Implications For The 100-Year Life For The Financial Sector

LBS Professor Andrew Scott believes the multi-stage life can still embrace some of the financial structures of a three-stage life

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“Think of your future self as a friend,” says Andrew Scott.  “Think of what behaviours and structures you will need to support a longer life.”

Nurturing and cultivating thoughts about one’s future self has always been integral to personal financial planning, but in the third decade of the 21st Century, a more novel and universal approach is required to plot life’s course. For London Business School’s Professor Andrew Scott, the co-author of The 100-Year Life – Living and Working in an Age of Longevity and The New Long Life: A Framework for Flourishing in a Changing World, financial planning is very much part of the multi-dimensional scenario planning required by individuals and society to make the most of living longer lives.

Andrew acknowledges that while greater longevity presents many exciting opportunities, living well into one’s eighties and nineties creates momentous challenges, not least the need to remain healthy.

“Ageing well is critically important,” says Andrew, who hosted the recent NasDaq, ‘Implications of a 100 Year Life for the Financial Sector webinar in Dubai’. Within the confines of a three-stage life, one insured against an early death, which in turn stimulated the need for life insurance products. For today’s multi-stage, multi-career, longer-lived world, Andrew believes that it is important to anticipate the need for more mobile financial arrangements: being prepared, for example, to move assets from one life stage to another.

“A more creative approach is needed for people to draw on a range of assets, including early access to pensions, or, as we see in Australia, ‘superannuation funds’, where flexible, tax-free cash drawdowns are permissible up to certain limit.”

Andrew believes the multi-stage life can still embrace some of the financial structures of a three-stage life, such as having an annuity to augment other sources of income, but for those with ambitions to work past normal retirement age, or to explore different types of work and lifestyles, the need to access savings flexibly will be increasingly important.

With the dynamics of a longer-lived, longer working, multi-stage life, the financial sector cannot work on the basis of higher rates of return. “However, certain sectors will thrive and grow, thereby presenting opportunities for investment and income,” says Andrew.

Working as a macroeconomist, Andrew says that he was never previously approached by individuals, nor indeed never felt responsible for influencing the personal views and expectations of members of the public. With the growth of his reputation concerning his research into the economics and associated issues of longevity, he admits to being occasionally daunted by people who have read his books and listened to his lectures, and declare that their lives have been changed by his work.

The onerous responsibilities of practicing economic and social futurism aside, Andrew makes a very good case for encouraging people to think of their behaviours, and how to build and sustain the structures that support a longer life.

One of the key lessons learnt by the Covid-19 pandemic, he says, is seeing how some countries have been better at supporting older age, and managing end-of-life care, with the UK and the US performing less well than Nordic and some European countries.

Most countries will continue to need to find a mix of public and private provisions to pay for long-term care costs for those, who through sickness or extreme old age, become infirm. However, for Andrew the more powerful challenge is associated with discovering open, “playful” networks with which to develop lives and careers.

It is finding purpose and adapting to many new directions in life, Andrew maintains, which is the most hopeful aspect of experiencing a longer life.

“We need to realise that the book of life has got longer, but has shorter chapters in it,” says Andrew.



For more information about Andrew Scott and Lynda Gratton’s book, The New Long Life: A Framework for Flourishing in a Changing World, click here