Think Forward,
Planning Right to Left.

Executive Summary

Dealing with dementia with financial services and investment clients will become increasingly complicated over time. The number of people who are aging, the ever-extending length of their lives, and the activity that they display well into retirement, coupled with the complexity of capital markets and products can produce a difficult situation for many.

The boundaries of the Boomer generation has them aged from 55 to 75 in 2024. Advances in all types of medical diagnostic and treatment regimens has increased the life expectancy well into the 80s for both men and women in Canada and the United States.

The legislation and regulation regarding clients with dementia will continue to evolve, but it squarely falls under the Know Your Client area. As you suggest or receive investment recommendations and choices to or from your clients, you must feel confident that they are capable of making decisions on their behalf.

And as much as Advisors may feel that Compliance can make their lives miserable at times, this is one situation where involving Compliance will be the smartest decision to make. It is paramount that you maintain your clients’ interests above all else and if you embark on this journey too quickly, without guidance, and, frankly, as the friend and trusted advisor who is now discussing potentially personal and emotional issues, the relationship could be irreparably damaged.

Involve a third-party like Compliance, branch or regional management to assist with each case.

If one of your clients displays the following characteristics, it may be time to act.

1. Rapidly forgetting items and details, and the inability to retain new information
2. Difficulty performing familiar tasks
3. Forgetting words or using words out of context
4. Disorientation in time and space by not knowing the day or a familiar place
5. Impaired judgment with the inability to analyze and act on a situation
6. Problems with abstract thinking like telling time or performing mathematics
7. Misplacing items or putting them in unlikely places
8. Severe mood swings from easy-going to anger
9. Changes in personality
10. Loss of initiative and interest in friends, family and favourite activities

If you see several of these activities and conditions in a client, especially when they haven’t been previously present, it is time to act.

Each situation is different since each of us are individuals. But several steps are common to every situation:

• Review the Power of Attorney documentation on file
• If family members are involved, encourage your client to include them in your next meeting or conversation
• Discuss your concerns with your branch or regional management to receive the latest direction from your firm’s legal and compliance departments

The sources of dementia are many; they range from strokes, sleep disorders, nutritional deficiencies, thyroid conditions, Parkinson’s disease, Huntington disease, mental illness and the most discussed cause, Alzheimer’s Disease.

The source of the dementia will determine the appropriate course of treatment, naturally. In nearly every case, as a percentage of the total, the reversal of symptoms is almost always impossible to achieve.

Canada, along with the rest of the G7 countries, has some of the best dementia diagnostic and treatment in the world. As developed nations the life expectancy is consistent, and the incidence of dementia is similar across the seven countries. In 2023 the number of cases is estimated at nearly 14 million, or 30% of all dementia cases worldwide.

Each province and territory has a well-developed system of provincial, regional, and local dementia and Alzheimer’s societies. Each provide educational and support resources for individuals and families.

If your practice is skewing toward older clients, and this is an area of interest to you, volunteer opportunities are plentiful on the fundraising and care dimensions. Special areas have been established in many care facilities where well-mannered and tempered dogs are brought in to provide later stage dementia patients with comfort, for example.

Key Factors to Know

Dementia, whether it is Alzheimer’s or another source, will touch almost every family. Globally almost 50 million people have been diagnosed, with a new case identified every 3 seconds according to the Alzheimer’s Society in the United Kingdom.

The cost of dementia globally is estimated at $818 billion USD for 2015. A significant amount of healthcare resources are being poured into this area since it has a debilitating effect on those directly and indirectly afflicted.

Memory loss and diminished mental abilities, like reduced joint flexibility and endurance, are a normal part of aging. According to the Alzheimer’s Society of Ontario the symptoms typically follow a pattern of increased frequency of forgetfulness, and the forgetfulness of increasingly important and personal details of one’s life.

The Bottom Line

Stay attuned to your client’s personal situation and stay in-contact closely enough to understand if any physical or mental abilities are being impaired.

The best pre-emptive steps are to include multiple generations in your client base and include multiple generations in your discussions for family financial planning. Obtain consent to discuss your client’s situation with their adult children.

And don’t assume that the older generation, who may be losing some mental acuity, and may be experiencing dementia, does not realize this and want assistance.

Executive Summary

The amount deposited into a Tax Free Savings Account (TFSA) is subject to a yearly contribution limit.   For 2024, the annual limit has been set at $7,000.   The lifetime maximum contribution has grown to $95,000.

If an over-contribution is made Canada Revenue Agency will levy penalties.

What You Need to Know

CRA will inform you when an over contribution on the account has been made and request an immediate withdrawal.  Once you have made the correcting withdrawal, you must submit Form RC243 (https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/rc243/rc243-19e.pdf) and its Schedule A (https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/rc243-sch-a/rc243-sch-a-17e.pdf)  to calculate the penalty.

As a rule, CRA charges 1% per month on the excess contribution. The 1% penalty will be charged against the highest amount of excess during a month until the excess amount is withdrawn.  The CRA does not pro-rate this penalty.  If an over-contribution exists at any time during a calendar month, the CRA treats it as an entire month.  If you correct your mistake on the first or second day of the month, you will be penalized the same 1% as you would if you corrected your error on the 31^st.

To make the necessary withdrawal of funds, you will need to contact your financial institution and request the withdrawal be made.

Two common scenarios lead to most over-contribution errors:

• TFSA Management
  • If you have multiple TFSA’s, especially when spread across several financial institutions, it can be difficult to correctly track all of your contributions. This becomes more difficult as time passes and the balances in each TFSA reflect its current market value, not the sum of its contributions.
• Withdrawal Management
  • TFSA withdrawals are tax-free and, unlike RRSPs, your contribution room never goes away. However, the contribution room is not returned to you until the following calendar year begins.  If you have contributed your maximum lifetime amount to your TFSA you must wait until the following January before contributing to your TFSA or incur the wrath and penalties of the CRA.

The Bottom Line

TFSAs are relatively simple but require some fundamental monitoring.  Proper planning with this tax-saving advice can also avoid penalties.

Executive Summary

A financial plan is like a roadmap to achieving the financial future you envision. It starts by identifying where you are financially and provides directions for getting to where you want to go. There are many areas that make up your finances: your assets and liabilities, investment portfolio, cash flow, tax situation, retirement income, insurance and estate plan (or lack thereof).

Your lifestyle also plays a role. For a financial plan to be effective, each one of these areas must be addressed in a coordinated way to provide a personalized, comprehensive financial solution.

What You Need To Know

As with any goal or strategy, a financial plan must have objectives. How do you see yourself five, ten or 20+ years in the future? After determining your current financial state in the areas mentioned above, you will need to establish a clear vision to start creating and implementing a plan. This includes what your retirement lifestyle will be, because only then can you determine needs for investments and income. If you have children, it may also include funding for their education or other endeavors.

Once you’ve clarified your current financial situation and understand your vision for the future, calculations can then be made to determine how your assets need to grow to reach those goals. This will determine the investment plan that you’ll need to produce the necessary returns from your assets.

A comprehensive financial plan must also consider the tax ramifications of your finances and identify strategies to minimize your tax liabilities. Additionally, your financial plan should mitigate risk and protect your wealth using tools such as insurance products. The use of insurance can also be beneficial in your estate plan, as there are ways to minimize taxation and maximize the wealth of your estate.

If all this sounds a bit complex or outside of your comfort zone, consider working with a financial advisor. Find someone who understands the implications that each area of your financial plan has on achieving the goals you’ve set. He or she may need to liaise with other professionals, such as your lawyer or accountant, to do a complete and thorough job.

Bottom Line

A proper financial plan is more than managing your investments, creating tax minimization strategies or planning for your retirement. It is all these things plus others, including risk management (insurance) and estate planning.

A comprehensive financial plan requires the coordination of all these areas to maximize the wealth potential from your current financial situation. It begins with setting clear financial goals and working through all the aforementioned areas. This is generally best done by working with a capable financial advisor, as all these areas must be addressed in a coordinated way to create an effective, holistic financial plan.

Book an appointment with us to get started on your financial plan today!  CLICK HERE

By: Shawn Todd, CFP

Many of you will know that throughout my life, I haven’t minded risk at times.  Before I was 35 yrs. old, I was a police officer, I was a diver with the OPP Underwater Search and Recovery Unit, and I was an Explosives Disposal Technician. I’m currently a business owner [a lot of business owners have an appetite for risk]. I downhill ski, I have a motorcycle, and I’ve climbed Kilimanjaro with my spouse Michele.

I imagine many of you have your own interests. You enjoy sailing, or camping, or travelling overseas. Flying to see family, swimming at the cottage, or having a steak on the BBQ. Some may enjoy biking in the city, ice skating on the canal, or smoking a cigar. Risks show up all over, and we all don’t enjoy talking about it.  We like the excitement of a ski weekend getaway in Tremblant, but we don’t enjoy talking prior to the trip about the potential of breaking our leg.

When I first came into the financial planning and advisory business eighteen years ago, that version of myself believed that insurance would be the least interesting part of my work. I spent hundreds of hours researching investment portfolio theory, financial planning, marketing, building a business, but the very last thing that I felt was needed by most up and coming young professionals was some of the insurance products that I was learning about.

I was dead wrong.

Five years into my financial planning career I had a terrible ATV accident while out with friends and clients. I broke my back in five places, split my liver, broke three ribs, tore my adrenal gland and almost died in a field in Calabogie, Ontario.  It was the scariest moment of my life. I had just met the person I have always wanted to be with, and I had children to care for.

Today, eighteen years after beginning as an advisor, I have had had several important and close clients experience terrible and demanding situations. I’ve lost some great clients and friends to a variety of illnesses, accidents, and situations. No one was planning on not being here in 20 years.

One of the things that strikes me as incredibly common about both my experience, and the experiences that I have had with clients, is that its difficult to talk about what might happen if we get sick, or if we die. It’s terrifying.

In my time as a financial planner, I have picked up a great deal of more experience and knowledge since my beginning days as a new advisor. I have seen well planned out life insurance policies provide enough income to a family after the unexpected loss of spouse. I have watched planned gifting to children and grandchildren that has allowed full lives after a loved one’s passing. Business owners have used it to ensure security while their business started, and while success ebbed and flowed. Professionals have used it to protect their occupation and income. Tax planning has allowed it to be used as a formative tool in dealing with business owners, passive income strategies, or dealing with terminal tax.

There are a few distinct things that talking about risk, and protecting ourselves, can provide.

• It can remove a lot of stress from your life. No more worrying about what happens [even if you don’t want to talk about it normally]
• It can help provide income to you or family members if you are sick, injured or die.
• Some may be able to pay off debts.
• During key parts of a financial plan, it can provide a great deal of stability for income and assets needed to achieve goals.
• It can be used as an opportunity to diversify how you invest or use business capital.
• Its usage may help in minimizing taxes – both now, and later
• During business growth periods it can provide a great deal of security to the business, the shareholders, and their families.
• For some it can offer an ability to gift to children, grandchildren, or even charities that are important to you.

While 92% of people believe talking with family and loved ones about the end of their life is important, only 32% do. [ Seattle Times – “Why don’t we talk about death” May 2019]

To conclude…

It may well be time to begin opening the conversation about your own risks. What risks do you have in your life that you are most concerned about? How would they affect your financial plan, or financial integrity? Are there opportunities you should consider for your business, your own portfolio, our own situation? If you didn’t speak about your risk concerns – would the situation have changed for the worse of the better in ten years time?

Speaking about risk, and what may come may be difficult for most. There is never a better time to start this conversation than today.

Just my thoughts for the day.