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Get Ready for Clients Who Keep Living

By Kenneth Silber

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Virginia-based author and consultant Joel Garreau has a knack for not predicting the future. Rather, he focuses on sketching out plausible scenarios of what could happen, and undercutting excessive confidence that any one outcome is in the cards.

This tack was evident in his 2005 book “Radical Evolution: The Promise and Peril of Enhancing Our Minds, Our Bodies—and What It Means to Be Human,” which outlined a variety of possible futures stemming from advanced technologies and cultural choices. I reviewed the book positively for Scientific American Mind.

Last year, in an article at the online magazine Slate and a related Washington, D.C., conference of Future Tense (a collaboration of Slate, the New America Foundation and Arizona State University), Garreau delved into the future of longevity. Focusing on the year 2030, he offered four scenarios:

Small Change. In this scenario, technological advances have only modestly altered current trends in lifespans and health outcomes. Leading-edge baby boomers alive in 2030 are octogenarians and often infirm. Their kids who are in their 40s can expect to live into their 80s but face a familiar decades-long decline in health. Medical costs continue to skyrocket. According to Garreau, this is “the official Washington future regarding aging—the one many policymakers expect.”

Drooling on Their Shoes. In 2030, under this scenario, technological advances have increased lifespans while doing far less to improve health in later life. Octogenarian boomers face decades of frailty and dementia; suicide rates among the aged have jumped. Health care costs are even more burdensome than in Small Change, increasing budget turmoil and intergenerational tension.

Live Long and Prosper. Information technology has revolutionized health care while reducing its costs, in this 2030 scenario. Octogenarians remain active, thanks partly to what Garreau calls “Google Medicine,” a toaster-sized home appliance that analyzes spit samples to detect health changes. The first person who will live robustly to 150 is entering adulthood. Hospitals have become primarily for the less affluent, and tech-driven obsolescence threatens many health care institutions.

Immortality. In his last scenario, Garreau raised the possibility of lifespans of indefinite duration. “Immortality is not as crazy as it sounds,” he wrote. Sufficient tech advances could boost life expectancy by one year each year, and “you have something that looks like immortality for some people.” Boomer octogenarians in 2030 have “too many hard miles on their chassis” to fully benefit, but younger people may have trouble imagining the onetime prevalence of sickness and death.

Seeking to understand what these scenarios implied for financial advice, I contacted Garreau for a phone interview. I found he had strong opinions about how the financial advice industry prepares for the future.

How Likely? Don’t Ask

I asked Garreau: Which of these scenarios are more likely than others? Is there any way to make an educated guess?

“That, if I can say, is the sort of dumb question that gives financial planners a bad name,” he replied. “If you accept the notion that all four of these scenarios are credible, then the first law of scenario planning is never try to guess which one is going to happen.” Predictions don’t work, he asserted, citing a litany of failed ones including IBM’s severe underestimation of the personal computer market in the 1980s.

“By and large, I find that financial planners—my experience with them anyway—drive into the future through their rearview mirrors,” he said, adding that he’s personally gotten poor advice. “They look backwards to what financial history has been and then they predict it forward in a straight line. And that is the one thing that you can reliably say about the future—that it’s not going to be a straight-line projection from the past.”

However, Garreau noted, some insurance companies have embraced the scenario approach. Insurers “cannot put all their eggs in one basket or else they will go bankrupt.” Prudential Financial, which sponsored the conference at which he discussed the longevity scenarios, gets kudos from him for a marketing campaign that asked people to consider how long they might live so as to not outlive their money.

What can financial advisors do to prepare their clients for a world of transformed longevity? “Educate them,” Garreau answered. A former journalist for the Washington Post, he is accustomed to trying to explain complex subjects to a broad audience—but finds that getting the public to grasp how fast technology is developing is a challenge.

“People have tremendous difficulty thinking about how it could be possibly that technology has been seeing a curve of exponential growth for the last 50 years and that now this is moving out to the human body, into longevity,” he said. He tries to illustrate the pace of change by asking people what they would have thought of a smartphone or tablet if one had been handed to them a decade or two ago.

Based on Moore’s Law, which describes repeated doublings of computer power, he suggests that capabilities of expensive medical equipment now found only in hospitals could be readily available in 15 years in people’s homes. “That’s why you end up with credible scenarios for a device that I laughingly call Google Medicine,” he said.

Still, assuming that something like Google Medicine will show up runs counter to Garreau’s scenario philosophy. “It just doesn’t do any good to ignore other scenarios,” he said. “Because if you do that you run a very high probability of ending up in a scenario like Saddam Hussein invading Kuwait,” which is to say, something few people predicted.

Taking Action

Garreau’s own experience in investing has reinforced his conviction of not being too sure of what’s going to happen. He “got clobbered” by the 2000 dot-com bust, riding it all the way down based on professional advice. With the 2008 crash, he ignored his advisors and cashed out, realizing that he had little idea what risks his portfolio had taken on. Now he is wary of the stock market as a “rigged casino,” dominated by high-frequency programs.

“The only investment that has worked for me in my lifetime—and I’m approaching 66—is I’ve invested in real estate in places that I love,” he offered, noting that such investments have not only had financial payoffs but been of practical use.

“The one thing that you can count on is upheaval. And that’s the one thing that financial planners don’t prepare people for, in my experience,” he said. “The past is not a prologue, no matter what financial players think. It will not be a straightforward thing. If you were asking me to give people advice, I would say get serious about your bucket list. Make it longer and make it more ambitious.”

Does he see any financial products being offered or emerging that are well suited for a world in which longevity has become the wild card described by his scenarios? How about longevity insurance, such as annuities that begin payments at age 85?

“No,” he said. “The product that I’d like to see, if you want to get me back into good graces, is one that accepted that you had a range of scenarios that were possible for you as you age. And this product would provide me a strategy that was robust in all of these scenarios. Such that no matter which scenario occurred, good things would happen to my portfolio; or to my life, more to the point. And I don’t see that. Do you?”

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