Creating Confident Clients with Longevity Planning

Living longer, much longer, is no longer a myth

by Katie Libbe

If you had an extra 30 years to live, what would you do differently? Travel more? Spend more time with your family? Pursue your dream career? This is no longer just a theoretical question to pose to your clients. Living longer is not a myth and financial planning as we know it must adapt to meet a new reality of longevity.

And it is not as simple as planning for a longer retirement.

Recently, the Stanford Center on Longevity reported that the average American lifespan has increased 30 extra years compared with 100 years ago. With that in mind, Allianz Life Insurance Company of North America (Allianz) conducted a study on longevity* and asked Americans how they feel about The Gift of TimeSM, possibly living 30 more years.

More than nine in 10 (93%) Americans expressed a favorable view of living that much longer. Yet at the same time, longer life comes with a dose of apprehension about the future. Fifty-one percent of respondents identified “having enough money to last my whole life” as a very big problem when they thought about living to age 100.

The juxtaposition of these results offers significant opportunity. Financial professionals need to change their paradigm on financial planning. No longer is it as straight-forward as setting up a strategy for retirement at 65. A well-rounded financial strategy needs to also take short- and mid-term goals into consideration. In many respects, it is no longer just a financial plan, it is a longevity plan.

A longevity plan is different from an estate or goal-based plan, which are based on the traditional goal model of building funds for college, retirement, a home purchase and then estate planning. A longevity plan looks at the events that occur while saving for the major goals.

Clients may want to go back to school, take time off to raise their kids, take a sabbatical or explore the world. A longevity plan can help build the financial strategy that supports these short- and mid-term savings events throughout a client’s life and gives clients the freedom to explore alternate life paths.

The need for this type of planning may be greater than ever before, especially as more millennial clients seek support.

With Longevity Comes Opportunity

Financial professionals have the perfect opportunity to help quell clients’ concerns with living longer – namely, fears about money and lack of planning. However, in many instances, this conversation is not taking place – 41% of respondents say their financial professional has never talked to them about planning for a longer life.

The majority, 78% of Gen Xers and 80% of millennials, don’t even have a financial professional. They are more willing to consider one, however, if this professional could help them find solutions to create guaranteed income for life and help with finances throughout life stages. A longevity plan can fit perfectly into this client base.

If done right, clients will have more confidence and may see the potential in living longer. We found that respondents who had a financial professional reported being happier with their major life decisions, compared to those who were happy with their decisions but didn’t have a financial professional.

When planning to take risks or live an alternate life path, support and reassurance are key. Be prepared to discuss alternate life paths because more clients will be interested. Many of our study respondents wanted to design their ideal life with a nontraditional model unique to their interests. Additionally, 65% admitted that it was better to explore, experiment, and travel earlier in life by changing when and how they learned, worked, married or raised kids.

The Longevity Plan Conversation

We’ve seen some evidence that supports why a longevity plan can help clients live with confidence, but how does a financial professional start the conversation? Here are some tips to keep in mind.

First, clients should think about key milestones and put them down on paper in sequential order, starting with what they’ve accomplished so far, followed by what they want to do in the future. Milestones could include starting a family, taking a sabbatical, expanding their career, traveling, caregiving, volunteering or transitioning.

Once these milestones are down on paper, clients can more clearly see their ideal future. Next, prompt clients to consider the implications of their milestones. Ask them key questions to get the ball rolling:

• What things have you always wanted to do? When do you want to do them?
• Think about your ideal life. What does it look like?
• What has held you back from accomplishing your dreams? How can we change that?
• If risks weren’t taken, why not?
• What would you like to accomplish in five years? 10 years? 15 years?
• Are there events you want to save for now and in the future?
• When you retire, what do you want that to look like?
• Have you thought about an encore career? If so, what would it look like?

As these questions are answered, a new financial strategy should surface and the foundation for a longevity plan may be easier to build. When the short- and mid-term goals have been accounted for, the door will be open to take a closer look at the financial component to help meet those goals. The stage will also be set to discuss the long-term financial goals that still need to be addressed.

Financial professionals who seize this unique opportunity to meet the longevity planning needs of their clients can play an invaluable role in helping them truly understand the new opportunities ahead. Most importantly, they can take what may have once been just a theoretical question, and turn the gift of time into the new reality.

Helping clients understand the opportunity that longevity offers can be life changing. Planning for the possibilities can help give clients clarity and confidence. ◊

*The Allianz Gift of Time Longevity Study was conducted by Larson Research + Strategy via online survey in March, 2016 with 3,000 U.S. adults ages 20-70 with a minimum household income of $30K+ and was commissioned by Allianz Life Insurance Company of North America (Allianz).
Allianz Life Insurance Company of North America and the Stanford Center on Longevity are not affiliated.