Wealth Management 3.0

Two young fish are swimming along.
An old fish passes by, “Hey boys, how’s the water?”
A moment passes and the old fish swims off.
One young fish turns to the other, “What the hell is water?!” 1

Wealth management has fallen into a similar paradigm as medicine: react to problems as they occur, treat patients similarly based on diagnosis and do no harm. These become the norm – even regulated as such – while better practices become “worlds hidden in plain sight.”²

In his book Outlive: The Science and Art of Longevity³, Dr. Peter Attia describes a new paradigm of medicine (dubbed Medicine 3.0) that is directly applicable to our perspective of wealth management at SS&C ALPS Advisors:

• Greater emphasis on prevention than treatment.
  • The force of compounding works in both directions – we can help identify risk factors before they develop into chronic issues. Exercising oversight and controls pays dividends for longevity.
• Considers the patient as a unique individual.
  • Like clinical trials, typical standards around risk questionnaires and strategy assignment based on heuristics misapply averages to individual situations – taking “heterogeneous inputs and come[ing] up with homogeneous results.”
  • A client’s goals, symptoms, risk factors, etc. require a personalized treatment plan.
• Our attitude towards and acceptance of risk.
  • We have previously covered this differentiated perspective⁴ that like Hippocrates' dictum of “First, do no harm,” there is a risk of being too conservative.
  • Risk can be perceived as the probability of not attaining a goal and thus traditional risk (aka volatility) is “not something to be avoided at all costs.”
• Pays far more attention to maintaining healthspan and the quality of life.
  • It’s not all about outperforming indices, but rather helping clients achieve their goals.
  • Unlike the current healthcare system, this aligns with our business model!

We are building Wealth Management 3.0 via institutional-quality model construction, state-of-the-art proposal generation and personalized managed services. Here’s to a happy – and healthy – holidays and New Year.

Important Disclosures & Definitions

1  Wallace, David Foster. This Is Water. Little, Brown & Company, 2009.

2  Krakauer, David C. Worlds Hidden in Plain Sight. Sante Fe Institute, 2019.

3  Attia, Peter. Outline: The Science & Art of Longevity. Harmony Books, 2023.

4  The Efficient Frontier Is Not Real: A Case for Lottery-like Assets.

AAI000525  12/12/2024