Why retirement should be broken down into three parts

Alzheimer Society of Canada gives advisors tips on financial plans and how to treat clients with respect

Why retirement should be broken down into three parts

How do you get a client to plan for dementia when they are a fit and active 50 year old? And where do you start to ensure they have enough money set aside to cover any medical expenses that align with their wishes?

These are tough questions to ask someone who is approaching retirement and looking forward to extended holidays and extra time on the golf course. However, with reduced financial capacity a growing problem, advisors need to not only be alert to signs of dementia but also prepare clients financially for the possibility.

Mary Schulz, director, education at Alzheimer Society of Canada, told WP that ensuring a client gets all the benefits they are entitled to is a good starting point. There is a misconception, she added, that these just drop into your inbox but it’s imperative to get on top of this.

Then you need to get estimates on the level of care a client might need down the road, which may vary depending on which province they live in. This could range from $8,000 a month at a ritzy, private long-term care establishment all the way down the scale to provincial services.

She said: “It’s thinking about what might be realistic in terms of being able to plan for that eventuality where you may need care in a place other than your own home. But even in one's own home, we certainly could be looking at needing to supplement what is offered through the provincial services, because often they're quite minimal and a lot of people don't realize that.

“Everyone talks about wanting to be in their own home but really think that from a financial perspective; that could cost quite a lot of money as you may need much more than what is offered through the provincial government and, therefore, what's free.”

Approaching these decisions should be done in a non-threatening way. Clients in their 50s and 60s will be thinking of retirement and the kind of lifestyle they want and Schulz said it’s vital an advisor breaks this stage of life into three parts – early old age, middle old age and late old age, which is 90-plus and likely to be accompanied by multiple physical health concerns.

An advisor should naturally be on the lookout for decreasing cognitive abilities in an older client; the biggest risk factor for developing dementia is simply getting older. Schulz said that warning signs are when memory loss gets in the way of a person’s ability to function on a day-to-day basis.

“If I run down to the basement and I forget what I ran down to the basement for it, that's not a big deal, I just need to pause and think and maybe retrace my steps or focus. But when I can't remember how to make a meatloaf recipe that I've made for 40 years, or I don't know how to start the lawn mower that I've used for 40 years, those are the kinds of things that should cause a bit of a pause.”

Another red flag is if a typically pleasant, polite client starts to be more irritable, or maybe starts using swear words they would never usually use.  Schulz said she hears from people all the time that one of the hardest things about living with this disease is not the disease itself, but the way they're treated.

For financial advisors, the onus is on them, therefore, to know everything they need to know about dementia rather than relying on stereotypes or misinformation. For example, if a person has been diagnosed, they are not rendered immediately incapable. Advisors should make sure they are still talking to the person who has dementia to establish what they're comfortable deciding and where they want their substitute decision-makers involved and where they don't.

“Make sure you are not sidelining them,” Schulz said, “but also really talk openly with them about how they want to manage things going forward. It could even be as simple as when the appointment is over, helping them to the elevator or helping them get a cab.”

The Alzheimer Society of Canada has offices across the country and can help financial advisors by pointing them to helpful resources or provide them with training sessions on dementia. It may help with something as simple as having the Canadian Charter of Rights for People with Dementia in a firm’s office.

The Charter was launched in September, 2018, and was created by the society's advisory group, made up of people with dementia. A landmark document, and the first of its kind in Canada, it sets out seven explicit rights to empower people with dementia to understand and advocate for their rights. It's also designed to help others - includng financial planners and advisors - to pause and reflect on how they interact with those with dementia.

Schulz said: “If a person has dementia or a person has a relative with dementia, and they're sitting in the waiting room, they see you understand that dementia is a reality and that people with dementia have rights.

“That sends a very powerful message to anyone who you may not even know they're dealing with it, but they will see that as a subtle way of your firm saying, ‘we respect people with dementia as full human beings’.”