Dementia planning - the latest trend among financial advisers

The challenge has 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.

Lara Warburton, managing director of Illovo-based Imara Asset Management South Africa, says prudent older clients often take the initiative and raise the issue of what to do in case Alzheimer’s or dementia sets in.

At Imara Asset Management SA the advisory process takes into account the need for a system of ‘red flags’ that are raised when an older client diverts radically from agreed financial strategy or long-established practice. When this happens, the financial planners are empowered to get in touch with children, grandchildren or trusted friends.

Says Warburton: "A long-standing relationship with a trusted, highly experienced financial adviser 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.”

In one recent incident a long-retired client suddenly needed much more ready cash month by month. Enquiries revealed the gentleman had started buying the same high-ticket item over and over again.

Imara Asset Management SA says the implications of increasing longevity deserve careful consideration in many fields, including financial planning.

"We increasingly advise clients to make provision that will last into their 90s,” explains Warburton. "We take a holistic approach. We not only cover investment management, but estate planning. This often leads to a discussion around ‘Living Wills’ and instructions to family members should a client become totally incapacitated.

"Once scenario-planning like this is underway, many clients raise the issue of dementia or Alzheimer’s. There is growing recognition these diseases will afflict more and more people as the population starts to age.”

She says many clients take a practical, matter-of-fact approach.

Warburton explains: "One client in his mid-60s recently told me he’d spent 35 years building a nest-egg and if he started ‘losing it’ he didn’t want to lose his money as well.”

Another challenge has been spotlighted when gathering family contact details to support the red-flag system.

"An increasing number of older South Africans have waved goodbye to their children,” says Warburton. "They remain in South Africa, but the rest of the family is spread around the rest of the world.

"One older client gave me nothing but international contact details. His kids and grandkids are in the USA and Europe. Only he and his wife are left here. The kids now know how to contact us and we know how to contact them. This illustrates the strength of the relationship.

"Today, prudent South Africans have a trusted family doctor, a trusted family lawyer … and a trusted financial adviser.”