How to Plan Your Life Cycle

“ We are one of the longest-living countries in the world, with a life expectancy that now exceeds 84 years and continues to grow. This is a success for science and for people, but it can cause problems if we do not prepare ourselves in time”. This is the belief of Alberto Martini , director of wealth management at Banca Mediolanum . He sees the key to best addressing this structural evolution of society in the ability to match savings to our life goals . “The public pension covers the 15 years following the retirement date, but the average life expectancy is 25 years. At a system level, there is a risk of an economic impact due to the slowdown in consumption, a social impact linked to individual dignity and a political impact due to potential unrest”, he says.

This prospect concerns everyone, even those with large assets . “Large clients have more liquidity than average, but they are also more prudent in their investments,” Martini continues. A third of the money put aside remains tied up in current accounts or invested in low-yield instruments and only a minority is allocated to instruments with high growth potential or pension or insurance solutions that could offer adequate protection to face the challenges posed by longevity and guarantee financial security during retirement. Everyone faces the risk of outliving their financial resources. In essence, one can lose one’s financial autonomy, depending, in the best of cases, on relatives or institutions. This does not ensure the quality of care. Suffice it to say that already today one in two health services is paid privately in the face of increasingly limited resources for public health.

What is the solution? “Let's start from the foundations to build the house,” Martini continues. “People need to be helped to identify their risks to contain them as much as possible, removing the possible impact on income and assets. Once the risks have been neutralized, we move on to liquidity management. The part that is functional to everyday life should be left in the current account, while the excess part should be activated, otherwise, over the course of a quarter of a century, purchasing power will be halved. The first activation of savings serves to cover the pension gap. Once this need has been resolved, we can move on to long-term, or rather very long-term, investment .” Another piece of this scenario comes into play. “In the coming years, we will witness a powerful intergenerational transfer of capital ,” Martini points out. “But are the new generations ready to manage inherited assets and the challenges of the future or do they think they can break even by investing in cryptocurrencies?”

Given the scenario, for the expert it is time for an evolution also on the supply side . “Financial consultancy cannot be limited to managing portfolios, but is called to accompany people over time”, he says. “Industry professionals, in addition to putting their investment skills to work, can help the client plan their life , and not just protect their capital”. A vision that has pushed the bank to develop a model, Mediolanum Life Planning , which offers needs analysis, stochastic longevity models, protection, credit, investment and generational transition solutions in a single digital interface. “Let's start from a premise: you don't plan money, you plan the life that money must enable. The approach combines deep listening, definition of goals and customized financial architecture”.