There seems to be at least one new concept that lingers in the memory and creates a buzz among the attendees at each FOX event. At this year’s FOX Wealth Advisor Forum, it was the observation by Glen W. Johnson, Managing Director of Mirador Family Wealth Advisors, on the significant impact that increasing life expectancy is going to have on the dynamics of family wealth management.

One hundred fifty years ago, life expectancy in the US was 40. Fifty years ago, it rose to 60. Today it is nearly 80. How soon will it reach 100? When it does, it will have resounding repercussions on family wealth management that will require new approaches as the needs and dynamics of the family members change. What can be expected?

• If the patriarch lives to 100, there will be four generations for the advisor or family office to serve instead of the three generations we generally see today.

• As a result, the next generations are going to have to wait longer to assume control as the patriarch ages in place. This will impact family dynamics and family decision making.

• One positive benefit of having G1 around longer is the opportunity to work with succeeding generations—especially G3— on the family's entrepreneurial spirit potentially inspiring continuation of the wealth creation culture.

• The sustainability of family wealth and investing for adequate cash flow becomes more critical as principals will need more income for a longer period.

• Longer life spans will lead to a higher likelihood of more health issues and possible dementia.

• It also means more support requirements for health care and the processing of medical claims.

Many family offices are already reporting these demands arising. Some are adding staff to support medical claim processing.

One’s longevity is a major factor in wealth and investment planning, yet health factors are rarely disclosed, much less discussed and planned for. There are concerns about confidentiality and the vulnerability from disclosing sensitive personal information. However, hereditary health patterns and underlying conditions can have material impact on wealth planning decisions and should be shared with trusted advisors.

Possibly most daunting is discussion of how to intervene should a principal show signs of material mental impairment. This conversation needs to be initiated with the patriarch and matriarch well in advance of the need for action. It may be difficult for the succeeding generation to bring it up for fear of appearing greedy or impatient. However, office executives or outside advisors are in a better position to initiate the conversation so that agreements for evaluation and transition plans can be reached as a standard part of wealth planning well in advance of the need.

Obviously the benefit of longer, healthier lives is to be eagerly awaited, but adjustments and planning are needed to make it productive and rewarding.

Glen Johnson's full remarks can be viewed in the following 11 minute video:

[FOX Members: to see the full session video including all four panelists discussing trends, click here.]