Articles

Economic Insights

AUSTRALIAN RETIREMENT TRUST

2025 ROAD SHOW REPORT  

ECONOMIC INSIGHTS

BY Brian Parker Chief Economist, 
Presented at The Establishment, Sydney – April 9, 2025

 

“This Is Your First Rodeo” – Brian Parker Unpacks the End of a 30-Year Economic Dream

In a compelling keynote at the Australian Retirement Trust 2025 Road Show, Chief Economist Brian Parker delivered what could only be described as a “sobering recalibration” of investor expectations. Standing before a packed boardroom in The Establishment on George Street, Sydney, Parker walked attendees through a deep and disarmingly frank analysis of where we’ve been—and where we may be headed.

“If you became economically aware after 1993, this is your first rodeo with inflation,” said Parker, invoking a generational line in the sand that drew quiet murmurs across the room.

The World We Knew: A Golden Age of Falling Rates

Parker opened by reflecting on the last three decades—a period characterized by falling interest rates, declining inflation, and globalized cooperation.

“From the early 1990s to COVID-19, the Reserve Bank of Australia had pretty much nailed it,” he stated. “Inflation was kept within the 2–3% target band, and interest rates followed suit.”

For investors, this era was a windfall:

• Bond yields declined steadily, pushing up bond prices.
• Equities surged as capital flowed freely.
• The '60/40' balanced portfolio strategy thrived.
• Global trade flourished with minimal friction.

As Parker explained, passive investing flourished in this tide of predictability, with even mediocre asset allocation delivering positive real returns.

The Demographic Shift: Enter the “Inflation Virgins”

One of the most striking observations in Parker’s presentation was demographic. He noted that anyone who became financially literate post-1993—those aged approximately 30 to 55 today—has lived only through an era of low inflation and interest rates.

“If the first time you became aware of money was after 1993, then you’ve never seen a broad-based acceleration in prices,” he said. “You’ve seen banana prices spike after Cyclone Larry, maybe petrol go up, but never this kind of sustained inflation.”

This cohort—which includes a large chunk of today’s investors, professionals, and even advisers—has been conditioned to expect:

• Low borrowing costs
• Predictable monetary policy
• Steady equity returns
• Negligible inflation risks

Parker warns: those days are over.

Parker’s Personal Inflation Memory: A Paddle Pop’s Price Shock

In a touching aside, Parker recounted his first memory of inflation:

“It was 1974. I was seven years old, in grade two at Burleigh Primary School. The price of a Caramel Paddle Pop jumped from 5 cents to 20 cents in six months. That was hyperinflation for a seven-year-old,” he laughed. “It scared me for life.”

That personal anecdote wasn’t just storytelling—it was a reminder that inflation is not an abstract concept. It erodes purchasing power, destabilizes savings, and changes consumer and investor behaviour.

The Next Decade: Parker’s Grim Outlook

Looking forward, Parker painted a landscape that’s markedly different from the past:

🟥 Persistent Volatility

“We are entering a period of more frequent and severe shocks—to prices, trade, and investment flows.”

Globalization, once a cornerstone of economic stability, is reversing. Parker highlighted US-China trade wars, tariff surges, and geopolitical mistrust as accelerants of instability.

🟧 Inflation Above Comfort Levels

“It’s not the 1970s, but it’s not 2015 either. We’re going to be flirting with inflation above 3% far more often.”

While central banks like the RBA may still aim for 2–3% targets, the reality, Parker argues, is that structural inflation—driven by defence spending, energy transitions, and fractured supply chains—will become the new normal.

🟨 Decline in Traditional Diversification

“In a high-inflation world, bonds and equities become positively correlated. That old diversification playbook doesn’t work the same.”

Parker stressed that investors can no longer assume bonds will buffer against equity market volatility in an inflationary shock.

🟩 Private Assets Are Key

“We need other strings to our bow—real assets, infrastructure, private equity—that offer genuine diversification and inflation protection.”

Parker explained that ART has been deliberately tilting portfolios toward private market exposures with longer-term, inflation-linked income streams.

Implications for Investors and Advisers

The message was clear: investors need to recalibrate. The playbook of the past 30 years is not fit for the future.

✔️ Time Horizon Mindset

Parker reminded the room that ART’s internal team is investing “as if they’ll be managing this money for the next 30–50 years.”

Advisers must adopt a similar long view when helping clients adjust expectations for:

• Returns
• Risk
• Asset allocation

✔️ Client Education is Crucial

Clients who have only seen the “good times” will need re-education:

• What rising rates mean
• Why diversification must evolve
• The realities of geopolitical instability

✔️ Portfolios Must Reflect Reality

“Designing a portfolio based on what might happen in the next 6 months is a fool’s errand,” Parker warned.

Instead, focus should shift to building resilience—not just chasing returns.

Conclusion: A Turning Point in Economic History

Brian Parker’s presentation wasn’t about fear-mongering—it was about truth-telling.

For a generation of investors accustomed to predictability, his message hit hard:
Inflation is back. Volatility is the new norm. And the tools that once worked might now leave clients exposed.

His advice: adapt now, diversify wisely, and think long-term.

“Because if all you’ve ever known is 2% inflation and cheap credit, buckle up,” he smiled. “This is your first rodeo.”

 

General Advice Warning

The information provided in this blog is of a general nature only and does not constitute personal financial advice. It has been prepared without considering your individual objectives, financial situation, or needs. Before acting on any information, you should consider its appropriateness to your circumstances and seek professional advice.

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Familia Wealth and Shartru Wealth do not endorse or guarantee the accuracy or completeness of any third-party content referenced in this blog. The views expressed by third parties are their own and do not necessarily reflect the opinions of Familia Wealth or Shartru Wealth. While care has been taken to ensure the information is accurate at the time of publication, neither Familia Wealth nor Shartru Wealth accepts liability for any errors or omissions.

Posted in Articles at 15 April 25