How COVID-19 accelerated the convergence of health and wealth

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Nigel Brook-Walters, European head of wealth & advisory for SEI’s Asset Management Distribution team writes that as advisers consider a post-pandemic paradigm, they have begun to place a greater emphasis on the inherent connection between health and wealth. This focus parallels a tectonic shift in which individuals have progressively become more responsible for funding their own retirements. 

Though advisers have long offered health and life insurance policies, such policies are rarely integrated as part of a holistic, longevity-oriented offering. Amid a prolonged health crisis that has doubled as a market-moving event, clients’ shared health and financial anxieties underscore that advisers would be wise to adjust their strategies accordingly.

Looking ahead, a more holistic, goals-based and health-integrated approach to wealth management will be increasingly important. Even as vaccination rates continue to rise and the once-hazy return-to-normal plan comes into focus, this change is here to stay.     . 

Health + Wealth = A Harmonious Pair

The intersection of health and wealth is a valuable opportunity to engage with clients on a deeper and more meaningful level, as well as create a financial plan that better suits all of their needs. However, wealth managers face a pronounced gap in their ability to effectively collect, aggregate and assess the additional data required to offer strategic health-related policies. And, because health needs as well as life goals will be so different for each client, a one-size-fits-all approach will not work. A hyper-personalised approach is required, allowing advisers to demonstrate greater value-add, but it also places greater strain on their ability to be all things to all people. 

As the gap between health and wealth blurs, it will also prompt advisers to consider health-related strategies and incentives that influence their integrated services. In this model, a conversation about healthy behaviours and preventive care would be applicable to both a client’s health plan and his or her investment plan, time horizon, retirement target date, and asset accumulation requirements. 

Importantly, these conversations should also address the correlation between mental health and financial planning. Because mental health influences physical health and finances are at the heart of many mental health challenges, goals-based planners would be wise to put in place a plan that both enhances their client’s overall financial wellness and provides them with peace of mind. 

This will ultimately require robust, data-oriented models that integrate health needs, treatments, and expenses, alongside longevity and succession planning, retirement needs, giving an adviser a far more holistic perspective on their client. In turn, they’ll undoubtedly be better positioned to offer optimised investment advice and personalised counsel, making the relationship more fruitful for the client as well.

An Expanding Role 

Advisers, at their core, want to have a positive impact on clients’ lives by adding real value – financial and otherwise, and the pandemic has provided them an opportunity to make a bigger impact. It has allowed them to revisit what is really important to their clients and put in place a plan that fully reflects their needs. We’re increasingly seeing more advisers move towards a fully-integrated approach to advice that depends less on day-to-day market and investment performance.

The most important thing is that advisers can enable their clients to lead the lives they want to live, and more and more clients are realising that good health plays a critical part in it. Taking a comprehensive, proactive approach to addressing these issues at the outset will help drive more effective end-to-end client service. 

Goals-Based Health and Wealth Management

In the aftermath of financial crises, advisers have sought out pathways to add value outside of traditional investment advice and portfolio allocation and thereby ensure that they remain trusted partners to their clients. COVID-19 is no different, and the embrace of health-oriented support doubles as both a way to streamline challenging issues for clients, and an effectively integrated and more holistic way to service them.   

A goals-based approach positions advisers to deliver the support and counsel clients are looking for in order to drive precisely those ultimate goals. Integrating healthcare into that goals-based framework makes for a more comprehensive offering to include goals outside of a traditional investment plan—especially those that are nonetheless related to it. 

Wealth managers are always looking to engage clients in a deeper and more meaningful way. By interweaving health and wealth, advisers can provide clients with a more customised plan that better aligns with their life goals, which is at the core of an adviser’s principal mission. 

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