A conversation on Longevity and Your Clients with Cannon EVP and Practice Management Expert Linda Eaton
“My mother-in-law will soon turn one hundred years old. She is in good health, participates in numerous community events and is well known in our small town. A few weeks ago, my husband contacted the local newspaper and inquired if they would write a brief article about his mother’s centennial birthday. “No,” said the newspaper. Why? “Too many people are living to age one hundred that it’s no longer news.”
About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95*. An affluent woman who retires in good health today at age 65 can easily need retirement income for another thirty years. It’s important to remember that not only do women of any socio-economic status live longer than men, affluent women live longer than any other group in the population.
“For many decades,” Linda said, “FAs traditionally began to shift portfolios to become more conservative by reducing the percentage of equities as their clients aged in their late 50s and 60s. The industry assumption has always been that clients who are around 60 years old will live another 20 to 25 years. But this is no longer the case. People with money have had better nutrition, better health care and lived healthier lives. We as an industry must quickly rethink this paradigm and begin planning for clients to live 30 to 40 more years after retirement.” Approximately 84% of financial advisers are males. Because of this gender disparity, many financial advisers don’t know —or don’t understand—a critical issue which resonates with most women. “We can cite numerous studies that reveal the same thing,” Linda said. “In every socio-economic strata, including the extremely wealthy, one of the deepest fears among women is running out of assets in their old age. You will hear women repeatedly say that they don’t want to be a burden to their loved ones.”
Understanding this is critical. At the same time, the second group of people in our society who live the longest are affluent males. “Are you as an FA preparing your clients to consider the financial implications of living to one hundred?” Linda asked. “Because the probability exists that many of them will.”
Another crucial point Linda mentioned was ensuring you have younger FAs in your group. “The average age of financial advisers is now 55. Your older clients are far more sensitive to this than you might realize. A question which every FA over 55 needs to answer is this: are you preparing your practice to serve elderly clients by hiring younger advisers who can continue to advise the clients in your practice after you retire?”
While you don’t have a legally binding fiduciary obligation to this, you should begin to prepare your clients for the day when you will no longer be advising them while assuring them that will continue to be well advised.
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Contributing Writer: Subject Matter Expert Charles McCain