the environment. This means revenue from power generators and retailers could halve even without government incentives.
This doesn't mean the ultimate demise of AGL or Origin. After all, this development is one of the slowest moving train wrecks around and companies and investors have plenty of time to react.
What's more, Origin is investing heavily in liquefied natural gas export projects while AGL is positioning to become one of the first movers in battery storage products, along with US electric car company Tesla.
It's good to see they are not burying their heads in the ground like traditional media did.
But it's utilities like Spark Infrastructure Group (ASX: SKI) and Ausnet Services (ASX:AST) that could potentially have more to lose as their investments and business models are focused on the expensive power infrastructure of poles and wires that span the country.
Another technological trend that is escaping most investors' attention is driverless cars. This technology will likely be commercialised sooner than most think and we are already seeing some of this functionality built into cars sold today, such as automatic parking and auto emergency braking.
The advancements in this area could dramatically curtail accidents, particularly "fender benders" which make the bulk of all car accidents.
Is that good news for insurers? Well maybe as it will mean less payouts in claims. But it could also mean falling revenue as the premiums for car insurance could fall due to these improvements.
While the impact on insurers like Insurance Australia Group Ltd (ASX: IAG) may be less clear, the advancement in automobile technology is bad news for Suncorp Group Ltd (ASX: SUN) as it owns the largest network of panel beaters in the country.
Even if profitability in its insurance division escapes relatively unscathed, it will have pretty quiet workshops to support in time to come.
This also puts AMA Group Ltd (ASX: AMA) into focus as it undertakes a $45 million capital raising with some of these proceeds likely to be used to fund more acquisitions in the panel beating space.
We don't even need to talk about 3D-printing and how that could one day mean we can replace car parts ourselves.
Again, these threats are not something we need to stress about in the next few years and many of the stocks mentioned here can still make good returns in the meantime.
But what it does mean is that we need to be careful about our earnings assumptions and willingness to pay a premium for these stocks, particularly if we buy them to last the mile till retirement.
The only constant is change, and the last important point investors should take away from this is the need to keep yourself informed by using investment tools such as the Motley Fool….
