The Questions Proliferate
We’ve had to ask questions to give ourselves a good starting point for change:

• What is different in an “Age of Longevity”? What needs to be understood by clients and firms?

• What additional services should be provided or coordinated by an RIA firm? Why should this fall to a financial services firm instead of another type of professional advisor?

• What holds “holistic” firms back from trying to reach a different level of service? “Comprehensive” planning frequently includes financial, estate, tax and investment planning with varying levels of implementation and oversight. But it does not necessarily include planning or oversight in other aspects of clients’ lives, such as health care and social services. Could it be that “comprehensive” is no longer the accurate descriptor?

• How can a financial advisory firm transition to this new world with a new, targeted service level that responds to changing demands?    

Today’s clients, facing longer lives, require a financially and emotionally literate advisor who values and fosters deep relationships. They will require ongoing trust. Advisors must be able to constantly evaluate and monitor clients’ objectives to see how they’re being met. And they must offer a much broader and deeper range of services that allow clients choices about their finances and spending wherever possible. And they must be able to cooperate with other generations of the families.

Many life planning services, however, are not in the wheelhouse of RIAs, even though their boomer clients might need them.
Longevity: History and Probabilities

How did longevity “sneak up” on us as investors, government policy makers and business leaders?

Part of the answer is the economic equivalent to the tragedy of the commons: The problem for everyone becomes the problem of no one. But recent history is also to blame, because people’s increasing longevity was obscured by the terrible violence and upheaval of the 20th century.

These statistics, welcome as they are for human happiness and achievement, are simply overwhelming for systems of thought that take decades to adjust.

While the three most recent periods in Figure 2 reflect U.S. statistics, this data mirrors the entire developed world—and is even directionally correct for much of the developing world. These gains have been attained, of course, primarily because the childhood death rate has declined with improved sanitation and medical care.

But thinking of mortality as an average conceals large distributions of possibilities. What’s required are a number of adjustments for “average” life expectancies to become more useful for personal decision making:

• Life expectancy is almost always stated as a median figure.

• Personal expectations should be adjusted upward for education (more is better), marital status (married is better), and income level (more is better, at least to a degree sufficient for the best medical care). The reverse is true for chronic disease (obviously not so good), and family history (usually not so good, but not typically a sole determinant).

• Most often, we think of joint life expectancy for a married couple. The interaction of two lives leads to an even longer longevity expectation after age 65.

Crafting Solutions
Clearly, many RIAs are looking to millennials for future growth. (We also create services for millennials as part of our strategic planning.) But we also believe that it’s necessary to improve services for aging boomers—and that their longevity issues may actually drive RIAs’ business success.

Longevity does not necessarily equal “aging,” though the two are often conflated. Longevity can best be viewed through the multiple lenses of physical, mental and financial health. It’s really about the reinvention of long life.

Here’s where it gets tricky for RIAs. Many client needs at this point are non-financial in nature—and the solutions often demand expertise that has relatively little overlap with the financial and analytical training of the typical financial services associate. Along with the pressing problems of aging and the unwinding of assets that increasingly take center stage at financial services firms, it’s the non-financial problems, the “softer” concerns like health care, that they will have to address.