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Many Canadians understand the heart-wrenching human toll of dementia, from memory loss and changes in mood to difficulties in judgment and reasoning. The physical and emotional burdens are well documented. However, fewer are acquainted with the disease’s financial toll.
It doesn’t affect just those living with dementia, but also their adult children, extended families, and caregivers.
Financial advisors have a tremendous opportunity to help their clients given that dementia will affect a growing number of them directly in the coming years.
As the population ages, the diagnoses for dementia and Alzheimer’s disease – the most common form of dementia – will rise. In turn, many more Canadian families will face financial questions they may not be equipped to answer.
Since the 2001 Canadian census, the number of seniors over the age of 85 has more than doubled, and projections say it will triple by 2046. More than 500,000 Canadians live with dementia, according to the Alzheimer Society of Canada. By 2032, this number will likely climb close to a million as incidence rates sit around 14 new cases for every 1,000 people over the age of 65.
That has the potential to result in a real financial crisis in Canadian homes. Within the next decade, the total out-of-pocket costs for families and caregivers of people with Alzheimer’s and other forms of dementia are projected to be in the billions of dollars annually.
In response, there will be a critical need for more disability planning services and a redefinition of how clients view advisors, who will have a greater responsibility to play a more holistic role.
However, stigma around the loss of cognitive functions, which can take many forms, is more often than not the first hurdle advisors will face in fulfilling this task.
Even though great strides have been made in opening up the public conversation around mental health, there may still be shame for those affected by dementia in seeking guidance with finances.
While many people can live full and productive lives for years following a dementia diagnosis, there may come a time when they’re no longer able to make sound financial decisions. Without proper guidance and support, these people are at a heightened risk of suffering serious financial problems.
Advisors must be aware of the potential consequences clients could face in order to plan adequately for those challenging life stages to protect them and their families from personal and financial damage.
For example, the number of Canadians without a will or designated power of attorney is likely to be vastly underreported. Far too many people lack the financial literacy needed to set these plans in motion, or worse, feel they’re too young to need one.
No matter the reason, advisors have a part to play in nudging clients toward preparing the appropriate legal documents before it’s too late. That lack of preparation can lead to unintended costs for clients and their families.
If a client doesn’t prepare a power of attorney in advance, families may face lengthy and costly court proceedings to be granted access to a loved one’s finances to pay for a great number of related estate and health expenses, including nursing care costs.
Worst of all, it can also lead to financial abuse, which affects many older adults with dementia, according to the Alzheimer Society of Canada. An advisor can help clients develop the appropriate safeguards to protect against abuse.
To accomplish that, advisors will have the duty to do what they can to protect vulnerable clients. More Canadians than ever before will need this guidance, but first, they need to know advisors are there for them.
Damon Murchison is president and chief executive officer at Winnipeg-based IG Wealth Management. Kevin Noel is interim chief executive officer of the Alzheimer Society of Canada.
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