Longevity & Wealth Management

Longevity has always been a human fascination, but advancements in medicine and technology have transformed this fascination into a present-day reality.

There are very real considerations facing the wealth management field when you begin to unpack what this means for individuals post-retirement. To be blunt, the question for wealth managers becomes “How do we make the money last?” Currently, the average American life expectancy is projected to be 86 years for women and 84 years for men, with one in five people expected to live past the age of 95. Every year added to this average significantly impacts an individual’s financial outlook.

Our aging population must somehow navigate the innumerable changes to the tax code, social safety nets and available investment vehicles. As the population ages, wealth managers and investment advisors are increasingly looking for ways to educate their clients on the importance of long-term planning and the flexibility that must accompany the possibility of longevity.

As trusted financial advisors, it’s imperative we are attuned to the attributes of longevity studies so we may properly align our clients’ personal financial goals with realistic outcomes. Every member of the 4Thought team believes there is more to the advisor-client relationship than actuary tables and investment product decisions. It’s why we’re taking a step back from our normal discourse to dig deeper into the psychology behind our methodology and perspectives.

Understanding Longevity

To find the modern-day hunters on the eternal quest for the Fountain of Youth, look no further than Silicon Valley. Several of the biggest names in tech have joined the anti-aging pursuit with vigor, and a ton of capital. Think tanks and research institutes now dot the California coastline, each determined to crack the longevity code. Entrepreneurs like Joon Yun—physician and president of multibillion-dollar hedge fund Palo Alto Investors—are offering prizes to the scientific community for significant breakthroughs, and others, such as Google, have even set up dedicated laboratories.

The hunt for further breakthroughs in the life sciences has been emboldened by recent studies that are beginning to deepen our understanding of the genetic and environmental factors contributing to aging, and more importantly, the intersection between them.

A 2016 study by University of Calabria genetics professor Giuseppe Passarino titled “Human Longevity: Genetics or Lifestyle? It takes two to tango” and published by the National Center for Biotechnology Information provides keen insight into how the bioscience community’s thoughts are evolving on this timeless subject. The study concludes that “a few subjects can attain longevity because a lucky combination of polymorphisms which allow them to have an efficient metabolism or an efficient response to different stress. Most of the others can attain a similar result by targeting the same pathways with appropriate life style or interventions.”

It’s impossible to overstate the significance of such a conclusion. Essentially, the researchers are exploding the myth that longevity is simply a matter of “good genes.” While genes are an important factor in the equation, the study tells us that certain combinations can be augmented by lifestyle and environmental circumstances. In other words, there is an element of aging that can indeed be controlled. The ramifications in the scientific community are obvious, and there’s little doubt that this area will continue to be explored by universities, corporations, and independently wealthy individuals wishing to live forever.

Okay, but what does this have to do with investing?

The answer is, quite simply, a lot. All prior modeling in the wealth management and insurance world was tethered to predictive data that followed measurable patterns and could be adjusted over time. If the scientific community continues the rapid path of discovery and investment into longevity increases exponentially, we could very well witness life extension programs in the near future. So if all prior modeling allowed investors to plan a comfortable life through their 80s and 90s, what happens when we begin to add years or perhaps decades to this equation?

The Stanford Center on Longevity, a division of Stanford University dedicated to the acceleration and implementation of “scientific discoveries, technological advances, behavioral practices, and social norms so that century long lives are healthy and rewarding,” offers valuable insight into how we think about our clients. The center studies aspects of productive aging—such as mental fitness, physical and emotional health, social engagement and financial security. Charting a long, healthy and successful life is about finding the balance between all of these factors, not simply looking at one or another in isolation.

According to the center, current studies show that “individuals’ confidence in the ability to retire comfortably, or to retire at all, are at new lows. According to the Employee Benefit Research Institute’s 2012 Retirement Confidence Survey, 47% of all workers were either ‘not too confident’ or ‘not confident at all’ about their ability to retire.”

Given this unnerving statistic, our first goal is to set clients’ minds at ease. Successful financial planning and wealth management is a holistic endeavor that considers multiple factors: family circumstances, health and wellness, and mental acuity, among these.

Everything matters when planning for a long and balanced life.

Live to Plan. Plan to Live.

The first step in the planning process is to share and communicate helpful information. Our guide to financial planning is a great place to start if you’re just beginning the planning stages, or are thinking about updating your current plan.

This helpful guide walks you through the different types of traditional planning services that are available to clients and discusses some key differentiators in the 4Thought methodology. While it might sound paradoxical, 4Thought is a large boutique firm; we have access to some of the most sophisticated investment technologies available while maintaining a size that promotes a personal relationship with every one of our wealth management clients. It’s important to know that this is a deliberate choice on our part. Being able to maintain a human connection to our clients and understand what motivates them is essential to successful planning.

There are several parallels between creating a mental and physical wellness plan and a proper financial plan for longevity. Here are four main pillars of our consultative strategy that reflect the similarities in the pursuit of longevity:

• Walk. Don’t Run.

The older we get, the more important it is to take care of our bodies. Studies show that walking is one of the most important ingredients to a long and healthy life. It’s similar to how we plan for the long-term. We never push too hard on any particular strategy, preferring to create a balanced portfolio that will sustain our clients over time and provide with enough financial health and stability to walk for miles.

• Avoid Toxic Things.

It’s no secret that exposure to internal and external toxins creates serious health risks in individuals. There’s no reason to patronize our clients, as they know this. But the same holds true for investments. People are willing interact with toxic things because of the momentary highs associated with the potential payoffs. Gambling, narcotics and thrilling adventures release dopamine into the brain, which creates the illusion of happiness in the moment. Unnecessarily risky investment strategies tend to have the same effect. All investments carry an element of speculation and risk, but our job is to mitigate risk in the context of a proper strategy that aligns with your life goals and succession plans. So, while we’re probably not going to talk you out of your lifelong dream of jumping from an airplane, we will make sure your life insurance policies are aligned before you do. J

• Everything In Moderation.

Chances are that you have not only heard this a million times throughout your life, but you’ve given the same advice to your children. The best wealth managers create a balanced portfolio of investments and may recommend insurance products that can combine to provide a sustainable income, the ability to continue growing wealth post-retirement, and safety nets for unforeseen life circumstances.

• Frequent Checkups.

The older we get, the more often we tend to see a doctor. Regular evaluations are essential in all human beings, no matter how difficult that might be to explain to the younger generation. This was one of the core philosophies behind the Affordable Care Act. The more proactive we are as a society when it comes to our physical and mental health, the greater the outcome of the total patient population over time.

4Thought Financial Group

Wealth management firm 4Thought Financial Group, based in Syosset, NY, specializes in unique investment strategies and retainer-based relationships that promote frequent “checkups” on your personal financial situation and wealth management goals, consistently fine-tuning the approach to improve the probability of achieving the personal and professional objectives outlined on your financial roadmap.

Have questions for the 4Thought team? Connect with us here to launch a chat and schedule an appointment, or give us a call.