News

Boomers stressed about financial future
By Ottawa Business Journal Staff
Wed, Jul 12, 2006 10:00 AM EST

Canada's baby boomers are a happy lot, but are worried about their financial future.

A survey for BMO Financial Group finds only 28 per cent of boomers are very confident that they will be financially secure in old age, compared to 41 per cent of those under 40 years of age and 47 per cent 60 years and older. A third of boomers believe their standard of living is likely to drop in retirement, compared to 16 per cent of younger Canadians.

The study reveals that three in five Canadian boomers with children aged 18 and over are providing some kind of financial support to their kids. Adding to the financial pressure, one-quarter of those boomers whose parents are still alive have one or more elderly parents that need their assistance on a regular basis.

"Given the changing nature of retirement, particularly concerning longevity, it's no surprise that boomers are somewhat unsettled by what the future holds," says Tina Di Vito of BMO Financial Group. "This is uncharted territory."

According to the study, many baby boomers are having challenges balancing the books, with 73 per cent still with debt. Only 28 per cent of boomers say they have savings and investments of $100,000 or more. Almost one-in-five boomers who have not yet retired say they have no savings.

Despite the tenuous financial picture, almost all boomers surveyed say they are satisfied with their lives, and almost half indicated they are very satisfied.

Two-thirds of boomers are at least somewhat willing to sell their home to fund retirement, although only a third are intending to use this strategy. The national telephone survey of more than 1,500 people was conducted by The Strategic Counsel between May 24 and June 5.

Healthy aging factors subject of new study

Only 50 per cent of Canadian men and women in the pre-retirement years of age 55 to 64 report themselves to be in very good to excellent health. This slips to around 45 per cent for those in the 65-74 category and to between 30 and 37 per cent for women and men respectively in the 75 and older group.

These figures, from Statistics Canada’s 2005 General Social Survey, form part of an analysis published by the agency this week that is meant to provide some insight into the factors behind healthy aging.

It is an important question. Almost one-in-four Canadians are expected to be senior citizens in 20 years.

Predictably, healthy older adults are more satisfied with their lives than those who report themselves not to be healthy.

Less healthy seniors spend more time on passive activities such as watching television, while those in the healthy and satisfied group devote more time on active leisure such as reading, socializing and physical activities.

But while active leisure may be correlated to some degree with aging well, Statistics Canada says there is no one thing that is directly linked with this goal.

True, healthy men and women spend more time on physical activities but this does not translate into greater life satisfaction among all senior age groups.
For healthy men under the age of 75, the level of physical activity does not differ by level of satisfaction with life. And it is only healthy women in the 55-64 and over 75 groups who are more satisfied with their lives and more physically active.

As it is, physical exercise is not a big part of the lives of most seniors. They tend to spend less than three quarters of an hour a day, often less, on physical recreation which can be as simple as taking a walk.

Women spend significantly less time on physical activities than men, and, surprisingly, men and women in the 55 to 64 age group tend to spend the smallest proportion of their daily lives on physical activities compared to those in older age categories.

The report, "Aging Well: Time Use Patterns of Older Canadians," is available at http://www.statcan.ca/Daily/English/060726/d060726a.htm. HE

Women Bear Greater Share of Long Term Care Risks and Costs

They have 60% greater chance than men of entering a nursing home

July 18, 2006 – A study by Genworth Financial has found women were 60 percent more likely than men to enter a nursing home at some point in their lives and may experience large financial sacrifices in their roles as America's predominant unpaid care providers.

The study indicates long term care impacts women, both as care providers and recipients, more profoundly than men.

Genworth's study, The Impact of Long Term Care on Women -- An Analysis of Women as Care Providers and Care Recipients, was presented to the Congressional Women's Caucus in a Capitol Hill briefing today.

National polling data compiled by Public Opinion Strategies on behalf of Genworth showed that 67 percent of adult American women respondents have provided long term care to someone in need. The complete report is available at Genworth.com.

Three Ways to Simplify Long Term Care Insurance Choice; From LTC Financial Partners, Answers to Mind-Boggling Complexity

PRNewswire -- Why don't more (Americans) buy long term care insurance? Decision paralysis. This is the conclusion of a study commissioned by the AARP Public Policy Institute. People throw up their hands and do nothing when faced with complexity that confounds even the experts: myriad policy choices from dozens of carriers that use different terms and definitions; regulations that vary from state to state; and price quotes that map poorly to benefit amounts, waiting periods, deductibles, duration of benefits, possible rate hikes, and inflation protection.

"It's like you know you ought to buy a fire extinguisher, but the store has hundreds to choose from," says Cameron Truesdell, CEO of LTC Financial Partners, the nation's most experienced long term care insurance brokerage. "So you put off the buying decision and your house burns down." Truesdell applauds the AARP study and offers three strategies for "picking the right fire extinguisher" in time.

1. Rely on a knowledgeable independent agent. "Choosing among hundreds of fire extinguishers gets a lot easier when there's a clerk who knows the types, makers' reputations, and so forth," says Truesdell.
   Beware, though, of LTC agents who represent a single carrier rather than several, and lack long term care insurance experience. "The field is so complex, you need someone who's not only impartial, but who's focused on the specialty for a long time."
2. Get financial advisors into the act. "Americans are starting to realize that long term care insurance is a factor in good estate planning," says Truesdell. "Without the insurance, you put your whole nest egg at risk, not just your lifestyle." Many financial advisors are becoming more knowledgeable about long term care insurance; calling upon them can narrow one's policy choice. Advisors to contact include bankers, estate planners, accountants, elder law attorneys, and others.
3. Join with a group. "Just about anyone can qualify for some form of group coverage, at a discount," says Truesdell, "and a group decision can be a lot simpler than an individual one, because your group does the legwork." While most companies won't pay for premiums, many are starting to facilitate policy choice and discounts. Examples range from Weyerhaeuser Corporation to mom-and-pop enterprises. Associations are getting into the group act too.

What do the Affluent Think About LTC?

Affluent investors in the latest Citigroup Smith Barney Affluent Investor Poll were asked their outlook on, among other things, trends in personal finances, views on health care costs and their experiences with long term care and long term care insurance. And what did the poll find? That the affluent are just like everybody else:

• Nearly three-quarters express concern about being able to pay for the cost of long term care.
• Two thirds mistakenly believe that Medicare will pay for some portion of their LTC.
• Seven in 10 are concerned about outliving their retirement funds.
• Only 25% of affluent investors have purchased a long term care insurance product.

Not surprisingly, many of those affluent investors (33%) who did have a conversation with a financial professional about LTCi, chose not to purchase the policy because they decided LTCi was not a 'good investment'. When confronted with a similar situation, it is important to point out that an investment implies some level of risk. LTCi is not an investment, but rather a risk transfer product that can be put in place to help protect the prospect's other 'good investments' from erosion due to a long term care need. Read more here: http://www.insurancenewsnet.com/article.asp?n=1&lnid=386744139

Views

Wealth management is the phrase du jour. The billions of dollars that are being transferred inter-generationally are creating a renewed interest in HNW clients.

There is tremendous competition on Bay Street and across Canada for these clients However are they being well served? According to Taddingstone Market Research, they are not.

• "Only 33% of millionaires surveyed by Taddingstone use private banking services. And those that do aren't particularly satisfied. The affluent see their private bankers as little more than account administrators, not investment advisors or financial planners"
• "Taddingstone's discussions with Millionaires clearly show there are business opportunities for financial service providers. Millionaires want expertise, education and value offered through experienced advisors who place the well being of the client well ahead of personal or corporate objectives."
• "Our research shows that some institutions are listening to their clients, reacting positively and building share. Others, however, are entrenched in traditional service and product structures and seem content to watch their market share erode. "Financial institutions that focus on the wealthy need to demonstrate the unique value that they create for clients which extends beyond the individual advisor."

Investment Executive wrote:

"To wealth managers and financial advisors, this forecast suggests that their top clients are likely to become more valuable than ever. As the rich get richer, and their rate of wealth accumulation outpaces the population growth, advisors' smartest move may be to do whatever it takes to keep their richest clients happy."

According to Mr. Al West, Chairman and CEO of SEI Investments (NASDAQ:SEIC): "Baby boomers demand a holistic wealth management experience that focuses on their life goals and provides them with an integrated array of financial services that includes substantially more than traditional wealth management offerings."

Karen and her colleagues offer services that will add value to your wealth management strategy to help you achieve your financial goals and keep your clients informed, knowledgeable - and loyal.

Contact Karen for more information

And finally in The New York Times, Globe and Mail etc. the week of July 27, 2006:

If It Could Happen to Her ...

"The charges are startling — that Brooke Astor, the fabled New York socialite and philanthropist, has been suffering from deprivation and elder abuse as she moves into her 105th year. At this point, it's not clear whether the allegations are based on truth, jealousy or other human entanglements that come with such wealth and social status. Yet almost everyone who has learned about this case and who also possesses a birth certificate dated earlier than, say, 1955 can't help but wonder: If it can happen to somebody as rich as Mrs. Astor, how easily could it happen to me?"

"The allegations of neglect involving Brooke Astor, while unproven, are a reminder that the very rich are not that different in one respect: money can go only so far in protecting them from the adversities of old age… Whether it takes the form of neglect, physical or emotional abuse, or financial exploitation, elder mistreatment is an emerging problem as the population ages, experts say… "The greatest perpetrators of elder abuse are family members. The rich and powerful are as helpless and vulnerable as anyone else."

Unfortunately elder abuse is alive and well in Canada. Stats Canada 1999 general social survey on victimization found 7% of older adults surveyed experience some form of financial or emotional abuse by their families.

Advisors should be alert for signs of elder abuse. For more information contact Karen.