Longevity industry expert Margaretta Colangelo says we are on the brink of a Longevity financial revolution.

With people living longer and healthier lives than ever before, it stands to reason that the focus must also turn to how an elderly population, currently largely ignored by the financial industry, will continue to fund their lifestyle later in life.

There are currently a billion people in retirement globally, with 10 million of those in the UK. Despite the clear spending power of this demographic, it is one that tends to be side-lined by the traditional financial services sector. However, the opportunities for the financial sector, and its investors, are vast when you consider that this demographic has a spending power globally of $15 trillion. [1]

Margaretta Colangelo is the co-founder and managing partner at Deep Knowledge Ventures and Longevity Capital, as well as the co-author of Longevity Industry 1.0, a new publication that aims to provide a full-scope understanding of the global Longevity industry, including the Longevity Financial Industry. She and fellow author Dmitry Kaminskiy take a deep dive into the issues and developments in AgeTech, WealthTech, FinTech and the rise of new financial instruments and derivatives aimed at an older population.

A native San Franciscan with more than 30 years’ experience in software companies in Silicon Valley, Colangelo is renowned for her ability to track and forecast innovation in technology. At the forefront of emerging technologies throughout her career, Colangelo now predicts that AI will give rise to FinTech 2.0 and Longevity Banks will emerge specifically to serve an aging population. [2]

While Colangelo says FinTech has received more investment but achieved less with it when compared to other areas such as AI and healthcare, she now believes that advancements in the development of AI tools will lead to the development of new FinTech solutions to benefit an aging demographic.

With this in mind, we spoke to Colangelo about how the future of financial services for the one billion (and growing) retired population can be transformed.

Longevity Technology: How big an opportunity is the development of the Longevity financial sector for investors?

“It’s the biggest opportunity in history. Over the next 40 years Americans are expected to hand down an estimated $53 trillion to their heirs…”

Margaretta Colangelo: It’s the biggest opportunity in history. Over the next 40 years Americans are expected to hand down an estimated $53 trillion to their heirs. Advances in medicine will enable many of these people to continue to live in good health. Many will live decades longer than the previous generation and their heirs will not inherit that money when they expected to. As these long living people continue to invest, their wealth will keep increasing. They will have more time to accumulate wealth, will have a longer investment horizon, and will benefit from compounding. When they do spend their money, they will spend it in a different way and on different things than their heirs would have.

Longevity Technology: Which technologies do you feel are most important for the development of Longevity finance solutions?

Margaretta Colangelo: AI and data science are the most important for the development of Longevity finance solutions.

The most successful Longevity Financial companies will be those that aggregate and implement the most advanced AI and Data Science solutions, willing and capable to on-board innovations as soon as they are created, constantly staying ahead of the technological curve.

“As more and more middle-aged and Silver Generation individuals begin to recognize and embrace Health as New Wealth, we will also see an increasing convergence between integrated AgeTech WealthTech HealthTech solutions…”

In the last 10 years investment in the FinTech industry has exceeded $350 billion dollars. During the same period a similar amount of funding was invested in other industries such as AI, healthcare, and aerospace. There have been a number of breakthroughs in these other areas but not in FinTech. The amount of money invested in FinTech has not yielded significant results compared to other domains. FinTech received more investment but accomplished less with it. However, recent advances in the development of practical AI tools are enabling new FinTech solutions.

Many of the most important advances in AI will be invisible to the individual user. AI will actually decrease complexity for the users and will become systematically embedded into the infrastructure of the underlying technologies and user journey.

As more and more middle-aged and Silver Generation individuals begin to recognize and embrace Health as New Wealth, we will also see an increasing convergence between integrated AgeTech WealthTech HealthTech solutions, and who have high demand for technologies able to optimize their wealthspan in step with increasing healthspans.

Longevity Technology: Why do you think London is leading the way in Fintech 2.0 for Longevity? 
Margaretta Colangelo: The most advanced FinTech 2.0 technology adjusted for Longevity is emerging in London and tools for FinTech 2.0 are already in development there. The Longevity FinTech Company, incorporated in London, is managed by Eric Kihlstrom, the former Interim Director of the UK government-led £98 million Healthy Ageing Industrial Strategy Challenge Fund. Stefan Hascoet is working on the preparation of its subsidiary Longevity Bank in Switzerland, and Sergey Balasanyan, is developing FinTech 2.0 tools and solutions for Longevity FinTech framework.

Longevity Technology: How willing do you feel the traditional finance industry is to adapt to an aging society? 
Margaretta Colangelo: Currently most financial assets are preserved rather than invested. Many owners of these assets are personally interested in Longevity, both as a prospective market with the capacity for unprecedented growth, and as a means to their own personal life extension. Even the most conservative investors, and the owners of the largest financial assets, now understand that the industries of AI and Longevity, separately, are two of the most prospective and relevant sectors to invest in, with full confidence that such investments will lead to relatively low-risk and stable profitability in the long term.

“Even the most conservative investors, and the owners of the largest financial assets, now understand that the industries of AI and Longevity, separately, are two of the most prospective and relevant sectors to invest in…”

However, due to the lack of liquid tradable instruments related to the AI and Longevity industries, owners and managers of these assets still prefer to avoid any significant investments into these sectors.

Financial innovations that can provide liquidity to Longevity companies, and technologies that can form a bridge between the Longevity industry and conservative financial markets, would inevitably enable the injection of around 1% of the tens of trillions of dollars currently lying inert as “lazy money” within the global Longevity Industry.

In practice this means once such a liquidity bridge is established, it will immediately have the ability to attract an estimated $500 billion dollars within the first few years and several trillions within a 5-year horizon.

The increased liquidity that these would provide would set in motion a self-perpetuating cycle of Longevity Finance: The greater the progress in achieving healthy Longevity, the more the owners of wealth will want to invest in the repeatedly reinvigorated labor force endowed with greater healthspan, leading to further growth and greater healthy Longevity.

Next week we’ll share more from our interview with Colangelo, including her thoughts on what action needs to be taken to ensure a positive economic outcome for the global. Stay tuned!
[1] https://bit.ly/2vm887h
[1] https://bit.ly/2U3lv6Q