Advisors must be prepared to spot signs of cognitive decline
It's time to pay attention. More than 700,000 Canadians are currently living with Alzheimer's disease and other forms of dementia, and that number is projected to reach 1 million by 2030.
This year, we ushered in a new era as a 'super-aged' society in which 20 per cent of our population is over the age of 65 – a demographic shift that increases the risk of cognitive decline and the need for proactive financial planning. However, despite our rapidly aging population, less than half of Canadians have general knowledge about estate planning. As an industry, we need to change that.
Financial advisors must play an active role to ensure their clients' assets and legacies are protected in the event of cognitive decline by developing a comprehensive and personalized estate plan.
The wealth management industry must make it a priority to watch for early warning signs of cognitive decline so advisors can help clients prepare. If an advisor suspects a client is suffering, there are several steps to take.
First, initiate discussions early on so clients can participate actively in planning for their own future rather than having someone else make those decisions on their behalf. Advisors should handle these conversations with empathy and frame the discussions around legacy protection and safeguarding financial security.
Second, ask clients if they would like to involve a family member or a trusted individual. Finally, if neurological concerns are significant, recommend the client to seek a cognitive assessment.
Every client should have a comprehensive estate plan. It's critical for legacy preservation and ensuring a person's financial wishes and asset distribution are carried out the way they intended in the event of death or neurological decline. Those without clear directives are leaving the distribution of their wealth in the hands of provincial law or probate courts. It's up to an advisor to prevent this scenario.
Estate planning is more than just creating a will. It can also involve naming beneficiaries and trustees, drawing up a power of attorney, outlining health care directives, developing a succession plan for business owners and building early multi-generational relationships to ensure trusted parties are prepared for the asset transition when the time comes. Estate planning isn't just for the wealthy – it's for everyone.
Once an estate plan is created, advisors should revisit this plan with their clients every three to five years or when a major life change occurs. As the client ages or if cognitive issues become evident, more frequent check-ins should be arranged.
It's important to remember that an estate plan can't exist in a vacuum. Advisors need to build a network of professionals who can offer clients experiencing cognitive issues with services and support.
That could include legal experts and estate lawyers who specialize in elder law and capacity issues; health care professionals who specialize in geriatrics; accountants or tax advisors to help manage the client's tax obligations and ensure their financial affairs are in order; and social workers to help co-ordinate care, find appropriate services and provide support to both the client and their family.
Estate planning must be proactive, not reactive. It's not just about wealth, it's about protection – of a client's dignity, legacy and financial security. As advisors, the time to act is now.
Damon Murchison is president and chief executive officer at Winnipeg-based IG Wealth Management.
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