Better predicting a client’s lifespan could give them more certainty that they won’t outlive their money and help them make the most of their good years.DKosig/iStockPhoto / Getty Images
A small cohort of advisors in the U.S. is beginning to use clients’ genetic and health information to create more personalized financial plans and longevity risk assessments. Doing so, they say, not only gives retirees more certainty that they won’t outlive their money but also helps them make the most of their good years.
Clients’ lifestyles, family health history and genetics can affect their longevity significantly and the number of years they may need care, says S. Jay Olshansky, a professor of epidemiology and biostatistics at the University of Illinois at Chicago, who researches aging and human longevity. Traditional approaches to financial planning aren’t capturing those factors.
“We’re moving in the direction of a pretty dramatic change in the way wealth management and financial planning is done,” he says.
Mr. Olshansky, also chief science officer at Wealthspan Advisors LLC in Grand Rapids, Mich., worked with the firm’s advisors to create a software platform that generates personalized lifespan and health-span assessments, called Wealthspan AI. The platform uses clients’ answers to a health questionnaire and genetic information, such as the raw data from a 23andMe profile.
The questionnaire covers clients’ smoking status, body mass index, marital status, education, family history, physical activity, sleep patterns and, for women, the age of menopause – all of which are correlated with longevity. Genetic data and family history may also reveal whether a client has a genetic likelihood of living a long time.
Jeff Stukey, president and co-founder of Wealthspan Advisors, says more precise assessments are crucial for couples. Giving the example of a couple in which the wife is four years younger than the husband, he says advisors who were planning to age 95 for both clients would only account for a small window of time during which the wife would be living on her own. But a more science-based assessment might reveal a significant gap if the husband’s lifestyle or genetics indicated he may not live that long.
“It helps [clients] to understand we need to plan and make decisions about how to provide care for a surviving spouse,” he says.
Mr. Olshansky says the Wealthspan team plans to launch its tech platform formally in 2025 for use beyond the firms’ clients and announce a series of partnerships with wealth management firms.
More precise probabilities
At Telemus Capital LLC, a wealth management firm that serves high-net-worth individuals in Michigan and Illinois, advisors use a tool, Genivity, that uses clients’ answers to a detailed health questionnaire and their family health history to develop a range of longevity outcomes for their financial plans.
Lyle Wolberg, principal and senior wealth advisor at Telemus, says those more precise probabilities help clients make decisions such as when to begin receiving social security payments, whether they should be more aggressive or conservative with their investments, if they should consider retiring earlier, and whether to purchase long-term care or life insurance.
These tools can also give advisors the opportunity to help clients improve their health, Mr. Olshansky says.
“We don’t want advisors to become doctors or geneticists, we just want them to give valuable information to clients,” he says. “Take the four modifiable risk factors – weight, smoking status, physical activity and sleep. If you’re operating at a level that’s less than optimal, we’ll tell you how much longer you could live if you [improved].”
Randy Knipping, a physician and the medical director and co-founder of the Deerfields Clinic, an integrative medicine clinic in Toronto, says tests that measure biomarkers such as the stiffness of someone’s arteries, their brain function and their blood vessels’ reactivity can measure patients’ health against the average for their age group. That can be converted into a “biological age.”
Tests can also measure someone’s telomeres – the spare length at the end of a strand of DNA – to determine whether they’re younger or older than their chronological age; someone with longer telomeres than their age group would be considered biologically younger, he says.
People can improve their biological age through a combination of lifestyle changes such as healthier eating, regular exercise, quitting smoking, improving their sleep and other interventions such as regular meditation, Mr. Knipping says.
However, there are limits. An October study in the journal Nature Aging by Mr. Olshansky and researchers from the University of Hawaii, Harvard University and the University of California at Los Angeles suggested that after decades of increases in life expectancy, humans may be reaching the upper limit on the average lifespan.
The researchers studied life expectancy at birth between 1990 and 2019 in countries where people typically live the longest. They found that while life expectancies continued to rise during that time, the rate at which they were rising has slowed. Mr. Olshansky says the study says there’s not often a need for advisors to plan for their clients to live to 95 or 100, as very few people do.
Biological age and financial plans
Jason Pereira, senior partner and financial planner at Woodgate Financial Inc. in Toronto, says the idea of incorporating genetic testing and clients’ biological age into financial planning isn’t well known in Canada, and he doubts any advisors are doing it.
He says incorporating someone’s biological age into their financial plan could be done, in theory. Yet, it raises the question of how to account for the difference between someone’s chronological and biological ages.
“What I would likely do if I knew someone was [biologically] 10 years younger [is] look at a mortality confidence interval around 15 per cent or less” from FP Canada and Quebec’s Institut de Planification Financière’s probability of survival tables, he says.
The probability table is part of the associations’ annual projection assumption guidelines. FP Canada recommends planning toward a 25 per cent probability of survival as a general rule, so using a lower interval means planning to an older age.
However, he notes that it isn’t unusual to factor clients’ health into the financial planning process by shortening the expected plan duration for someone with significant health issues or factoring in the likely need for long-term care.
Mr. Wolberg of Telemus says science-based longevity tools can deepen relationships with clients.
“It’s a hard dialogue for advisors to have in general – it’s a challenge sometimes getting clients to be open and honest about things that are not comfortable to talk about,” he says. “This is just a tool that allows advisors to have more in-depth discussions about the client’s health and longevity.”
But being presented with a more precise range of possibilities for when a client will die can be overwhelming, Mr. Olshansky acknowledges. He says some clients who have used Wealthspan AI have opted to have their advisor review their results and make recommendations without disclosing their survival probabilities.
For those who choose to see their results, “when you see it on paper, the gap between spouses, for example, provokes a pretty powerful emotional response,” he says. “But as it turns out, that’s a good thing. An emotional response leads to action, and action can and should be better planning.”
Mr. Olshansky experienced that emotional response firsthand when he and his wife received their analysis. It prompted them to book three cruises, and the 45-day trip to Africa they’d been talking about for years.
“It isn’t about when you’re going to die, it’s about how you enjoy the time you have and using financial planning to help you enjoy the smart [financial] decisions you made when you were younger,” he says.
