A core part of a great advice experience is the modeling discussion. It's where the client sees for the first time how your advice will help them live their best lives.
With that being said, the values-based community, and those with a mind for the client experience, know the model in itself isn’t the star of the show. The conversation is.
A great client-centered modeling experience should leave a client feeling:
Educated to the level they desire
Engaged and involved in their strategy and overall financial plan
Empowered to make choices backed by your expertise
The solutions you’re recommending are personally tailored to their best life
Sounds great, but there has always been a catch.
Typically these modeling conversations are based on core assumptions that rely on industry averages, like retirement age and life expectancy, which can be widely inaccurate.
For example, unless otherwise specified, the typical retirement age used in financial models is 65. For things like life expectancy, it's common to use statistical averages based on an individual's sex. These two estimates are then used as conversation guardrails around how much money you need in retirement to ensure it outlasts the national life expectancy estimates.
But we know people aren't average, and our conversations with clients reveal much more complexity. Retirement age, lifestyle, and legacy are so different for everyone, so why do we not do the same for longevity?
We’re rethinking how this conversation needs to look and feel for clients. At the core of this experience is connecting clients to information to make informed choices. That's why we recently acquired Genivity. We wanted to give clients the information they needed about how their lifestyle, health risks and demographic factors impact longevity and how to optimize the time they spend living their best lives.
Here are six questions we believe we'll be able to answer for clients through personalized longevity planning.
1. What is life going to look like?
Perhaps the most awkward question…how long do I have left?
The life expectancy question is one that no one asks overtly but is the core of the modeling discussion. We've typically relied on statistical averages. But we know life is more complex than that based on demographic factors, health risks and lifestyle choices.
We’re not saying advisors must turn into health professionals and give each client a personal health check. But let’s all acknowledge there’s more to this conversation that you can talk about to provide greater personalization beyond life expectancy estimates.
So, how can you get hold of this information without becoming a doctor?
This is where Lumiant's Health Analysis and Longevity Optimizer (HALO) tool can help. Through a series of carefully written questions, clients give us essential data points that enable us to run their inputs through a statistical model that returns information on their life expectancy based on lifestyle, social and genetic factors - not just a statistical average based on sex.
But, the model doesn’t just answer life expectancy. It also projects information about the often left-out conversation - their quality of life or their "Go Go" and "Go Slow" years. Choices clients make now can drastically impact their quality of life later and how active they are in retirement. Conversely, being too conservative could make you not active enough in your "Go Go" years and miss out on living your best life.
Knowing this information will allow you to plan the right goals in the appropriate life phase, from lifestyle goals (i.e. traveling the world) to advanced care planning goals (i.e. assisted living) more accurately.
2. What do I want to do and when?
Once you know how long and how active you can be, the next question is, what do you want to do?
We know the most common financial planning goal is to retire at age X with Y dollars. But values-based planning is so much more than that. Living a life aligned with your values helps articulate goals beyond retirement age and income.
Using values as the foundation of your plan means you can take a much longer-term view. While goals can change frequently, values tend not to, with change typically occurring at certain life stages - such as starting a family or retiring from work. To progress and live a life aligned with their values, clients will set goals far in the future, identifying their big life milestones or stages.
It could be a change in purpose, like working less to pursue a passion project at 50. It could be knowing you want to create extraordinary family memories with your grandkids to give them education opportunities you never had. Or it could be doing something you never had the financial permission to do when you had a family.
To support you in this conversation, our intent is to enable you to overlay the HALO information onto a client's best life plan, clearly indicating their "Go Go" and "Go Slow" years. This will allow your clients to easily visualize whether they are doing what they want to do at the best time to do it.
3. Who for and with whom?
Goals are great, but knowing who we are doing them for or who we are doing them with is even better.
We are social and emotional creatures and typically want to live out our lives with the people we love. We know connecting planning to purpose is critical to behavioral change. And, while values help us to understand the why behind what clients want to achieve, we also need to understand the social and emotional connection to each value - i.e. who are they doing this for, or who do they want to do this with?
What this does is create mental imagery that helps motivate clients to make the changes required to achieve this goal. They can see it, see who they are with, and understand why they are doing it. It could be they are achieving this goal for themselves - everyone needs a bit of self-TLC every now and then.
It's a common trait within servant leadership to understand who you are in service of. At the core of everything, we all have people who matter to us; we want to share life with; and create extraordinary lives for.
That’s why we connect our best life modeling tool to our goals timeline, so you can keep the context of who you’re doing this for in check as you work through trade-off decisions for clients.
4. What levers do I have?
When a client hires you, they engage your financial expertise. But we know this is only the foundational expertise advisors need to help their clients. The real value of your expertise comes out when helping articulate the levers available to a client when making choices around their strategies. The typical levers within our control are:
Spending - how much do I spend and what on? Are my spending habits aligned to my values and goals?
Savings - how much do I need to save to achieve my goals?
Timing - when do I want to achieve my goals?
Risk - what investment risk am I willing to accept to achieve my goals?
Legacy - what do I want to leave behind as my legacy? Do I want to leave it behind and die rich, or do I want to spend it with my family now and live rich?
These are the right financial trade-off discussions, but as we mentioned, the conversation can go deeper from financial to lifestyle. When we think about the quality of life with HALO, the extra trade-offs we can discuss are:
Alcohol consumption - how much I drink and will this impact when I can achieve my goals?
Fruits & vegetables - Do I eat the right foods to stay healthy to achieve my goals?
Body Mass Index - my height-to-weight ratio - am I healthy enough to live the life I want?
Exercise - do I exercise enough and stay active and healthy?
Smoking - do I smoke tobacco products and understand the implications on my longevity?
Making informed choices about if we do these things or how much we do these things drastically changes the active years of our retirement and the length of our retirement. It also has significant implications on care costs in retirement.
So, why not simultaneously have a longevity and lifestyle conversation as the financial trade-offs?
For example, if you’re trading off a goal time frame to spend more money now, extending the achievement date to 70 instead of 65, do you know you will be "active" at 70 based on your current lifestyle? If not, you may need to revisit that time trade-off and make a trade-off elsewhere, like in your spending, so you can still achieve the goal at 65.
Lumiant HALO provides a complete health analysis and care cost report using data about the client's lifestyle choices, health risks, and demographic factors to support advisors with this highly emotional conversation about longevity. A client assessment generates the information, providing an engaging and insightful digital experience that navigates many of these sensitive topics, ensuring they are primed for your longevity trade-off discussion and already know what goals they need to achieve to live their best lives.
5. What choice do I make?
At the end of the day, an excellent advice experience helps clients make informed choices backed by your expertise. Meaning you’re going to guide them through their trade-off options above and empower them to make their own choices with all the right information about what scenarios inspire them the most so they can take action.
Once they choose what trade-offs they’re comfortable with and what life they want, you have all the information necessary to put your technical mind in the plan and finalize the specific strategies to achieve it.
Getting your clients involved in this modeling process with a holistic view of the options available makes for an engaged client. This holistic view will give them the greatest visualization of the path ahead and the choices they need to make so you can inspire action - because the hard work starts now.
Once a modeling conversation is complete and the plan is set, the only thing in the way is execution. A wise mentor of mine once said, “To implement change with confidence, people must have clarity (the why) and capability (the how).” Holding an excellent modeling discussion like this gives them all those things….and, ultimately, don’t we want all our clients to move forward on their best life with confidence?
Want to learn more? Visit www.lumiant.io/halo or book a demo below.
Mark Akeroyd, Head of Product at Lumiant