From the Editor: Longevity, Estate Plans and Low Growth – Oh My!

Q2 | July 2019

Laptop, notebook, Tablet and coffee on work desk

Topic: Wealth Planning

Dianne C. White CPA, CA, CFP, TEP

July 8, 2019

Image used with permission: iStock/PRImageFactory


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From the Editor: Longevity, Estate Plans and Low Growth – Oh My!

Q2 | July 2019

In June, I was busy attending two different conferences, one for financial planners and one for trust and estate practitioners. Many subjects were presented, including economic forecasts, retirement planning issues, estate planning strategies, Canadian and U.S. tax updates and, my favourite, a session called “The Estate Freeze from Hell Redux” – there was a part I and part II! Despite the wide variety of topics, there were a few common themes throughout both conferences: aging and longevity, creating comprehensive estate plans, and the expectation for a low-growth investment environment going forward. I share with you a summary of ideas that developed from these recurring themes. Whether you are years away from retirement or well into it, these are important considerations for everyone.

It is not news that people are expected to live longer than previous generations. Scientific breakthroughs not only mean a longer life, but also longer periods of good health. Both have financial planning implications and thus aging and longevity were hot topics at the conferences. The longer you experience good health in retirement, the more likely that you will also be enjoying activities like travel and maintaining club memberships. While this is great news, they also cost money! The conclusion is that more emphasis should be placed on retirement planning, at least 10 years ahead of time, to ensure you have saved enough to cover these expenses. It might mean you decide to retire later, or work part-time in retirement. The downside of longer lifespans is that disease and disability tend to pile up toward the end of life. This gives rise to a whole host of other financial issues that need to be addressed to avoid clients and their families going into crisis mode. Issues include the complications and planning required around diminished competency, client end-of-life requests like DNR orders, and when to initiate palliative care.

Related to longevity and aging, the estate planning presentations went beyond the financial ramifications. It is still essential to be sure that documents such as wills, powers of attorney and a health directive are completed. However, just as important to being properly prepared, it is now generally agreed that an estate plan needs to include a conversation about personal preferences, such as how someone wants to be buried or organ donation. Once identified, these wishes need to be in writing. But it is even better for clients to discuss this with family members and others who will be part of the decision-making process.

There was also much discussion around what the future investment horizon looks like, given that we are in year 10 of a bull market. The conclusion: the economy is certainly different today compared to before the credit crisis – weak economic growth, the dramatic rise in e-commerce and, more recently, the rise in populist movements and the push towards de-globalization. This likely means a lower-inflation, lower-interest rate and lower-growth environment than we have been used to. It was no surprise to see that the guidelines for financial planning assumptions about future equity returns have been revised downwards by the FP Canada Standards Council. In this issue of Nexus Notes, there is an article about the Council’s investment return guidelines and how Nexus’s revised assumptions line up. Also in this issue, given the unknowable future and the current uncertainty in the markets, we feature an article about time in the market, not timing the market.

Finally, we have news about people movement at Nexus. First, Karrie Cheng joined us in May as a portfolio administrator to help with the day-to-day running of client portfolios. Second, and sadly, we are saying goodbye to a great colleague and friend, Mahmood Hassan, or “Mo” as he is affectionately called around here, at the end of July. Mo, his wife Zunera and daughter Minna are relocating to Pakistan to be closer to family. You can read more about Karrie’s arrival and Mo’s departure in our “Inside Nexus” feature. On that note, we hope you will be able to enjoy some downtime this summer relaxing… while reading Nexus Notes, of course.

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