In a time of long-lasting economic uncertainty, it is still very hard for financial advisors to predict how things will go in the near future. If you want to be ready for the future, Dr. Ben Meng, Executive Vice President and Chairman of Asia Pacific at Franklin Templeton, says you should learn about the “5 Ds.” When you understand and use these basic factors, they can give you information about big trends like GDP growth, inflation, and the rise of the next group of wealthy people.
Meng’s upcoming publication, which sheds light on the effects of the 5 Ds, is like a road map for advisers who want to learn more about how the economy is changing.
Demographics: A Change in the World’s South and East
The population transition, which affects areas from the south to the east, marks a big change. Southeast Asia, South Asia, and Africa are all seeing their numbers grow. On the other hand, North America, Europe, and developed East Asia are all seeing their populations age, which means that they are less productive. Meng stresses how important it is to understand the long-term effects of these kinds of changes in population, pointing out the effects on areas like healthcare and output.
Deglobalization: A Focus on Redundancy Driving Costs and Inflation Higher
As the move towards deglobalization continues, the focus on layoffs is making prices and inflation go up. The reorganisation of global markets has caused immediate changes in the economy. These changes pose both risks and chances for financial advisors and their clients.
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Deleveraging: A time that could be “ugly” and involve very expensive debt
There are issues with the current phase of deleveraging, which is characterised by expensive debt. Financial advisors have to figure out how to get through this time and find possible value for their clients amidst the economic chaos.
Decarbonisation: A Big Change for the World Economy
Because of the need to stop climate change, the process of decarbonisation will probably speed up over time. People need to pay attention to this change in the global economy because it will have long-lasting effects on technologies and solutions that aim to reach net zero carbon.
Digitization: The Rise of AI as a Growth Driver That Shakes Things Up
The rise of artificial intelligence (AI) marks the start of a time when growth could be disturbing. Advisors who look into possibilities in this area will be better able to help their clients and take advantage of new opportunities in the digital age.
Meng divides these trends into two groups: those that are coming soon and those that are happening now. Demographics and decarbonisation are both slow changes that will have big effects on the economy over time. This means that advisers need to think ahead. On the other hand, the current trends of deglobalization, deleveraging, and digitalization can change the balance between growth and inflation in both good and bad ways.
Even though these changes could be hard, Meng shows how useful it could be for financial advisors to figure out how to adapt their plans to these ongoing changes. Having a forward-thinking attitude and understanding what the 5 Ds mean can help advisors guide their clients through this tough economic climate and set them up to take advantage of new possibilities.
Who is Dr. Ben Meng?
Dr. Ben Meng is the Executive Vice President and Chairman of Asia Pacific at Franklin Templeton. In this role, he is in charge of global private equity and environmental projects. He has worked in finance for more than 20 years and has experience in a wide range of areas. He has been in key investment positions at well-known companies, such as Chief Investment Officer at CalPERS and Deputy CIO at SAFE.
The fact that Dr. Meng chairs ESG-focused boards demonstrates his concern for the environment and society. The degrees he has earned are a Master of Financial Engineering and a Ph.D. in Civil and Environmental Engineering. He teaches at well-known business schools and writes for the Journal of Investment Management because he believes in education.
