EDMONTON Q2 2016

PAVILION INVESTMENT HOUSEa division of Pavilion Advisory Group Ltd.

www.pavilionih.com

11523-100 Avenue NW, Suite 402 Edmonton, AlbertaT5K 0J8

OPTIMISTON FAMILY, FINANCES, AND AGING

In 2001, at the age of 90, my grandfather was diagnosed with Alzheimer’s disease. He was moved to a facility that

could offer better care for someone with dementia-related illness. While it was absolutely the right choice, my mother was torn apart by the decision. Asking someone else to care for a family member that needs your help creates a feeling of inadequacy in the most capable and loving heart.

While there are many articles about the challenges that families encounter when dealing with money, it may not be as common to read about the issues that arise when our parents get older. As a grandchild, I was comfortable in my role of witness while my mother dealt with my grandfather’s health issues and long-term care. Even though I was on the sidelines, I learned a lot as an observer

and I am thankful now that she provided the gift of openness at that time, and again more recently with my grandmother. After watching her ride the roller coaster of emotions that comes with ailing parents, bureaucratic health systems and far-flung siblings, I feel privileged to have shared, even peripherally, the sleepless nights and quiet moments of self-doubt that accompany the joyful burden of caring for aging parents and loved ones.

With this quarter’s newsletter, our hope is that you will be inspired to think about what you want for you, your children and parents as your family ages. We hope that you are emboldened to share those desires openly and, through that communication, enable the multiple generations of your family to learn, grow and flourish.

Cary Williams, CFP, Associate Private Wealth Counsellor cwilliams@pavilioncorp.com

PAVILION INVESTMENT HOUSE EDMONTON 2

It has been over 50 years s ince Br i t i sh rock band The Who re leased i t s famous song “My Generat ion”. In 1965, the lyr ic “I hope I die before I get o ld” rang out as an anthem for youthful rebe l l ion.

Now in 2016, Roger Daltrey and Pete Townshend are playing what is likely their last tour—at the ages of 72 and 70, respectively.

Getting old is what we do. Talking about getting old, unfortunately, is something we do not do. Demographic data tells us that being open and honest about what happens as we age are more imperative than ever. This article outlines the need to discuss the process of aging and its impacts on us, our families and our finances.

Mind the (planning) gap

When discussing estate planning, the vast majority of conversations focus on the will. If a family has experienced significant financial success, these deliberations may stretch to tax reduction and estate structure. While most estate planning discussions emphasize wills and inheritances, the cycle of life often dictates that many of us will need assistance from the very people we once raised.

A plethora of questions arises when considering the care of another person: Where will they live? How much will it cost to care for them? Who will help with day-to-day tasks? These basic questions become more complex when we consider the health challenges that come with aging.

Just as with family wealth, we must invest in communicating effectively about aging with our family to minimize the stress experienced by ourselves and our loved ones, and increase the likelihood of achieving family financial goals.

Four topics for family discussions

While estate and incapacity issues can be complex, here are four topics that we feel are worth considering:

1) Mobility. In the car-centric communities of North America, the loss of a driver’s license can be psychologically devastating for seniors. It also increases stress for caregivers as elders become more dependent on others.a. How will you and your family discuss the issue when it

comes time to stop driving? b. When you stop driving, who will help with daily and

weekly activities, such as grocery shopping and visiting friends?

c. Will the loss of a car make it difficult to stay in your home and still have the social lifestyle that you want? If so, where will you move?

2) Housing. While retirement discussions often involve the

idea of “downsizing”, a 2013 RBC study found that the top choice for baby boomers is to stay in their own homes as long as possible.1 While this may be the desire, we are social animals. Our happiness is directly connected to the relationships that we maintain. Research in the U.S. indicates that transitioning away from a single family home into a multi-tenant building around the age of 80 may improve one’s life satisfaction compared to being forced to move later in life.2 With that in mind, it’s important to communicate with family about housing goals:a. How long do you want to stay in your home? b. If you stay, who will take care of the cleaning and

maintenance of your home and yard? c. If you need assistance getting around your home or

community, who will help?

ON FAMILY, FINANCES AND AGING

1 Canadian boomers want to stay in their homes as they age (2013). CBC News. http://www.cbc.ca/news/business/canadian-boomers-want-to-stay-in-their-homes-as-they-age-1.2224171 2 Multifamily Housing Characteristics and Tenant Satisfaction: Russell N. James. Journal of Performance of Constructed Facilities, Volume 21, Issue 6. December 2007.

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d. If a family member will perform these tasks, will you pay them as you would a caregiver?

e. How will the family members communicate so they can help each other and avoid friction between siblings? What will they do if it becomes too difficult, or if they need respite?

f. If the family wants to hire someone to help you at home, how much of your savings are you willing to commit?

g. Who will decide when it is time for you to have more professional care? Would you prefer a public assisted-living facility, or are you prepared to pay for private care?

h. How close do you want to live to your family, such as children and grandchildren or brothers and sisters? Are you prepared to pay more for a facility that is closer to family?

3) Dealing with finances. There are a number of challenges that can arise from the reduction in cognitive ability that can come with aging. For example, a report from the Office of the Legislative Assembly of Ontario found that financial abuse was the most common type of elder abuse, making up about 62.5% of incidences.3 The good news is that seniors report feeling better able to recognize and deal with potential abuse when they speak frequently about finances with a ‘third-party resource’ such as a family member or trusted advisor.4

a. Who will help with your daily and monthly financial activities like paying bills?

b. How will you communicate important financial information with your family or professional caregiver, while still protecting your financial information?

4) Who to inform. While communicating with your children, spouse and caregivers is an important first step, there are other people who you should inform.a. Have you communicated your plans and desires around

personal care to your Powers of Attorney? If POAs are different from your family members and caregivers, they need to know about your wishes.

b. Do your legal, accounting and financial advisors know who to contact if they recognize that you are experiencing some of the challenges that come with aging?

Due to the ongoing and evolving nature of family finances, it is not uncommon for investors to meet throughout the year with their advisors. Because of this regular, but less-than-monthly contact, it is often easier for advisors to recognize a change in the demeanour or capabilities of an aging client. If the advisor does not have a relationship with the client’s children or caregivers, however, it can be challenging to help the client effectively.

While investment and financial planning are often the focus for discussions between wealthy families and advisors, it is vital to expand beyond these areas. Aging should not be a taboo topic that we approach with fear or distress, but should be the culmination of a long and fruitful life. Starting discussions with family around the areas of mobility, housing, finances and trusted advisors prior to needing immediate help will reduce stress for everyone. Communication, as always, provides the key to a flourishing family.

ON FAMILY, FINANCES AND AGING

3 Elder Abuse Prevention Laws (Office of the Legislative Assembly of Ontario: Toronto, 1999) via OHRC Elder abuse & neglect. http://www.ohrc.on.ca/en/time-action-advancing-human-rights-older-ontarians/elder-abuse-neglect 4 Allianz Life Study Finds Third-Party Resources Underutilized in Identifying and Preventing Elder Financial Abuse. (2015). https://www.allianzlife.com/about/news-and-events/news-releases/preventing-elder-financial-abuse

PAVILION INVESTMENT HOUSE EDMONTON 4

Cary Williams, CFPAssociate Private Wealth Counsellor

cwilliams@pavilioncorp.com

T 780 638 2493F 780 451 5547

Marshall McAlister, CFAPrivate Wealth Counsellor, Principal

mmcalister@pavilioncorp.com

T 780 638 2491F 780 451 5547

OPTIMISTOptimist is a quarterly publication from the Edmonton team at PIH distributed to our clients. Unless otherwise noted, all content is written by Pavilion employees.

DISCLAIMERThe information contained herein is for information purposes only and does not constitute investment advice. Any investment advice provided by Pavilion Investment House will only be delivered pursuant to the terms and conditions contained in an Investment Counsel Agreement. The informa-tion provided is based on asset class, security, and investment data and projections that are generated by Pavilion Investment House using 3rd party sources, assumptions, models, and methods that are consistent with invest-ment industry standards and are partially based on specific expectations and assumptions made by Pavilion Investment House. Although Pavilion Investment House takes all steps to ensure that it presents information for which it has reasonable basis and grounds, there can be no warranty, guarantee, or assurance, implicit or otherwise, that the projections con-tained within this presentation will occur exactly as stated. Where historical statistics are used, they are used for illustrative purposes only. Historical performance is not to be construed as being indicative of future perfor-mance. Historical statistics use publicly available index or mutual fund re-turns (where appropriate) and may not include all fees or taxes associated with implementing an equivalent strategy. © 2016 Pavilion Advisory Group Ltd. No part of his publication may be reproduced in any manner without our prior written permission