Longevity planning will be a central mission for advisers of the future

Clients are living longer, and advisers will need to help them avoid outliving their money

Jul 22, 2019 @ 4:59 pm

By Ryan W. Neal

As people live longer, healthier lives, they will need more help managing their money through retirements — which likely will last longer, too.

At a recent roundtable discussion hosted by InvestmentNews on the Future of Financial Advice, many industry leaders agreed longevity planning will increasingly play a role in how advisers work with clients, especially in the face of fee compression and automated investing.

(More: How do advisers estimate a client's longevity?)

Advisers of the future should be providing clients with peace of mind that they won't run out of money even as they live longer, said Frank McAleer, Jr., Raymond James senior vice president of wealth planning and global wealth solutions.

Based on work with MIT Age Lab founder and director Joseph Coughlin, Raymond James tells advisers they should be asking these three questions to all clients.

"Who will change your lightbulbs, how will you get an ice cream cone … and who will you have lunch with?" Mr. McAleer said.

(More: Client longevity is advisers' top retirement planning concern)

The questions change the conversation to planning for quality of life issues, such as where clients will live or how they will afford long-term care, he said. "Because that's really what money management is about."

Advisers of the future will have to be increasingly comfortable working in planning areas beyond the traditional realm of finance, such as with geriatric-care managers and transportation companies.

"Wouldn't it make sense to connect those resources and integrate them more as part of your service offering?" Mr. McAleer asked. "I think whoever masters that, and we're trying, is going to be really disruptive. Because it really, really resonates."

Even if clients aren't yet asking for these services, they will soon, said Heather Kelly, United Capital Risk Management senior vice president. If advisers are serious about creating an "Amazon-like" experience for investors, one way they can do it is to build a sort of one-stop-shop for everything a person needs in retirement.

"People are buying things from Amazon that are more expensive than they can purchase them elsewhere because it's so easy to go on their phone and just buy it," Ms. Kelly said.

It was a convenience no one asked for 10 years ago that today is commonplace. Advisers who start working today on building that one-stop-shop for longevity will be ahead of the curve when clients start demanding it tomorrow.

(More: How advisers can ride the 'wave of opportunity' of aging clients)

But longevity also requires a rethinking of investment products, said Matthew Schlueter, Advisor Group wealth management solutions' president.

With baby boomers living longer than any previous generation, there needs to be assurance not just that clients won't outlive their money, but that they'll be able to live with dignity for the duration.

"I think there is technology that lines up with that, which helps consumers," Mr. Schlueter said. "It will be disruptive if folks focus in that area and have good solutions."


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