Reimagining Wealth Advice in times of Longevity

Women’s wealth is growing, but recent studies show that women and men have different wealth journeys and can play it at the pension age. It also negatively impacts global wealth. A 2022 study by BNY calculated that if women inveterate at the same rate as men, there could be more than 3.22 trillion USD in additional capital to invest globally. In other words, these 3.22 trillion USD do not exist because women save instead of investing. These 3.22 trillion USD could be used for longevity planning if women invested instead of saving. The study also shows that if women invested, we would have, out of the 3,22 billion USD, a good portion of 1,87 trillion invested in responsible investments, impact, and ESG.

So one reason why money is missing for longevity is the fact that saving is not investing and that we need more female investors to have a good, long, healthy life to sustain financially.

Another point is that women take investment decisions more conservatively, like investing in real estate and real assets and investing much less in shares, let alone private equity, venture capital, crypto, structured products, or hedge funds.

Women get kids, make a baby pause, keep the family together, and look after the grandparents. This provides more business and income interruption. It is interesting to note, though, that women have begun to talk more about money within the family, and financial participation, according to UBS, has generally increased. However, when it comes to longevity, the products on the market do not reflect the specific requirements for safety, responsibility, and flexibility when investing. In addition, women have a lower investment risk tolerance than men, according to Credit Suisse and UBS. All this together suggests that women need a different value proposition in investing and that they need to take more risks, at least at their younger ages. Both require a shift in mindset, for women and for the finance industry. Investment planning in the context of goals and needs will probably make investing more attractive for women.

When we talk about longevity, we need to talk about lifecycle investing in order to help women make ends meet when they live longer, and we have to do it in a different manner than men would plan and make their investments. There is more alignment between personal values and investments, more flexibility, but also more risk-taking in this context.

Lifecycle investing is an investment philosophy with special foresight and, thus, a smart pension option. It takes into account the personal life cycle in line with individual return expectations and risk tolerance at all times.

The earlier one starts to invest according to this philosophy, the
the longer the time horizon over which the initial capital can work towards one’s own financial well-being and finally make affordable a longer healthy life.

Fonds and Co. have created five golden rules for inviting with a longevity strategy.

1) Start now: The longer the investment horizon, the easier it is to reach the targeted return.

2) Maximise potential returns: Begin with riskier investments, i.e., be willing to accept greater volatility at your younger age, as you have a lot of time for the investment to recover if things go wrong.

3) Manage risks selectively: As retirement approaches, gradually shift the focus to less volatile investments.

4) Asset allocation is the key to success. Actively manage relative-return and absolute-return strategies, incorporating market assessments.

5) Exploit the full investment horizon: Do not liquidate all investments upon retirement; instead, let your capital work for another 20 to 30 years.

…and we herewith add rule number 6: Talk about your strategy within your family.