The technology with the most radical impact on advisors’ businesses isn’t robo-advisors, according to Ric Edelman, founder and executive chairman of Edelman Financial Services in ThinkAdvisor. It’s the exponential technologies they may know little or nothing about.
Exponential “sciences and technologies are going to alter virtually every aspect of life on the planet,” Edelman told ThinkAdvisor on Thursday. “I’m not talking about the latest software upgrade from people who make financial planning software. I’m not talking about Apple’s new iPhone. I’m talking about technologies that are going to upend all of the assumptions that financial planners use in their financial planning models and in the advice they give to their clients.”
Edelman said that among the most significant change resulting from exponential technologies is in life expectancy. “The typical planner today is assuming that his client has a life expectancy of age 95. When I first started in this business in the ‘80s, we used to assume 85.” How will these technological advances impact longevity risk?
Experts in health care and other fields predict that today’s 60-year-old will more likely die at age 110 or 120, Edelman said. “If that’s true, most of the financial plans that planners have produced will blow up. They aren’t contemplating that the client will have a 50- or 60-year retirement.” Edelman said that the notion of retirement itself is going away as people will continue working long into their 80s, 90s and 100s.
Advisors today have worked very hard to prevent that very scenario for their clients, but because morbidity is improving as well as life expectancy, Edelman said, the 85-year-old of the future who continues working will have more in common with a 55-year-old today. He referred to research where scientists successfully reversed the effects of aging in mice. That means that “at age 95, you’ll probably be healthier than you are at 55 today.”
