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Can we trade forthcoming living needs and legacy in a dedicated 'senior network market'?

Let's match segment-based demand with virtually an infinite set of solutions, by aggregating them and trading at a networked level.

Photo of Diogo

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Statistics aside, we know that population is getting older and life expectancy is increasing. Therefore, one gets to the age of '50' carrying over a legacy (physical, emotional and patrimonial) and a prospective concern: preserve while looking out for the next ones.

This is also the time when a person can rush last-minute savings for the retirement or life donation.

Even though this may seem quite universal, I believe that each individual will end up having very specific needs and wishes. Therefore, segmentation is crucial for designing a more-or-less comprehensive solution (financial and non-financial), offered by a financial institution (either in its mutual or tradicional corporate form).

Let's first take a look at an incipient segmentation criteria:

1. Is this person alone (divorced, no-kids, single, others) or accompanied (husband/wife, partner, parents, siblings, kids, others)?

2. What is the professional status? Active worker, dependent, non-dependent, others?

3. Does the person owns property? Is this property fully paid for?

4. What are the future concerns? Leave some sort of financial legacy or trust to others? Just enjoy life in a very healthy way? Ensure no costs for the next generation (eg funeral expenses)?

Now, doing a simple combination analysis, we realize that the potential for offering is enormous. In this way, one 'isolated' financial institution will hardly be able to cope with demand and provide a one-size-fits-all solution.

Proposal: aggregate and trade at a network level.

Let's fit our networked needs with a networked set of offerings. In this way, I can preserve and benefit while the financial institution can gain by overlooking my financial patrimony.

Most rational option: develop an equivalent to stock market, where a 50+ person can bid and trade his/her specific patrimonial legacy (transformed into some sort of credits, backed-up by a financial institution) by future needs of his/her own or others (eg grandkids stipends, access to healthcare, etc)

Example: I am 50+, have an almost fully paid house, 2 great kids, sharing life with my 2nd wife, would like to be active until 65-ish, health is overall ok, etc. 

But, one thing I know: I will not be able to take my house with me, once I'm gone. 

So, can I transform my patrimony into something more useful and get the freedom to do whatever pleases me the most? Example: can I get a 2nd mortgage on the house, while maintaining the legal right to live in it until I die? Can I then use this capital to invest in some sort of 'senior stock market', where I can bid and acquire solutions for my future living and legacy needs? If I don't use them, can I pass them over (re-sell) in the same 'stock market'?

What is a provocation or insight that might inspire others during this challenge?

Who will help taking care of those staying? You are!

Tell us about your work experience:

In a certain way, I consider myself as being an Organizational Intrapreneur (in the Insurance Industry). And I really look forward to successfully combine design thinking with business strategy.

13 comments

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Photo of Kate Rushton

Hi Diogo!

I hope you are well. 

If there is anything I can do for you in the realization of your idea, please let me know. 

The ideas phase is still open here - https://challenges.openideo.com/challenge/financial-longevity/ideas

Photo of Diogo

Hi there! :) Doing well, thanks. 
Just need some time to address the matter. Scheduled for next week ;)

Photo of Kate Rushton

Hi Diogo, we’re excited about the potential of this thought-starter you’ve posted here and would love to see this develop this in the Ideas phase that just opened. If you’re planning on developing this thought-starter, be sure to re-post it in the Ideas phase of the Challenge here: https://challenges.openideo.com/challenge/financial-longevity/ideas Looking forward to how this will grow in the upcoming weeks! The Challenge Brief is here: https://challenges.openideo.com/challenge/financial-longevity/brief

Photo of Diogo

Indeed Kate, I certainly will! I'm just a bit busy for the next couple of weeks but soon after I will dive into it. And will add the supporting drawing / scheme, as suggested.

Photo of Kate Rushton

Hi Diogo! I hope I get to see this idea posted in the ideas phase which starts in two days.

Photo of Diogo

It would definitely benefit from the challenging contribution by this "expert community"!

Photo of Paul Reader

Somehow the image seems very apposite!

Photo of Kate Rushton

Hi Diogo, interesting post! Any chance you could find an image to go along with it? Images help grab attention and tell a story. You should be able to use the Edit Contribution button on the top of your post and follow the instructions to add images from there. Looking forward to seeing more of your inspiring insights on OpenIDEO.

Photo of Diogo

Done! It seems that after all, it's just a matter of doing it. As a quick web search retrieved such a meaningful combination :)

Photo of Kate Rushton

Thank you, Diogo! I have been thinking about your idea a lot. How would you manage risk e.g. unexpected cancer diagnosis and so on?

I am interested to know the technicalities of how such a system would work. I think a diagram might help explain the concept. 

Photo of Diogo

Hi Kate, great to hear back from you! It's rewarding having this kind of interaction. Especially for  a new comer, who is being introduced to this approach, for the first time.

I think that it would be good to clarify and distinguish the concept from the approach. I believe that the key success factor for this idea to potentially reach the light of the day, is actually following the proposed process. Namely, while compensating for the gaps in such a collaborative way.

It's also easier to write than to draw. Especially if the time is short. So, I propose to write down my thoughts and, with time, I will try to draw the concept :)

Given this and getting to your question.

The underlying principle is that is almost impossible for a single financial institution to offer a universal solution to a virtually infinite set of combinations in the demand segmentation. Therefore, I think that is much more effective and less opportunistic to simply match the demand (people over 50) with the offer (some sort of credit unions consortium). And this, using the same principle as the stock market, where investors (demanders, in this case) search and trade for the available offerings (for this matter, can be healthcare providers, financial advisers, contractors, and so on). When one cannot control such a wide variety and mix of demand and offer, the best way is just to let the market work in an orderly (and regulated) way.

Who gains what:
- People over 50: gain access to liquidity, with advantageous conditions, at the credit union (eg. by getting a 2nd mortgage on the house, keeping the right to live in it, via a rental contract). Then, they can only use this liquidity to subscribe products available at the credit union or (better) to trade their needs (eg. ensure a trust for the grandchildren, secure healthcare, traveling, etc) in the "tbd" market (limited to the people over 50 trading within this financial consortium). If they don't use their "stocks", they can then re-sell them on the market (trading, in the tradicional way). For example: one person acquires the right (credits / stocks) to travel next year (or some healthcare credits). And, somehow, ends up not using them. Then, this person could trade them back (matching demand with supply).
- Credit Unions: secure income by the trading commissions, with potential x-sell to other financial products, holding savings accounts, other family members, etc.
- Potential service / product providers (sellers) gain access to a specialized market of loyal customers.

Ideals aside, this corresponds to some sort of a cooperative approach, where the market is "owned" by the people over 50 eligible for trading, and by the credit unions. This would also give them the power to redistribute the gains throughout the causes they mostly define.

The best would be to approach this set-by-step, i.e. start with simple products (needs) and then expand over time to more risky products (such as cancer treatment offering). It corresponds, somehow, to a "social market insurance" and can be mathematically designed by actuaries and financial experts. 

The end result is giving the ownership and power of decision to those directly involved (people over 50 and credit unions) while promoting actuarial and market efficiency. 

Hope that this long writing has become short to understand. Will work on the diagram, now.

Photo of Kate Rushton

Hi Diogo! Thank you so much. I understand your idea :-) I can't wait to see how this idea develops in the ideas phase. I would recommend that you keep an eye on the people making posts in the research phase. You will probably come across people who can help you take your idea to the next level.

Photo of Kate Rushton

Hi Diogo! Thank you so much. I understand your idea :-) I can't wait to see how this idea develops in the ideas phase. I would recommend that you keep an eye on the people making posts in the research phase. You will probably come across people who can help you take your idea to the next level.