[Editor's Note: This is the second article in a series.]

One of the more surprising things about financial advisors is that, in reality, they don’t give financial advice. Rather, they diagnose and solve client problems. Financial advice is just one of many tools that they use to help clients with their problems.

However, as noted in a previous article in this series, how and what advisors do to help clients with their problems is about to change. We are at the front end of an era in which very sophisticated and low-cost online technology tools will make it much easier for clients to do much of what their wealth managers currently do for them now. And unless advisors substantially expand what they do for clients, their fees are going to get crushed.

More importantly, client problems are going to be very different in the future than today. Two reasons: people are going to live much longer and at the same time they are going to have to function in an economy that is changing at an accelerating rate.

To be sure, this is not more of the “Millennials are so different and so much more sophisticated than their parents that they will have completely different needs, communicate differently and not need or want the advice of another person” narrative that has been widely peddled. In reality, every generation ultimately faces the same problems—careers, marriage, kids, etc.—that only get more complicated over time. (And to paraphrase Mark Twain, as one gets older, their parents suddenly seem a bit less clueless.)

Rather, everyone’s financial life is about to become more complicated. More specifically, according to the Stanford Longevity center, for every three years that someone lives, their life expectancy goes up by four months. But about 70 percent of all longevity increases to date have been from decreases in infant mortality.

This is about to change. Generally healthier lifestyles along with a series of likely forthcoming medical breakthroughs (including immunotherapy for cancer as well as new brain treatments) are going to make these numbers spike. Soon it will become commonplace for people to make it to 100.

But not everybody—rather, just those with money. An MIT study found that men in the top 1 percent income bracket already live 14½ years longer than those in the poorest 1 percent. There is likewise about a decade difference between women in these categories. And longevity increasing at a rate that is 10x faster for people in the top 5 percent of incomes versus those in the bottom 5 percent.   

Consider for a moment the implications. We currently have a system (Medicare) that effectively subsidizes health-care costs for the wealthiest in our society for more than a decade longer on average than it does for the poorest. And this system is already going broke (currently projected to do so in 2026) and is being funded by a country that is awash ($22 trillion) in debt. How is this either politically or economically sustainable? 

Now consider what this will mean for your clients. How good is any financial planning if someone suddenly lives 15 to 20 years longer than he or she originally expected? Add to this, a major assumption in most planning to date has been that Medicare will pick up the lion’s share of the health-care costs for those who are over 65. That is clearly going to change. 

For many clients, outliving their money is going to go from a remote likelihood to an almost certainty unless they work much longer. And the idea of “retirement”—a quaint concept first originated in the late 1880s in Prussia and that was based then on the assumption that you could retire only after you had outlived normal life expectancy—is likewise going to change. People are going to “retire” later and may have to work at least part time when they do. 

Further complicating matters is that, at the same time that this is happening, the rate at which the global economy is changing is accelerating. Outsourcing and “virtual company” models are becoming the norm and fewer people today have anything close to a predictable career path. According to the Bureau of Labor Statistics, the average person already changes his or her job 12 times in his or her career. 

So, what does all of this mean for wealth managers? I guess the good news is that, if anything, the need for advice is going to be much greater in the future than today. However, the advice that industry participants will provide is going to have to be substantially more holistic and sophisticated.

One way to think about this is to view a client’s life and wealth as a continuum. At the front end of the continuum, the client is creating wealth either as an employee or by building and running a business. In the center, the client needs advice on how to intelligently manage the wealth he or she has created. At the back end of the continuum, the client consumes his or her wealth at some rate, ideally not running out of money before he or she dies and perhaps even leaving some for heirs.

Today wealth managers mostly provide advice at the center of the continuum. They largely help clients with their existing financial capital. More specifically, wealth managers do an incredible job of helping people to think through all of the issues that they need to consider and decisions that they must make when formulating their goals and then help construct a financial strategy to achieve them. 

In the future, however, wealth managers are no longer going to be “financial advisors.” Rather they are going to just be “advisors” because they are going to play a much larger role in also helping their clients at the two ends of the continuum. They are going to be experts in helping their clients in the creation of wealth by advising them on their careers and businesses. Clients will be changing jobs and careers frequently (and needing to work longer) and their advisors are going to help them to maximize the value of their personal and professional capital. 

To accomplish this, wealth management firms are going to become much more specialized. They are going to have to have teams of people with deep knowledge and experience in specific industries, professions and businesses. And many of the largest industry participants will effectively become confederations of sub-specialty groups within one organization. 

Wealth managers are also going to provide sophisticated advice to clients on how to more efficiently consume their capital. For example, regardless of how health care is structured in the future (be it the current system or even if we go to the other extreme and shift to what will effectively be a “Medicaid for All” program), the robustness of one’s health care and accompanying quality of life and longevity will be highly correlated to how much of their wealth that they spend on it. Thus, wealth management firms are going to have to become experts in helping their clients in managing their health-care costs so as to help preserve their capital. 

To be sure, these aspects of advice are only part of what future wealth management firms are going to do for their clients. They are also going to help their clients manage their non-financial assets (such as their information), invest their money in a much more sophisticated manner and help them more efficiently consume their capital in areas in addition to health care. (And we will delve much more deeply into them in later articles in this series.)

Additionally, there are some very successful industry participants that have already expanded their services to address some of these issues. For example, there are firms that have built subspecialties that focus on physicians and dentists and others that advise executives in fields as varied as the soft drink and pharmaceutical industries. However, to date, these subspecialties largely have been savvy marketing strategies and, while the advice that is provided is more specialized than at other firms, it still is nowhere near as comprehensive as it will have to be in the future. 

Lastly, a precondition to wealth managers being able to do much more for their clients is that they are going to need to have much larger businesses across which they can spread the associated increased fixed costs of providing broader and better advice. And—as has already been written about ad nauseum—having to run a larger business brings with it its own set of complications. 

However, on the bright side, these changes also mean that wealth managers are going to make a much bigger difference in their clients’ lives. And, in my experience over the past 25 years, that is what truly drives every successful person in this industry.  

Mark Hurley is the founder of Undiscovered Managers and the co-founder of Fiduciary Network.