Financial planning is like looking in a mirror. Most plans look “normal” because they show the version of life we expect to see — even if that reflection is already slightly distorted. That distortion is the version of life where independence is assumed to last forever, and the possibility of lost autonomy never truly makes it into the design. 

We’ve seen this distortion before.

Imagine presenting a financial plan in January of 2006 — the day before the industry adopted CSO 2001 and reset life-expectancy assumptions.  The Society of Actuaries refined how we measure who dies and when.  It did not attempt to measure what happens when those same people live long enough to require support, supervision, or care.  Longevity was modeled.  Dependency risk was not.  Same couple, same assets, and same goals, but an entirely different reality.  The plan didn’t suddenly become wrong per se, but it was built on a time horizon the advisory community finally acknowledged was incomplete. 

Longevity for the consumer didn’t change overnight; the planning and compliance standards did.  Twenty years later, when it comes to modeling a client’s loss of independence, we’re still acting as though a similar adjustment isn’t necessary.  That adjustment forced changes across the advisory community, as assumptions shifted, products evolved, and withdrawal strategies were re-tested against longer lives. Once the distortion was recognized, planning had to change to remain credible. 

Then another distortion occurred less than a decade later.

In 2011, the federal estate tax stopped being a planning “risk” for most Americans, as the estate erosion risk that dominated estate planning conversations for decades — estate taxes — disappeared for most households overnight.  The response was immediate, as advisors and estate planners pivoted as conversations moved away from estate tax minimization and back toward the original purpose of planning before it had been overtaken by tax avoidance.  No one debated the change because the underlying risk was gone.

Estate planning was never supposed to focus on optimizing the exit alone; it was supposed to ensure an entire family system held together in totality.  That’s why loss of independence feels like such an uncomfortable topic.  It drags the conversation out of the abstract and back into lived reality.  With the tax driver diminished, there was an opportunity — arguably an obligation — to focus on the forms of erosion most families were going to face; not just the balance sheets of the affluent. 

Today, for many families, the greatest threat to what they think of as their “estate” is no longer taxation at death, but the prolonged financial, physical, and emotional cost of needing care while still alive.  Yet most planning frameworks continue to model markets, mortality, and taxes with precision, but treat dependency as an external event rather than a core planning variable.  We corrected for longevity, and we adjusted to a new estate-tax regime, but we have yet to fully adapt to the risk that assets may be consumed not by death or taxes, but by the need to support life without autonomy.  Until that adjustment is made, much of what appears structurally sound in a financial plan remains built on an assumption that may not hold when it is tested most.  

For all the sophisticated modeling in modern financial planning, there is too little effort in quantifying what happens when the consumer becomes the plan’s passenger, rather than the plan’s driver.   We measure market volatility, stress-test withdrawal rates, and model longevity and income down to decimal points.  So, how is it possible that when it comes to a point in life where decisions, control, and even basic independence may shift to someone else, planning becomes “just wing it,” or “your family will handle it,” or “we’ll deal with that if it happens.” 

This is an advisory community that reflects structure and compliance — one that mandates every material risk be defined, modeled, and documented before advice is considered prudent.  But that reflection turns into the funhouse mirror when a metric or diagnostic accounting for the loss of independence and the need for Long-Term Care is ignored.

20260213