Longevity is the biggest variable in most Americans' careers and retirements. As people live longer, retirements and careers are no longer playing out along the linear stages of life that they did in the second half of the 20th Century. The upshot is advisors are being forced to address clients' increasingly complex, extended lifecycles.
But one eternal reality remains constant. "Human nature is a failed investor." These issues were the subject of an illuminating talk by Nick Murray at Financial Advisor's 10th annual Inside Retirement conference in Atlanta on Wednesday, May 1, which happened to be the day Murray began working in the financial services industry 52 years ago.
In the late 1960s, the nascent advisory business was about managing money. Today, it's about leading and managing people, Murray said. Today, there are 40 million people who are over 50 years old still working towards their retirement day. Most are getting ready to make every mistake in the book.
Americans are programmed by the quixotic nature of society to run out of money in retirement and somewhere between 90 percent and 95 percent of them probably will, Murray said. For them, talk about a financial legacy is irrelevant.
"There won't be any legacy," Murray said, citing two of the most influential books of the last decade, Charles Murray's Coming Apart and J.D. Vance's Hillbilly Elegy. Both books address in stark, sad detail the decline of America's white working class over the last 50 years.
Most people are in denial, he continued. There are some things financial advisors can do about this and much that is beyond even the most yeoman-like efforts of a relatively small profession.
American society is sensing that the top quintile is "breaking out of the pack" financially and most of the rest are falling behind. "I'm not here to defend or decry inequality," he told attendees. But given that financial initiative, hard work and thrift are unevenly distributed among humans, inequality is "baked into the cake.'
There is a tremendous correlation between longevity and education. "Your clients aren't living longer because they read Hemingway and listen to Vivaldi," Murray said.
But there also is a near-perfect inverse correlation between smoking and education. "Education in this country isn't delivered on an egalitarian basis," he explained.
Financial advisors and their clients eat healthier, get regular check-ups and exercise more frequently than most Americans. They even understand the link between periodontal wellness and heart disease.