In the past, discussions in wealth management meetings were largely predictable. Tax efficiency, market exposure, estate planning, and the issue of when and how to take withdrawals from retirement savings. Actuarial data were used to model the future and provide advisers with information about the average longevity. That average served as the foundation for the strategies. Then longevity science began to advance more quickly than the actuarial tables could keep up, and some advisors realized that it made no sense to plan for an average death when their customers were outliving it by ten or more years.
The term “whealth”—a portmanteau that sounds awkward but conveys something real—is occasionally used to describe the change that has been developing in high-end wealth management circles. The theory is that financial planning and health are now too closely related to be handled by different experts having different discussions. A person’s financial plan is strongly impacted by what happens to their health, and the financial plan directly influences what interventions they can afford when their body begins to require intervention. Leaving something crucial on the table is what happens when you manage one without the other.
In practical terms, this implies advisors are using customized health criteria in place of actuarial averages. AI-generated healthspan estimates, genetic testing, and biomarker panels are being used to create a more personalized baseline for a client’s expected lifespan and, more importantly, what that life might entail. In contrast to planning for an 85-year lifespan, planning for a 100-year lifespan modifies the asset allocation, withdrawal sequencing, and inflation assumptions. A portfolio that performs well during a 25-year retirement may not be fundamentally sound over a 40-year one.
The idea that is gaining popularity is the division of the “healthspan” from the “sickspan.” The active years of post-retirement life, such as travel, engagement, and comparatively cheap medical costs, are known as the “healthspan.” The sick span is the last phase, usually the last ten years, during which private in-home care, innovative therapies, and concierge treatment take center stage. The standard financial planning model hasn’t always sufficiently taken into consideration the significant backload of healthcare costs associated with aging. Advisors who explicitly incorporate these disparities into their models begin with a more realistic view of the actual uses of the funds.
Some multi-family workplaces have gone so far as to develop official alliances with providers of preventative healthcare and longevity clinics. Preventive medicine, wearable health monitoring, and early diagnosis are usually provided to clients at negotiated costs. The reasoning is simple: treating a chronic illness before it worsens is far better for the client’s financial situation than treating it after it has advanced. Up until now, traditional wealth management rarely had the infrastructure to take advantage of the fact that prevention is less expensive than treatment.
The 4% withdrawal rule, which states that retirees can take out 4% of their portfolio each year without running out of money over the course of a 30-year retirement, is being viewed more and more as an ineffective tool in a world where retirements may last up to 40 years and where healthcare expenses in the last ten years can surpass all previous expenses. Instead of adhering to a set rule regardless of circumstances, advisors are moving toward layered income planning, long-term care insurance that activates at predetermined need thresholds, and variable withdrawal guardrails that adjust based on portfolio performance.