“You may delay, but time will not” —Benjamin Franklin
Dementia is a big and growing problem (Part 1)
One of the most frightening changes in the health of society today is the increase in the incidence of Dementia.
What we are seeing is a shift in the types of illnesses that are killing people in old age. While some chronic illnesses are beaten by modern medicine, others rise in prominence. To put it bluntly, what would have killed you in your 60s or 70s is now being overcome and instead you die in your 80s and 90s of something else. As indicated above, one of the fastest growing causes of death in old age is dementia and it is important to understand the impact of this on pensions.
The key statistics about dementia
People with Dementia in the UK in 2015 numbered 850,000*
The estimated increase of dementia in the next 10 years is 29%*
And the estimated increase in next 10 years is a staggering 235%*
Overall Cost of Dementia in the UK
The cost of Healthcare which includes both Public and Private Care and, more importantly, Unpaid Care provided by family (and friends) is £26.2 Billion*. This is enough to pay the energy bills of everyone in the UK!
*Source – The Alzheimer’s Society
The statistics reveal two important things
- More and more people are going to suffer from dementia in old age as the number of people in retirement grows, and
- A ‘dementia tax’ exists, as the financial burden is 66% (two thirds) on privately funded care and unpaid care (such as your spouse or children looking after you).
The ‘dementia tax’ takes two shapes
- For the person who is suffering from dementia – their own financial assets to pay privately for care
- For the people who are caring for someone with dementia – there is an impact on their financial assets as well and, the loss of their ability to earn (as they are caring rather than working).
Both of these have a significant impact on pensions.
People usually meet the cost of their care & support
People usually meet the costs of their care and support from a combination of any of 4 primary sources:
- Income, including pension income.
- Savings or other assets they might have access to. This might include any contributions from a third party.
- A financial product designed to pay for long-term care.
- A deferred payment agreement which enables them to pay for their care at a later date out of assets (usually their home).
Frightening isn’t it? And I’m sure you will already have come across this type of problem personally or know somebody in this situation. Part 2 will be addressing how your financial adviser can help
In my last blog I looked at the reasons why many people were becoming concerned about their Social and Ethical responsibilities. Let’s move on…
For many years, the perception has been that there is a price to pay for taking social, environmental or ethical factors into account and that has dissuaded many from investing in this way. It has also limited the number of advisers and discretionary fund managers (DFMs) promoting the area.
But this change in perception, added to a growing awareness that there is a need for a more socially and environmentally sustainable economic system (plastics being a case in point) has helped drive growth.
There is of course views that are a little more sceptical. For example, Investment Association figures show ethical funds stand at £16.7bn in funds under management at the end of July, which represents a tiny 1.3 per cent share of the overall investment universe”.
While ethical consumerism has been on the rise, the trend has not been mirrored in the investment world, despite the best endeavours of advocates to raise awareness of ethically and environmentally screened funds.
Does that mean investors don’t care about issues like the damage being done to our oceans by plastic waste or climate change?, it is asked.
It would appear not as the outer investment markets are prepared to use shareholder influence to engage with companies on these matters.
There is also an assumption that these types of Ethical funds appeal more to millennials than other demographic groups. Millennials, those born between the early 1980s and early 1990s, are often said to be the driving force behind the increasing number of ethical and sustainable mandates launched by fund groups.
But others believe this generation cannot take all the credit.
I, personally, have noticed that there has been a significant shift across a much wider group of investors, both by age and type; from charities, private clients, pension funds and financial advisers and while there are suggestions that millennials are more interested in SRI investing, we are seeing interest in the area from a range of demographic groups.
We, specifically, are talking to all our clients about their choices in this area when making investment decisions, and this, we believe, is driving demand.
If you would like to have a talk with us about Ethical and Socially Responsible Investing, give us a call or drop us an email and we can have a chat over a coffee. (My treat!).
“Life is short. Do stuff that matters.” —Siqi Chen
When Sir David Attenborough’s series Blue Planet II was aired in October 2017, it was something of a call to arms to the world’s population.
But Sir David did not need to urge people to help clean up beaches, stop using plastic bags and dispose of their waste, for the images and intrepid filming did that for him.
Watching sea life having to navigate oceans filled with floating plastic bottles and debris, and sometimes being killed by them, plucked at most people’s consciences.
There was an urgency to the series as it showed how quickly ecosystems, such as coral reefs, are being destroyed by a very slight but crucial change in sea temperatures.
For many advisers’ clients, it may have made them think more carefully about where and how their money is invested.
The universe of sustainable investment funds in Europe continued to grow in the first half of 2018, making it easier than ever to invest for sustainability and impact.
“Consumers are moving to more sustainable products and services in every industry – and investments are no exception.
“A growing number of retail investors are looking to make a social and environmental impact,” she says.
What has changed recently? The BBC’s Blue Planet II series has been in many people’s views a watershed moment and it brought the direct effects of our lifestyle choices into sharp focus.
Counterintuitively perhaps, Donald Trump may also be a factor. His views on the environment and climate change, in particular, are so at odds with most peoples’ opinions that he has forced many people off the fence, and to confront the reality that if we do nothing, things will get worse.
Many people have started to think more about how they spend their money and the products they buy – how are they sourced and or produced? Is it bad for the environment? Is there a social cost?
This has, in turn, led them to question where their money is invested and look to align their investment choices with their lifestyle choices.
The investment industry has also been working hard to bust some of the myths about sustainable and ESG investing which many believe has prevented these types of funds from entering the mainstream in the past. One of these is the belief that investors would have to sacrifice returns if they wanted to invest with an ethical conscience.
In fact some believe that there’s increasing evidence that investing ethically does not have a negative impact on performance, indeed, it might even contribute positively to it.
Look out for Part 2 in the next few days…