What the evidence really tells planners at the bridge
For many financial planners, the journey toward Total Wealth Planning begins with a quiet but uncomfortable realisation:
“I’m excellent at modelling money — but that’s no longer where the real risk or opportunity sits.”
This is not a philosophical concern. It is now an evidence-based one.
A major longitudinal study of 19 advanced economies over nearly three decades has surfaced a finding that should stop every planner at the bridge and make them think carefully about what wealth really means — and what happens when we fail to plan for it properly.
[Ref: Distributional Effects of Human Capital in Advanced Economies: Dynamics of Economic Globalization, by Onur Can Özdemir.]
The uncomfortable finding planners need to face
The study examined the relationship between human capital (education, skills, earning capability) and income inequality from 1990 to 2017.
Its core conclusion is both subtle and unsettling:
- In the early stages, growing human capital reduces inequality
- In later stages, growing human capital increases inequality
In other words:
Human capital is not automatically equalising.
Left unmanaged, it becomes divisive.
This matters profoundly for financial planners — because traditional financial planning largely ignores human capital once earnings are “established.”
Why traditional planning quietly fails in the second half of life
Most conventional plans are built on an implicit assumption:
Human capital peaks early, then declines — so planning should focus on financial capital.
The data shows this is no longer true.
In advanced economies:
- Earnings increasingly diverge after education is complete
- Returns to skills become non-linear
- Globalisation amplifies winner-takes-more dynamics
- Those with adaptive, transferable human capital accelerate
- Those without it fall behind — even if they “did everything right”
The study demonstrates that in later stages of development, education and skills amplify inequality unless actively stewarded.
For planners, this exposes a blind spot:
A cashflow model without a human capital strategy is incomplete — and potentially misleading.
Human capital is not just “earning power”
One of the most important insights in the research is that human capital is not a single variable.
It includes:
- Skills relevance over time
- Bargaining power in the labour market
- Exposure to global economic forces
- Ability to adapt, reskill, or reposition
- Health, energy, and cognitive capacity
- Social and intergenerational advantage
The study shows that as economies globalise, returns increasingly accrue to those who can continually renew their human capital — while others stagnate or regress, regardless of prior success Distributional_Effects_of_Human….
This is precisely why planners who only model money end up reacting to problems too late.
The Total Wealth Planning implication
Total Wealth Planning reframes the planner’s role.
Instead of asking:
- “How do we optimise assets?”
It asks:
- “How do we sustain agency, adaptability, and choice across the whole life?”
From this perspective:
- Human capital is not front-loaded
- It is cyclical
- It must be reviewed, renewed, and protected — just like financial capital
This is why AoLP treats human capital as:
- A living asset
- A risk factor
- And a primary driver of future optionality
Why this matters for planners at the bridge
If you are approaching the bridge into Total Wealth Planning, this research validates what many planners already feel intuitively:
- Clients are not failing because they lack products
- They are struggling because their life capacity and economic position are changing faster than their plan
- Inequality shows up inside client outcomes — not just in society at large
By explicitly including human capital:
- You surface risks earlier
- You avoid over-confidence in financial projections
- You help clients navigate transition, not just accumulation
- You design plans that remain coherent under stress
From extraction to stewardship
The deeper message of the study is this:
Human capital unmanaged becomes extractive — even in wealthy societies.
Total Wealth Planning is the corrective.
It moves the planner from:
- Product optimiser → Life steward
- Retirement modeller → Capability architect
- Technical expert → Human systems thinker
And it allows clients to remain economically alive — not just financially solvent.
A closing reflection for planners
The bridge is not about abandoning technical skill.
It is about recognising that technical accuracy without human context is no longer sufficient.
The evidence is now clear:
- Wealth outcomes diverge long after education ends
- Human capital shapes inequality more than portfolios do
- And planners who ignore it will increasingly be outpaced by reality
Total Wealth Planning does not replace financial planning.
It completes it.
Discover more about Total Wealth Planning at the Academy of Life Planning.
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