With life expectancy in Canada increasing, seniors are living longer, and at the same time many couples are having children later. This combination of factors is making life challenging – and costly – for those caught in the Sandwich Generation.
Are you finding yourself caught between the demands of caring for your children and caring for your parents? If so, you are part of a not-so exclusive club – the Sandwich Generation – and membership is growing at a substantial rate.
We are a caring nation
At some point in their lives, almost half of all Canadians (46% or 13 million) aged 15 and older have provided some level of care to a family member or friend. The majority of those providing care are in the 45–64 age group, and from 2007–2012, the number of caregivers aged over 45 grew to 4.5 million, representing a whopping 20% increase over this short period. Furthermore, over 75% of these caregivers work at a paid job or business. In 2012, an estimated 8.1 million had provided care in that year alone and 28% (2.2 million – the Sandwich Generation) also had children under the age of 18.
Even though almost all caregivers report that they are happy to provide care, it still has an impact on their physical, emotional, and financial well-being.
Financial costs of care
The financial costs related to caring for a loved one can be significant. These are some of the financial pressures that caregivers feel:
- Out-of-pocket expenses. Supplies, medical equipment, prescription drugs, specialized devices, transportation and travel can add up. While the majority of caregivers spend up to $6,000 per year in out-of-pocket expenses, 17% spend between $6,000 and $24,000 each year.
- Reduced income, benefits, and pension contributions. Most caregivers have the greatest demand placed on them during what would normally be their peak earning years. Time lost due to absenteeism or reduced hours not only affects take-home pay during this critical earning stage, but also leads to fewer opportunities for career advancements, reduces access to employee and government benefits, lowers savings potential and pension contributions, and ultimately may lead to forced early retirement.
- Increased costs for utilities, supplies, and renovations. If parents are moving in with their children, there may be a need to implement home modifications costing on average about $10,000.
- In-home support. Home care assistance, respite services, and household help are costs not typically covered by our health care system. General home care can typically cost from $15 to $35 per hour, while personal nursing care can cost from $35 to $75 per hour. Some government subsidized services may be available for low income applicants.
- Out-of-home care. While less than 10% of older women and 5% of older men need long-term care facilities, the costs can be high. Government subsidized nursing homes can range from approximately $1,000 to $3,000 per month, while private facilities can cost from $1,500 to $9,500 per month. Most provinces offer subsidized care for low-income residents based on a means test.
Caregiver stress relief
Many caregivers cherish the time and opportunity spent looking after their loved ones – but it is not without some corresponding emotional and physical stresses. Facing the mortality of a loved one; changes in family and household arrangements; reduced time for children, spouses, and recreational activities; the added workload along with increased financial pressures; all these issues can take their toll.
Your loved ones depend on you, so you need to be around for the long haul. This means adopting strategies to manage the demands of care giving. Here are some helpful tips:
- Share the load. Reach out to family and friends and let them know specifically how they can contribute and help.
- Keep the lines of communication open. Bring family members into the care giving conversations early and often to ensure everyone has their say, and is in the loop.
- Take care of yourself. Make sure you have a healthy diet, get enough sleep, and exercise regularly.
- Control what you can. You might not be able to change the health challenges your loved ones are enduring, so focus on what you can control – your reactions and your stress management strategies.
Financial and estate planning tools for coping with care giving
Using some or all of these tools, together with a personalized financial plan, will provide financial benefit for both the caregiver and the recipient of care:
- Advance care directives. Known by different names in different provinces, these directives state your medical, end-of-life, and home care choices in case you do not have the mental and/or physical capacity to communicate your wishes directly when needed.
- Power of attorney (financial needs). This says who has the ability to make financial transactions and decisions on your behalf. You can specify broad or limited powers for specified periods of time.
- Will. Allows you to identify an executor to administer the distribution of your estate and a guardian for your dependent children, and the details of the beneficiaries of your assets. A Will can also contain instructions to set up a trust to fund care giving.
- Long-term care. This insurance provides funds for residential care and/or home care needs.
- Disability. In the event of disability, the benefits from this insurance can contribute to the cost of care giving services. Caregivers can use this insurance to ensure care continues should they become disabled.
- Life insurance. Provides financial support for the recipient of care should their caregiver die.
- Investments. Establish a nest egg for both care and retirement.
- Emergency fund. Make provisions for unexpected expenses.
- Debt and home equity management. Eliminate debt sooner or access the equity in your home.
At BMO Financial Group, we believe that providing care for loved ones is an admirable but demanding responsibility. Speak to a BMO financial professional to develop a personalized financial plan that incorporates your family’s care giving needs and responsibilities.
- Sinha, M. (2013). Portrait of caregivers, 2012. Statistics Canada Catalogue no. 89-652-X—No.0001 Social and Aboriginal Statistics Division, September 2013.
- Fast, J., Keating, N., Lero, D., Eales, J., Duncan, K. (December 2013). The economic costs of care to family/friend caregivers: A synthesis of findings. Fast and Keating – Edmonton AB: University of Alberta; Lero – Guelph ON: University of Guelph; Duncan – Winnipeg MB: University of Manitoba.
BMO Financial Group provides this publication to clients for informational purposes only. The information herein reflects information available at the date hereof. It is based on sources that we believe to be reliable, but is not guaranteed by us, may be incomplete, or may change without notice. It is intended as advice of a general nature and is not to be construed as specific advice to any particular person nor with respect to any specific risk or insurance product. Comments included in this publication are not intended to be legal advice or a definitive analysis of tax applicability or trusts and estates law. Such comments are general in nature for illustrative purposes only. Professional advice regarding an individual’s particular position should be obtained. You should consult an independent insurance broker or advisor of your own choice for advice on your insurance needs, and seek independent legal and/or tax advice on your personal circumstances.
BMO Nesbitt Burns Inc. and BMO InvestorLine. are wholly owned subsidiaries of Bank of Montreal and Members of the Canadian Investor Protection Fund and IIROC.
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Northern Trust: Outsourcing Accelerates Through Pandemic as Investment Managers Seek to Improve Margins, Enhance Business Resilience, and Future-Proof Operations
White Paper Sees Increase in Managers Outsourcing Middle and Front Office Functions to Achieve Optimal Business Structures
According to a white paper published today by Northern Trust (Nasdaq: NTRS), investment managers of all sizes and strategies have been prompted to undertake a comprehensive review of their operating models as a result of the Covid-19 pandemic which has accelerated existing trends that are compounding cost pressures. This has led increasing numbers of managers to outsource in-house dealing and other functions, such as foreign exchange and transition management, hitherto seen as core.
While cost savings remain a core driver, and indeed are one outcome of outsourcing, costs are no longer the only focus. Far from being solely a defensive reaction to increased pressure on margins, the white paper (‘From Niche to Norm’) describes outsourcing as part of the target operating model, or moving toward the ‘Optimal State’ for many investment managers, and explains how the focus “has expanded to the variety of other potential benefits offered – enhanced capabilities, improved governance and operational resilience.”
Gary Paulin, global head of Integrated Trading Solutions at Northern Trust Capital Markets said: “The pandemic has challenged a range of operational assumptions. Working from home has, for example, questioned the need for a portfolio manager to be in close proximity with the dealing desk. Previously considered essential, the pandemic has effectively forced firms to ‘outsource‘ their trading desks to remote working setups and the effectiveness of this process has disproved the requirement for proximity, in turn, easing the path to third-party outsourcing. Many investment managers are actively considering outsourcing to a hyper-scale, expert provider as a potential, cost efficient solution – one that maintains service quality and, hopefully, improves it whilst adding resiliency.”
Northern Trust’s white paper compares outsourced trading to software-as-a-service stating: “instead of carrying the cost and complexity of running an in-house solution, firms move to an outsourced one, free up capital to invest in strategic growth and move costs from a fixed to a variable basis in line with the direction of travel for revenues.”
Guy Gibson, global head of Institutional Brokerage at Northern Trust Capital Markets said: “The opportunity to deploy capital to build new fund structures, develop new offerings, focus on distribution and enhance in-house research has been taken up by several of our clients to the benefit of their investment approach, and to the benefit of their investors. Additionally, in the last two months alone, many firms have recognized that outsourcing to a well-capitalized, global platform has enabled them to take advantage of cost-contained growth opportunities in new markets.”
A further development, which has echoes of the journey the technology industry has already undertaken, is the move towards ‘whole office’ solutions, which represent the next potential wave in outsourcing.
According to Paulin; “recently we have observed a growing number of managers wanting to outsource to a single, hyper-scale professional service provider who can do everything, everywhere. This aligns with Northern Trust’s strategy to deliver platform solutions for the whole office, serving our clients’ needs across the entire investment lifecycle.”
Integrated Trading Solutions is Northern Trust’s outsourced trading capability that combines worldwide locations and trading expertise in equities and fixed income and derivatives with access to global markets, high-quality liquidity and an integrated middle and back office service as well as other services, such as FX. It helps asset owners and asset managers to meaningfully lower costs, reduce risk, manage regulatory compliance and enhance transparency and operational efficiency.
How are investors traversing the UK’s transition out of lockdown?
By Giles Coghlan, Chief Currency Analyst, HYCM
Just when we thought we had overcome the initial health challenges posed by COVID-19, the UK Government has once again introduced lockdown measures in certain regions to curb a rise in new cases. This is happening at a time when the government is trying to bring about the country’s post-pandemic recovery and prevent a prolonged economic downturn.
This is the reality of the “new normal” – a constant battle to both contain the spread of the virus but also avoid extended economic stagnation.
Of course, no matter how many policies are introduced to spur on investment, traders and investors are likely to act with caution for the foreseeable future. There are simply too many unknowns to content with at the moment.
To try and measure investor sentiment towards different asset classes at present, HYCM recently commissioned research to uncover which assets investors are planning to invest in over the coming 12 months. After surveying over 900 UK-based investors, our figures show just how COVID-19 has affected different investor portfolios. I have analysed the key findings below.
At present, it seems that by far the most common asset class for investors is cash savings, with 78% of investors identifying as having some form of savings in a bank account. Other popular assets were stocks and shares (48%) and property (38%). While not surprising, when viewed in the context of investor’s future plans for investment, it becomes evident that security, above all else, is what investors are currently seeking.
A third of those surveyed (32%) said that they intended to put more of their wealth into their savings account, the most common strategy by far among those surveyed. This was followed by stocks and shares (21%), property (17%), and fixed interest securities (17%).
When asked about what impact COVID-19 has had on their portfolios throughout 2020, 43% stated that their portfolio had decreased in value as a consequence of the pandemic. This has evidently had an effect on investors’ mindsets, with 73% stating that they were not planning on making any major investment decisions for the rest of the year.
Looking at the road ahead
So, it seems that many investors are adopting a wait-and-see approach; hoping that the promise of a V-shaped recovery comes to fruition. The issue, however, is that this exact type of hesitancy when it comes to investing may well slow the pace of economic recovery. Financial markets need stimulus in order to help facilitate a post-pandemic economic resurgence, but if said financial stimulation only arrives once the recovery has already begun, the economy risks extended stagnation.
It seems, then, that there are two possible set outcomes on the path ahead. The first is a steady decline in COVID-19 cases, then an economic downturn as the markets correct themselves, followed by a return to relative economic stability. The second potential outcome is a second spike of COVID-19 cases which incurs a second nationwide lockdown – delaying an economic revival for the foreseeable future. At present, the former of these two scenarios is seemingly playing out with economic growth and GDP steadily increasing; but recent COVID-19 case upticks show that it’s still too soon to be certain of either scenario.
A cautious approach, therefore, will evidently remain the most common investment strategy looking ahead. But investors must remember that, even in the most uncertain times, there are always opportunities for returns on investment. Merely transforming a varied portfolio into cash savings risks a long-term decline in value.
High Risk Investment Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information please refer to HYCM’s Risk Disclosure.
Hatton Gardens 5 top tips for investing in Diamonds
By Ben Stinson, Head of eCommerce at Diamonds Factory
Investing in diamonds can be extremely rewarding, but only if you know what to look for. For investors who lack experience, finding your diamond in the rough can be quite daunting.
For even the most beginner of diamond investors, the essentials are fairly obvious. For instance, you need to ask yourself will the diamond hold its value over time? What’s the overall condition of the stone and the jewellery? Is there history behind the item in question?
Although common sense plays a big part in investing, people often need insider tips and tricks to go from beginner to expert. Tony French, the in-house Diamond Consultant, at Diamonds Factory shares his professional knowledge on the 5 most important things to look for when investing in diamonds.
1: Using cut, weight and colour to determine value
Firstly, consider the shape, colour, and weight of your diamond, as this can play a pivotal role in guaranteeing growth in the value of your item. Granted, investing trends change with time, but a round cut of your diamond will almost always be the most sought after. The cut of your diamond is incredibly important, as it can influence the sparkle and therefore, the overall value. It’s a similar story for the intensity of some colours, such as Pink, Red, Blue, Green etc. Concerning weight, the heavier (bigger) stones will generally increase in value by a bigger percentage. Collectively these factors also contribute to the supply and demand aspect, which will determine their high price, and will ensure your item is re-sellable.
Looking for significant value? Well, aim to own jewellery or diamonds that come from an important public figure. If you’re lucky enough to own a piece that has significant history, or was owned by a celebrity or person of interest, it’s an absolute must to have concrete evidence of this. Immediately, this proof will increase an item’s overall value, and there’s a good chance the stardom of your item might drum up interest amongst diehard fans, increasing the value even further…
Equally, it’s possible to proactively bring provenance to unique diamonds of yours. For instance, you can offer to loan bespoke, or unusual pieces for film, theatre, or TV performances – then it can be advertised as worn by xyz.
3: Find the source
Establishing your diamond’s source is one of the most important things you can do when investing in diamonds. If you’re starting out, try to purchase diamonds that have NOT been owned by too many people, as the overall value of the diamond will reflect multiple ownership. Alternatively, I’d always recommend buying from suppliers like ourselves or other suppliers and retailers, who buy directly from the people who have had them certified.
Primarily, this will allow you to have a greater degree of transparency, which is crucial when buying such a valuable item. Next, you should immediately see an increase in value of your diamonds, as identifying a source will allow traceability and therefore, market context.
Linked closely with my previous point, is the requirement to ensure that your diamonds are certified by a credible lab, and you have the evidence to prove so (a written document with specific grading details about your diamonds) – this will remove any doubts of impropriety.
It’s essential to remember that not all labs are the same, and many labs are better than others. Both the AGS (American Gem Society) and GIA (Gemological Institute of America) have great reputations and are world renowned. I’d recommend doing your own research into the labs, and when you’ve found the pieces that you’d like to invest in, then make an informed decision based upon your findings. Ultimately, proving certification will make your stones easier to insure, and deep down, you can have peace of mind knowing you have got what you have paid for.
Don’t forget to keep this paperwork in a safe location as well – you’d be surprised how many people we’ve met who have lost, or forget where they’ve placed it.
5: Patience is a virtue…
If the market is strong, it might be tempting to look for an immediate sale once you’ve purchased a high value item. However, I suggest holding onto your diamonds for some time before even thinking about selling. More often than not, an item is more likely to increase in value over a few years than a few days – try and wait a little longer!
Equally, I would encourage having your diamonds, or jewellery professionally valued regularly. If you don’t have the knowledge to make a rough judgement on how much your pieces are worth, a consultant or expert can provide both a valuation, and contextualise that amount in the wider market. From there, you should be empowered with the knowledge to decide whether to keep or sell.
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