This news service talks to The Colony Group, the US wealth management group, about an approach to planning for important events that reaches beyond the idea that people should wait for retirement before enjoying life to the full.

The wealth management industry, like so many other business sectors, is fond of its catchphrases. A new one is “bucket list living.” The term relates to how people should focus on using financial planning to focus on enjoying the journey of life, rather than solely on the destination of retirement. Often, people focus on saving for retirement and planning for the future – which they should continue to do. But people should not wait until retirement to really start living, making sure that they have time to do what they enjoy while they can, such as travel, volunteer, spend time with family or learn a new hobby. They should think about how they can incorporate these life goals and aspirations into their financial plan. It sounds sensible enough, but is not always easy to do.

At The Colony Group, a US wealth manager previously interviewed by Family Wealth Report, advisor Brad Levin spells out what “bucket list living” means, how this mindset can be embedded into wealth advisors’ conversations with clients, and what this approach means for the future. 

What at its broadest does “bucket list living" mean? 
As a society, we have come to believe that people should work for 30 to 40 years or more to reach a point at which they are able “retire,” then relax and pursue all the things they have dreamed about doing during their entire life. Retirement is the ultimate destination on the horizon that we are working toward.  

Bucket list living turns this concept on its head. It recognizes that our lives are the journey, and the true destination is our “expiration date” or death. It’s unavoidable! Rather than postponing our enjoyment of life to a date way off in the future, we should reward ourselves with enriching, enjoyable and life-enhancing experiences. It doesn’t negate retirement as a concept but changes the focus from the importance of retirement as being the trigger point to start checking off our bucket list. We need to bring more of these experiences forward.  

The concept extends more broadly than just bucket list experiences. It’s about fulfilling your vision of living the best life in all its facets. Who do you want to be? What do you want to learn? What mark do you want to leave? What are your health and wellness goals? Let’s make all of this part of your financial plan.  

How does this BLL approach apply to wealth management clients? Is this essentially about certain goals that people want to achieve and therefore how to set asset allocation, financial plans, etc, so that these are achieved? Is this a version of what is sometimes called “goals-based investing”? 
It is goals-based planning; therefore, traditional planning elements such as cash flow decisions, funding needs, and asset allocation, are all still relevant. What’s different is this is a conscious approach to spread our “bucket list” items throughout life and to build them into the financial plan. Obviously, this will require a different approach than traditional planning because it may necessitate using some financial resources much earlier on in life than traditional retirement planning would. It may also necessitate some trade-offs as a result. For example, it may lead to a later retirement date or less spending on costly experiences after retirement in exchange for the ability to enjoy those experiences sooner. 

But there is another very positive aspect to approaching life planning with the bucket list living perspective. Many people are weighed down by their professional careers and can’t wait to reach retirement so they can really “start living”. Imagine, if you gave yourself the opportunity to enjoy “mini retirements” throughout your working career. Wouldn’t periodic relaxation and refreshment be more likely lead to a renewed sense of energy and excitement in your life? Perhaps taking this approach would result in greater productivity in your career, less stress, and less resentment.   

How did the idea of bucket list living come up at The Colony Group? Is there a colorful example of how it arose? 
It really came from my own personal life experience over the past two years. Unfortunately, I lost three close friends who died at relatively young ages. The oldest was just 53. None of them died of conditions related to Covid. Two died of pancreatic cancer and the other had a massive heart attack. Reflecting on these tragic experiences, I thought about the lives of each of these individuals, their families, and their plans…which they never lived to experience. I thought it was such a shame that they missed out on doing so many of the things that they had looked forward to. This helped me realize just how precious life is and yet we have become so conditioned to pushing the enjoyment of our “bucket list” toward our later years in life.  

As I have discussed this concept with many of my pre-retirement clients in recent months, I have found that it resonated with so many of them. In fact, I was talking to a 58-year-old business owner client just this week about his plans for retirement. He shared with me that he and his wife have been rethinking their plans since the death of her 54-year-old sister this past year (also due to cancer). He said that he saw less value in working full-time as long as he had originally planned but had a desire to enjoy life more and a willingness to work part-time as a consultant for a longer period of time so that they could begin enjoying their lives sooner.  

Is this a term that you have heard in the wealth sector before? 
No, I came up with this term.  

Is there a problem with people associating the term “bucket list” with the idea of fulfilling certain accomplishments/experiences because they fear mortality? Is that something that might have been galvanized by Covid, geopolitics?     
No, I don’t think there is a problem with this concept. Most of us hope that we live a long and healthy life. But, unfortunately, that’s not the reality for everyone and I think that Covid has made us much more aware of this. In fact, as I thought about this myself, I began doing some research and learned that life expectancy in the US has been on a declining trend since 2014. That was shocking to me! I also learned that US life expectancy was less than many other developed countries. Why? We have a much higher rate of cancer than many other countries and stress in our lives plays a major role. This is a real systemic problem, and I don’t see any major cultural shifts taking place that could change this.  

Because of Covid, I think that people have become much more thoughtful about their own mortality in the last couple of years and, as a result, feel a greater sense of urgency to really embrace and enjoy life as much as they can rather than just waiting for the future.

Do advisors at the firm find this terminology useful in framing clients’ ideas and expectations? 
I have recently introduced this concept at our firm and am really spearheading the adoption of this approach for our clients that it appeals to. But, as a firm, we are broadening the concept far beyond planning. We have what we believe is a unique business segment called “Curated by Colony” which is an opportunity for us to deliver additional value to our clients by providing them access to hand-selected service providers that might be of interest to them such as: health and nutritional counseling, concierge medicine, adventure travel planning, mindfulness coaching, and family legacy planning, just to mention a few. This fits perfectly with the bucket list living concept because not only can we talk to clients about their vision of their ideal life and to financially plan for it, but we can also help them implement it. 

Can you give a couple of actual examples of how this approach to financial planning works? 
Just this week, we were working with two separate retired clients on their financial plans, and both had the exact same goal, an African safari. What these clients also had in common was their age, mid-70s. I could imagine that they may have been thinking about taking an African safari trip for many years but just never thought it possible until now. If these clients had been in their 50s and they were working on their financial plan, I would have asked them if they would have preferred to take that trip during their working years or wait until retirement. I’m sure they would have preferred to take the trip sooner but would question if they could afford to or if doing so would derail their retirement. This would then be incorporated into their financial plan and we would explore different possibilities that could address their expenditure concerns.  

I was recently having a conversation with another client in their mid-50s, who had their children at older ages. Their children are still in elementary school now and they were sharing with me a desire to be able to take an extended European vacation with their kids while still in school. They expressed a strong desire to be able to share this experience with their kids while they felt it could make a really great impact on their development.  

While the prospect of spending tens of thousands of dollars on a vacation might seem either daunting or financially irresponsible, we have a lot of different options that could be explored. As an example, what about the idea of renting out your home on a short-term basis and using the income to fund your travel plans? If done regularly, this could potentially provide for an ongoing source to fund travel costs. If we want to plan for several large extended trips, we may have to consider shifting some of the planned retirement travel budget to earlier years or possibly consider the idea of retiring a couple of years later or working part-time during retirement. For people who are currently retired, we might explore the idea of downsizing from their current residence to free up additional funds that could fund their desired lifestyle. We might even explore the possibility of using a reverse mortgage to create a lifestyle enhancement fund. With a myriad of creative solutions to consider, it’s about finding a combination of options that can be customized to address each client’s desires and resources.

It is sometimes said that a smart wealth manager reflects on the full balance sheet of a client’s life: his/her assets and liabilities. How does “bucket list living” fit with this sort of notion? Does it speak to the greater focus on financial planning we have seen in recent years? 
It does reflect on the client’s full balance sheet but, once again, it turns the concept on its head. It asks you to think of your life experiences as an asset. I mean, just think about it. Why should we count only the value of material things? Does that measure the worth of your life? I think not. It’s the experiences we have and the impact we make on the lives of others that really are true measurements of worth.  

How can BLL also integrate with a risk management approach to wealth management? 
Risk management is always an important part of the financial planning process. There are different risks we must protect against. Market risk is higher when our time horizons are shorter. Therefore, prudent bucket list planning must address this risk by properly allocating resources to have funds properly invested for different time frames, like the “buckets of money” allocation concept. Shorter-term goals require a more conservative allocation mix and we can take on more market risk and higher potential returns for goals that are further out on our time horizon.  

Other risk management considerations include mortality risk and the risk of long-term care need. This addresses the possibility of an early death that might prevent one’s surviving spouse from living their best life or the possibility of exhausting a family’s financial resources to pay for the long-term care needs of one spouse.  

Life insurance as a risk management tool that can also play another role relevant to the bucket list living concept. Many policies today provide for accelerated benefits that would allow the insured to tap into their death benefits in the event of a chronic or terminal illness. This is a very pertinent use in the case of a cancer diagnosis. Unfortunately, most health policies will not cover alternative or experimental treatments. Such treatments may have the possibility of increasing cancer survivability but paying the cost of such treatment out of one’s own assets may not be feasible. A policy with a chronic illness benefit rider would provide a pool of money that could be used for any such needs that an individual might have. For an individual who is given a terminal prognosis, a policy with a terminal illness benefit rider could provide them the means to live their bucket list life in the remaining time they have.