MARCH 04, 2019
The world is getting older. Children born in the developed world today can anticipate living to 100 and beyond, and those of us arriving at old age in good health stand a very good chance of living into our 90s.
These shifts will change the workplace environment, and also offer companies new economic opportunities. The impact of what’s known as the “longevity economy” — defined as the purchasing power of those 55 and older — is over $7.6 trillion in the United States alone. Many business leaders are recognizing that there are, and will continue to be, financial reasons to pay attention to these demographic shifts.
There is a difference, however, between simply identifying opportunities for new products or services for an older market and actually making the longevity economy part of a business strategy. How do you go from product opportunity to a change in business strategy? Through our work at the Stanford Center on Longevity, we’ve had the opportunity to work with and study companies that are doing that.
One company that is integrating longevity is Bank of America. In 2014, the company convened multiple business lines for a strategic meeting. They reviewed the new demographic changes and asked leaders from each group to consider how longevity would impact their business and to identify needs and opportunities it created.
Initially, the company asked: “What is on people’s minds when they think about retirement?” Research projects and in-depth studies on the question produced a comprehensive framework for financial advisors that helped people get to and navigate through retirement. It is called the 7 Life Priorities. The program enhances the retirement planning by focusing well beyond just financial health to encompass all 7 major areas in which life priorities change in retirement: Family, work, health, home, giving, leisure, and, of course, finances.
New initiatives, research, tools, checklists, training, and education were also created to enhance the use of the new framework and the institution’s longevity strategy. The goal was to be sure each client and their advisor could address the simple question: “Are You Fit to Live to 100?”
Six Programs
This work, led by Lorna Sabbia, head of retirement and personal wealth solutions, yielded six new programs that were more than just new products. According to Surya Kolluri, managing director and head of thought leadership in the retirement group, “this is not a product development story, but rather building a mindset and having a different conversation with clients.” Doing it because it is the right thing to do and taking a more holistic approach to their clients’ needs became the guiding principle for the company’s longevity strategy. The six programs were:
A Specially Trained Longevity Advisor Force: Bank of America’s Merrill Lynch Wealth Management hired the industry’s first financial gerontologist in 2014 to help the more than 14,000 financial advisors better understand the needs of their clients and implement the framework. The financial gerontologist, provides training, education, resources and one-on-one attention to engage clients on the topics of aging, longevity, retirement, and life planning. With the company, the gerontologist also helped develop online learning modules for financial advisors. The library continues to grow: A supplemental training module on Cognitive Decline and Alzheimer’s disease was added recently, and a training program across different life stages has also been developed.
New Tools and Resources for Clients to Prepare for Longevity: Checklists and assessments were distributed to spur conversations between Merrill Lynch financial advisors and their clients, as well as within families to help navigate planning for healthy aging and longevity. A Preparing for Longevity Checklistwas created that outlines points to consider at every stage of retirement, including: Planning for the Future (ages 50-59); Medicare and Required Distributions, Social Security and Withdrawal Strategy (ages 60- 70 ½). Additional checklists and assessment tools were created, e.g., How Sound is Your Estate Plan? andWhat’s Your Investment Personality? A client contact authorization form allows advisors to reach out to a client’s specified contact person if they have concerns about the client’s health status. This form also enables conversations about control, privacy and maintaining independence, while helping to ensure the advisor is part of the elder fraud detection network.
Forums for Discussions on Longevity and Related Issues: Communities across the country have held meetings for clients, business, civic and nonprofit representatives to start dialogues about longevity and its impact on local communities. In 2018, Merrill Lynch held 140 events for more than 20,000 attendees.
Financial Education for Clients: Online learning for financial literacy isn’t new but learning specifically focused on data literacy and retirement was another program that emerged from Merrill Lynch’s effort. The company partnered with Khan Academy to create financial literacy videos and online resources, called Better Money Habits, on a broad range of topics, and including content focused on caregiving.
New Tools for the Unique Planning Needs of Women: In 2018, Merrill Lynch conducted research on women and financial wellness. It identified a $1 million wealth gap for women by the time they reach retirement, due to the wage gap and career interruptions, and on average longer lifespans than men. These findings led to a new initiatives, tools and checklists focused specifically on women’s life journeys, including parenting and elder caregiving. The research also found that women’s number one financial regret is not investing more of their money, so their financial advisors now plan with a goals-based approach that takes into account a woman’s longer lifespan and unique planning needs towards financial wellness.
Employer Partnerships: The research Bank of America has put in for its clients has been turned to its employees as well. It spurred a number of caregiving benefits for employees including adult back-up care, access to senior care managers who can evaluate care at a home or care center, and elder care law services. Their employee Networks for Parents and Caregivers, and Disability Advocacy Network, have taken on many of these causes and created forums within the company (on line and in-person) for enhancing access to services. Once these new products are made available to their own employees, the bank extends their best practices and a financial wellness program to employer clients (36,000 of them with 5 million employees) to help educate their workers on a broad range of topics including caregiving, budgeting, debt, and retirement.
