DEMENTIA AND YOUR FINANCES

Dementia has devastating consequences for physical health; but it can also ravage your financial wellbeing.

Lara Warburton, managing director of Imara Asset Management South Africa, says the challenges of dementia have prompted some leading financial planners to take special measures to assist ageing clients who are becoming forgetful, wasteful and disoriented.

The intention is to ensure that disorientation in financial management does not creep in.

She says prudent older clients often take the initiative and raise the issue of what to do in case Alzheimer’s or other forms of dementia set in.

Imara Asset Management has introduced a system of “red flags” that are raised when an older client diverts radically from an agreed financial strategy or long-established practice. When this happens, the financial planners are empowered to

get in touch with a client’s children, grandchildren or trusted friends.

Warburton says this proves the worth of a long-standing relationship with a trusted, highly experienced financial adviser, because such a relationship has has many unquantifiable benefits.

“If a client suddenly becomes extravagant or reckless in financial matters, this is a strong indicator something is wrong. Sometimes we simply request a review and a re-briefing on strategy. A simple face-to-face session usually resolves the issue, but in other cases it is necessary to alert family members.”

Warburton says that recently a long-retired client suddenly needed much more ready cash month after month. Enquiries revealed he had started buying the same high-ticket item over and over again.

She says the implications of increasing longevity deserve careful consideration in many fields, including financial planning.

There is growing recognition that dementia-related diseases will afflict more and more people as the population starts to age.

Warburton says many clients are taking a practical, matter-offact approach.

She says a holistic approach is required, which covers things such as investment management, estate planning, discussions around “living wills” and instructions to family members on what to do should you become totally incapacitated.

“Once scenario-planning like this is under way, many clients raise the issue of dementia or Alzheimer’s,” Warburton says. She says a client in his mid-60s recently told her he had spent 35 years building a nest-egg and if he started “losing it” he didn’t want to lose his money as well.

Prudent people should have a trusted family doctor, a trusted family lawyer and a trusted financial adviser, Warburton says.