1 00:00:02,720 --> 00:00:11,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news, This at All. 2 00:00:12,440 --> 00:00:15,600 Speaker 2: Chizuko is a seventy six year old retyree who lives 3 00:00:15,600 --> 00:00:18,919 Speaker 2: in the Japanese rural district of the Kui just north 4 00:00:18,920 --> 00:00:25,080 Speaker 2: of Kyoto. Her daughter Ma is fifty five. Chizuko and 5 00:00:25,120 --> 00:00:27,639 Speaker 2: my are pseudonyms that they've asked us to use for 6 00:00:27,760 --> 00:00:31,640 Speaker 2: privacy because they're talking about their family's finances. They were 7 00:00:31,680 --> 00:00:33,440 Speaker 2: interviewed by Bloomberg in October. 8 00:00:34,000 --> 00:00:37,000 Speaker 1: So, Chizuko, she lives in, you know, one of the 9 00:00:37,040 --> 00:00:40,600 Speaker 1: rural parts of the prefecture, kind of surrounded by by 10 00:00:40,640 --> 00:00:42,600 Speaker 1: a lot of forestry and ricefield. 11 00:00:43,000 --> 00:00:46,120 Speaker 2: That's Alice French, who covers the Japanese stock market out 12 00:00:46,159 --> 00:00:46,680 Speaker 2: of Tokyo. 13 00:00:47,320 --> 00:00:50,080 Speaker 1: She's been an active stock investor since she was kind 14 00:00:50,080 --> 00:00:53,199 Speaker 1: of in her thirties or forties, So her finances are, 15 00:00:53,320 --> 00:00:55,480 Speaker 1: you know, important to her. She she's built up quite 16 00:00:55,480 --> 00:00:57,400 Speaker 1: a nice nest egg or, but she's a pensioner now 17 00:00:57,400 --> 00:01:00,560 Speaker 1: and she relies quite heavily on those savings that she's 18 00:01:00,600 --> 00:01:01,080 Speaker 1: built up. 19 00:01:01,720 --> 00:01:05,720 Speaker 2: Like many Japanese families, the pair rarely talk about money, 20 00:01:06,319 --> 00:01:09,959 Speaker 2: but recently Chizuko's downer heard something that pushed her to 21 00:01:10,040 --> 00:01:13,440 Speaker 2: finally broach the topic of financial planning with her mind. 22 00:01:16,360 --> 00:01:20,840 Speaker 1: My the daughter was telling us that she's kind of 23 00:01:20,840 --> 00:01:25,120 Speaker 1: been hearing stories recently, one of which came from another relative, 24 00:01:25,800 --> 00:01:30,679 Speaker 1: one of her relatives. Basically, their account was found frozen 25 00:01:30,840 --> 00:01:32,640 Speaker 1: after they passed away. 26 00:01:33,240 --> 00:01:36,360 Speaker 2: My said, the children of her elderly relative had no 27 00:01:36,480 --> 00:01:39,839 Speaker 2: idea the account had been frozen. When it came time 28 00:01:39,880 --> 00:01:42,560 Speaker 2: for them to handle the state, they were shocked to 29 00:01:42,600 --> 00:01:45,400 Speaker 2: discover that they couldn't access their parents' money. 30 00:01:46,080 --> 00:01:49,320 Speaker 1: And this kind of really triggered an anxiety for my 31 00:01:49,560 --> 00:01:51,640 Speaker 1: you know, she's thinking, you know, her parents are also 32 00:01:51,760 --> 00:01:55,400 Speaker 1: kind of getting to that age. They're relying on a pension, 33 00:01:55,800 --> 00:01:57,880 Speaker 1: and obviously, you know, one never really wants to have 34 00:01:57,960 --> 00:02:00,480 Speaker 1: to think about your parents kind of becoming able to 35 00:02:00,520 --> 00:02:03,720 Speaker 1: handle things themselves, but it is a reality and something 36 00:02:03,720 --> 00:02:04,880 Speaker 1: that you have to think about. 37 00:02:06,000 --> 00:02:08,959 Speaker 2: It's a reality playing out all over the world as 38 00:02:09,000 --> 00:02:13,400 Speaker 2: population's age and families plan for their futures. In Japan, 39 00:02:13,760 --> 00:02:17,080 Speaker 2: home to the world's oldest population, there's a greater sense 40 00:02:17,080 --> 00:02:20,480 Speaker 2: of urgency to the planning. That's because almost a third 41 00:02:20,520 --> 00:02:23,560 Speaker 2: of the country, around thirty six million people, are over 42 00:02:23,600 --> 00:02:24,920 Speaker 2: the age of sixty five. 43 00:02:25,880 --> 00:02:28,720 Speaker 1: More and more seniors are now reaching that age where 44 00:02:28,760 --> 00:02:31,960 Speaker 1: they might be experiencing dementia or you know, these kind 45 00:02:31,960 --> 00:02:35,320 Speaker 1: of financial risks that come with aging, whether that be 46 00:02:35,480 --> 00:02:38,080 Speaker 1: kind of rash purchases, sudden selling. 47 00:02:39,280 --> 00:02:44,040 Speaker 2: In Japan, these financial risks aren't confined to small pocketbook issues. 48 00:02:44,560 --> 00:02:48,840 Speaker 2: Seniors with symptoms of cognitive decline now control trillions of 49 00:02:48,880 --> 00:02:53,800 Speaker 2: dollars in liquid assets. That's cash and investments in stocks, 50 00:02:54,000 --> 00:02:57,680 Speaker 2: bonds and other securities. Assets that are at risk of 51 00:02:57,680 --> 00:03:01,600 Speaker 2: being mismanaged are not being put to you in the economy. 52 00:03:01,680 --> 00:03:05,480 Speaker 1: It's almost half of Japan's GDP that falls into this category. 53 00:03:05,680 --> 00:03:09,520 Speaker 1: And you know, from health economists to think tanks to lawyers, 54 00:03:09,560 --> 00:03:11,560 Speaker 1: all of the people that we spoke to are basically saying, 55 00:03:11,840 --> 00:03:14,960 Speaker 1: as that pile of assets grows, it's going to slow 56 00:03:15,000 --> 00:03:18,079 Speaker 1: down consumption, it's going to slow down markets, it's going 57 00:03:18,120 --> 00:03:21,160 Speaker 1: to start impacting economic growth. It's kind of got to 58 00:03:21,240 --> 00:03:23,760 Speaker 1: a level now where I think it's becoming difficult to ignore, 59 00:03:24,200 --> 00:03:27,160 Speaker 1: and that's really started to raise alarm bells in Japan 60 00:03:27,280 --> 00:03:29,600 Speaker 1: but also across other economies. 61 00:03:34,720 --> 00:03:38,040 Speaker 2: This is the Big Take Asia from Bloomberg News. I'm Wanha. 62 00:03:38,720 --> 00:03:41,120 Speaker 2: Every week we take you inside some of the world's 63 00:03:41,160 --> 00:03:45,080 Speaker 2: biggest and most powerful economies and the markets, tyccoons, and 64 00:03:45,200 --> 00:03:49,160 Speaker 2: businesses that drive this ever shifting region. Today, on the 65 00:03:49,200 --> 00:03:54,080 Speaker 2: show Japan's Dementia Dilemma, a growing share of the country's 66 00:03:54,120 --> 00:03:58,119 Speaker 2: financial assets are controlled by the elderly, many at risk 67 00:03:58,160 --> 00:04:02,320 Speaker 2: of cognitive decline. Why that's a problem for everyone, not 68 00:04:02,360 --> 00:04:05,800 Speaker 2: just Japan, and what the Japanese are doing about it. 69 00:04:17,160 --> 00:04:20,440 Speaker 2: In Japan, older people have a lot of financial power. 70 00:04:20,960 --> 00:04:23,919 Speaker 2: Those over sixty five control more than half of the 71 00:04:23,960 --> 00:04:29,120 Speaker 2: fourteen trillion dollars in cash and securities held by Japanese households. 72 00:04:29,480 --> 00:04:32,479 Speaker 2: But Bloomberg's Alice French says a big chunk of those 73 00:04:32,560 --> 00:04:37,200 Speaker 2: liquid assets is held by people with dementia and cognitive issues. 74 00:04:37,800 --> 00:04:41,719 Speaker 1: We understand from data from Sumitomo Mitsui Trust Bank that 75 00:04:41,920 --> 00:04:45,360 Speaker 1: it's at around two trillion dollars, which is around three 76 00:04:45,480 --> 00:04:49,560 Speaker 1: hundred and fifteen trillion yen. Now that includes people who 77 00:04:49,600 --> 00:04:53,400 Speaker 1: have an actual dementia diagnosis, but it also encompasses people 78 00:04:53,480 --> 00:04:56,960 Speaker 1: with something called mild cognitive impairments. Now, this is usually 79 00:04:56,960 --> 00:04:59,240 Speaker 1: something that comes in kind of in the years before 80 00:04:59,279 --> 00:05:02,520 Speaker 1: you might get in a dementia diagnosis, you know, sort 81 00:05:02,520 --> 00:05:06,120 Speaker 1: of from the age of sixty five onwards, many older 82 00:05:06,120 --> 00:05:09,160 Speaker 1: people do start to experience kind of lapses in memory, 83 00:05:09,560 --> 00:05:12,000 Speaker 1: you know, struggling with judgment and things like that, and 84 00:05:12,040 --> 00:05:14,040 Speaker 1: just kind of overall cognitive decline. 85 00:05:14,520 --> 00:05:17,800 Speaker 2: People may develop cognitive decline in dementia due to a 86 00:05:17,880 --> 00:05:22,880 Speaker 2: variety of factors, including genetics and lifestyle choices, but age 87 00:05:23,120 --> 00:05:26,479 Speaker 2: is the strongest known risk factor, with research showing that 88 00:05:26,560 --> 00:05:31,520 Speaker 2: the risk of developing dementia rises after sixty five. In Japan, 89 00:05:31,680 --> 00:05:35,800 Speaker 2: the population of elderly with cognitive decline is growing fast, 90 00:05:36,520 --> 00:05:40,080 Speaker 2: and Alice says there are big financial risks associated with 91 00:05:40,120 --> 00:05:42,200 Speaker 2: what some are calling dementia money. 92 00:05:43,760 --> 00:05:46,880 Speaker 1: I've heard stories of seniors with dementia or kind of 93 00:05:46,920 --> 00:05:51,440 Speaker 1: cognitive issues, for example, suddenly donating huge amounts to charities 94 00:05:51,440 --> 00:05:54,640 Speaker 1: that they love, or you know, buying into into schemes 95 00:05:54,640 --> 00:05:57,000 Speaker 1: that it's not necessarily scamming, but it's sort of just 96 00:05:57,480 --> 00:06:01,440 Speaker 1: perhaps what one would describe as ill advised spending. It 97 00:06:01,480 --> 00:06:04,600 Speaker 1: can also creep in in ways like missed bill payments 98 00:06:04,600 --> 00:06:07,680 Speaker 1: that obviously affects credit scores, and then kind of on 99 00:06:07,720 --> 00:06:11,400 Speaker 1: a bigger scale, you know, obviously fraud is a huge problem. 100 00:06:11,480 --> 00:06:15,920 Speaker 1: We know that in Japan over sixty percent of financial 101 00:06:15,960 --> 00:06:19,279 Speaker 1: scams in twenty twenty four were targeted at over sixty fives, 102 00:06:19,279 --> 00:06:22,280 Speaker 1: which is pretty staggering. The older population is seen as 103 00:06:22,320 --> 00:06:25,119 Speaker 1: more vulnerable to this, and of course that's only exacerbated 104 00:06:25,480 --> 00:06:29,080 Speaker 1: if you have dementia or some you know, cognitive issues. 105 00:06:29,560 --> 00:06:33,480 Speaker 2: Financial firms can freeze accounts or place limits and restrictions 106 00:06:33,520 --> 00:06:36,279 Speaker 2: on them if they identify what they considered to be 107 00:06:36,560 --> 00:06:41,680 Speaker 2: erratic spending patterns. Research from Tokyo's Kale University shows that 108 00:06:41,760 --> 00:06:44,880 Speaker 2: about eleven percent of adult children who take over their 109 00:06:44,880 --> 00:06:48,720 Speaker 2: elderly parents' finances have found those accounts frozen. 110 00:06:49,839 --> 00:06:52,920 Speaker 1: In terms of how they're actually implemented these freezes, it 111 00:06:52,960 --> 00:06:55,520 Speaker 1: really does vary from sort of company to company and 112 00:06:55,560 --> 00:06:57,920 Speaker 1: from bank to bank. One of the firms that we 113 00:06:57,960 --> 00:07:01,520 Speaker 1: spoke to said that their staff make annual visits to 114 00:07:01,760 --> 00:07:05,080 Speaker 1: clients who are aged over seventy five instead of judges 115 00:07:05,120 --> 00:07:07,760 Speaker 1: their cognitive ability is now. Of course, you know, in 116 00:07:07,800 --> 00:07:11,440 Speaker 1: most of the cases these sort of securities firms employees 117 00:07:11,480 --> 00:07:14,000 Speaker 1: they don't have a medical background, and instead of having 118 00:07:14,080 --> 00:07:17,040 Speaker 1: to just use their best judgment, obviously one would assume 119 00:07:17,080 --> 00:07:19,720 Speaker 1: with the client's best interests, you know, at heart, but 120 00:07:19,760 --> 00:07:21,440 Speaker 1: it is a very difficult judgment. 121 00:07:21,160 --> 00:07:24,640 Speaker 2: Called money in a frozen account can't be stolen by 122 00:07:24,640 --> 00:07:27,560 Speaker 2: a scammer or squandered by an older person who might 123 00:07:27,560 --> 00:07:31,400 Speaker 2: not understand how they're spending. But it can't be accessed 124 00:07:31,440 --> 00:07:34,840 Speaker 2: by the account holder's children either, and that's a problem. 125 00:07:35,200 --> 00:07:37,560 Speaker 2: They might need that money to pay for their parents' care, 126 00:07:38,080 --> 00:07:40,320 Speaker 2: and if they can't access it, they might end up 127 00:07:40,320 --> 00:07:45,440 Speaker 2: paying for that care themselves. The accounts can be unfrozen, 128 00:07:45,880 --> 00:07:48,880 Speaker 2: but that can be a long bureaucratic process, and it 129 00:07:48,920 --> 00:07:52,440 Speaker 2: doesn't always happen. In some cases, money in those frozen 130 00:07:52,440 --> 00:07:55,280 Speaker 2: accounts is not claimed at all and ends up in 131 00:07:55,320 --> 00:07:56,480 Speaker 2: the hands of the government. 132 00:07:57,840 --> 00:07:59,640 Speaker 1: So that means that a lot of this money ends 133 00:07:59,680 --> 00:08:02,960 Speaker 1: up doing whether it's in cash piles unde seni as 134 00:08:02,960 --> 00:08:06,160 Speaker 1: mattresses at home, or whether it's sitting in bank accounts. 135 00:08:06,800 --> 00:08:11,000 Speaker 2: Alice says this growing pile of dormant dementia money has 136 00:08:11,080 --> 00:08:15,840 Speaker 2: implications for Japan's economic growth. Japan is struggling to boost 137 00:08:15,840 --> 00:08:20,200 Speaker 2: its economy after decades of deflation. The country needs its 138 00:08:20,200 --> 00:08:23,040 Speaker 2: people to spend that money, not let it sit idle 139 00:08:23,120 --> 00:08:25,240 Speaker 2: in frozen or dormant bank accounts. 140 00:08:25,640 --> 00:08:27,200 Speaker 1: One of the think tanks that I spoke to for 141 00:08:27,240 --> 00:08:29,560 Speaker 1: the story, for example, had this stat that said that 142 00:08:29,680 --> 00:08:32,480 Speaker 1: if the kind of dormant money the over sixties are 143 00:08:32,520 --> 00:08:35,280 Speaker 1: sitting on, if only zero point two percent of that 144 00:08:35,400 --> 00:08:39,320 Speaker 1: money was actually actively spent, it could boost GDP by 145 00:08:39,360 --> 00:08:39,920 Speaker 1: one percent. 146 00:08:40,520 --> 00:08:43,480 Speaker 2: There's an irony here. Some banks are worried that their 147 00:08:43,480 --> 00:08:46,880 Speaker 2: older customers might be taking too many risks with their money. 148 00:08:47,480 --> 00:08:50,600 Speaker 2: Some corporations, on the other hand, are concerned that their 149 00:08:50,640 --> 00:08:54,640 Speaker 2: older investors might not be taking on enough risk. Forty 150 00:08:54,679 --> 00:08:58,359 Speaker 2: two percent of retail investors in Japan or over sixty. 151 00:08:58,480 --> 00:09:01,839 Speaker 2: Alice says if those people become too risk averse as 152 00:09:01,880 --> 00:09:05,600 Speaker 2: the age, that could affect a company's liquidity and even 153 00:09:05,760 --> 00:09:07,000 Speaker 2: its corporate strategy. 154 00:09:07,360 --> 00:09:10,120 Speaker 1: If a big chunk of your shareholders, for example, have 155 00:09:10,240 --> 00:09:13,840 Speaker 1: dementia or are either unable or unwilling to kind of 156 00:09:14,040 --> 00:09:16,839 Speaker 1: actively use their shareholding rights, that can get in the 157 00:09:16,880 --> 00:09:20,240 Speaker 1: way of acquisition deals, That can get in the way 158 00:09:20,280 --> 00:09:22,199 Speaker 1: of things like corporate governance decisions. 159 00:09:23,640 --> 00:09:27,160 Speaker 2: She says, it's becoming a big issue for family owned companies. 160 00:09:27,800 --> 00:09:31,280 Speaker 2: More than ninety percent of businesses in Japan are family owned, 161 00:09:31,720 --> 00:09:34,400 Speaker 2: and over half of companies are run by people aged 162 00:09:34,480 --> 00:09:37,760 Speaker 2: sixty and older. This all adds up to a looming 163 00:09:37,800 --> 00:09:39,240 Speaker 2: issue for corporate Japan. 164 00:09:39,920 --> 00:09:43,119 Speaker 1: For example, if the founder is still the majority shareholder 165 00:09:43,559 --> 00:09:46,280 Speaker 1: but maybe has dementia or is just aging and is 166 00:09:46,360 --> 00:09:49,000 Speaker 1: unable to use those shareholder rights. M and A deals 167 00:09:49,000 --> 00:09:51,560 Speaker 1: have been collapsing. You know, you can't even do something 168 00:09:51,559 --> 00:09:53,800 Speaker 1: as simple, for example, as appointing a new board member 169 00:09:53,840 --> 00:09:56,600 Speaker 1: if you can't get a majority shareholder approval. And of 170 00:09:56,600 --> 00:09:59,120 Speaker 1: course this is all happening against the backdrop of Japan 171 00:09:59,360 --> 00:10:03,520 Speaker 1: trying to push forward with corporate governance with better capital efficiency. 172 00:10:03,600 --> 00:10:05,920 Speaker 1: We've got an M and A boom that's continuing here 173 00:10:05,920 --> 00:10:09,120 Speaker 1: and is expected to boom even more in twenty twenty six. 174 00:10:09,520 --> 00:10:11,559 Speaker 1: So this kind of is I think a real tangible 175 00:10:12,000 --> 00:10:14,240 Speaker 1: risk and that will start to have I think a 176 00:10:14,320 --> 00:10:17,839 Speaker 1: rippling effect across the markets and across lots of different 177 00:10:17,840 --> 00:10:19,800 Speaker 1: asset classes. 178 00:10:26,400 --> 00:10:30,080 Speaker 2: What is Japan's government doing to protect its aging investors 179 00:10:30,679 --> 00:10:33,520 Speaker 2: and how does it plan to tap into those dormant 180 00:10:33,559 --> 00:10:51,880 Speaker 2: trillions that's after the break. Japan's population is aging faster 181 00:10:52,080 --> 00:10:54,640 Speaker 2: than any other in the world, and the number of 182 00:10:54,760 --> 00:10:59,080 Speaker 2: Japanese people with dementia is growing fast too. That makes 183 00:10:59,080 --> 00:11:02,680 Speaker 2: the problems that with having assets controlled by people living 184 00:11:02,720 --> 00:11:07,800 Speaker 2: with cognitive issues hard to ignore. Luombrig's Alice French says 185 00:11:07,800 --> 00:11:12,280 Speaker 2: that Japanese government is taking action that includes reviewing Japan's 186 00:11:12,280 --> 00:11:15,840 Speaker 2: guardianship law. Similar to power of attorney in the US. 187 00:11:16,080 --> 00:11:19,320 Speaker 2: The law allows family members to take legal control of 188 00:11:19,360 --> 00:11:22,480 Speaker 2: a relative's finances if dementia sets in. 189 00:11:23,080 --> 00:11:26,319 Speaker 1: Only around five percent of dementia suffers in Japan right 190 00:11:26,320 --> 00:11:28,920 Speaker 1: now are using that system, and the government would like 191 00:11:29,000 --> 00:11:31,840 Speaker 1: to boost that now. It seems that one of the 192 00:11:31,840 --> 00:11:34,440 Speaker 1: main reasons that people are a little bit wary of 193 00:11:34,559 --> 00:11:36,679 Speaker 1: using the system right now is that once you're in it, 194 00:11:36,760 --> 00:11:40,040 Speaker 1: once you sign on for this guardianship system, you can't 195 00:11:40,080 --> 00:11:42,800 Speaker 1: get out. That does kind of put off some people 196 00:11:42,840 --> 00:11:45,880 Speaker 1: who might, for example, change their mind. So the government 197 00:11:45,920 --> 00:11:48,280 Speaker 1: is looking at the possibility of bringing in that option 198 00:11:48,760 --> 00:11:51,400 Speaker 1: that you could withdraw at a later stage once you're 199 00:11:51,440 --> 00:11:53,280 Speaker 1: in it, and they hope that that kind of new 200 00:11:53,400 --> 00:11:57,000 Speaker 1: level of flexibility will bring more people into the guardianship system. 201 00:11:57,440 --> 00:12:00,760 Speaker 2: Alice says the committee reviewing changes to the existing law 202 00:12:00,960 --> 00:12:04,360 Speaker 2: could propose amendments as soon as this year, but it 203 00:12:04,400 --> 00:12:08,520 Speaker 2: could take years for those changes to take effect. Until then, 204 00:12:08,880 --> 00:12:11,840 Speaker 2: banks and securities firms are coming up with their own 205 00:12:11,920 --> 00:12:16,239 Speaker 2: solutions to ensure that their elderly clients' assets are protected, 206 00:12:16,840 --> 00:12:20,360 Speaker 2: and some older people alert to their circumstances are working 207 00:12:20,400 --> 00:12:26,079 Speaker 2: with them. Chizuko and Mi, who we met at the 208 00:12:26,120 --> 00:12:30,000 Speaker 2: beginning of this episode, had a frank conversation about Chizuko's 209 00:12:30,000 --> 00:12:34,440 Speaker 2: financial situation. They decided that Chizuko would make My a 210 00:12:34,559 --> 00:12:38,320 Speaker 2: guardian of a special family support account offered by a 211 00:12:38,320 --> 00:12:42,600 Speaker 2: local securities firm. Now, if Chizuko is unable to manage 212 00:12:42,600 --> 00:12:46,040 Speaker 2: her finances, My can make decisions on her behalf. 213 00:12:46,720 --> 00:12:49,480 Speaker 1: I think in many ways, this Moldota couple were kind 214 00:12:49,480 --> 00:12:52,000 Speaker 1: of a best case scenario, and the challenge here is 215 00:12:52,080 --> 00:12:55,640 Speaker 1: kind of scaling them to be the majority. The sense 216 00:12:55,679 --> 00:12:57,840 Speaker 1: that I've got for sure is that the finance industry 217 00:12:57,920 --> 00:12:59,760 Speaker 1: is rarely kind of out the forefront of sort of 218 00:13:00,320 --> 00:13:03,800 Speaker 1: this issue forwards and raising the awareness. So Ima Murdo, 219 00:13:03,840 --> 00:13:07,160 Speaker 1: who I spoke about, which physical uses, they were very 220 00:13:07,160 --> 00:13:09,000 Speaker 1: frank with us, you know. They were telling us that 221 00:13:09,080 --> 00:13:13,000 Speaker 1: they've seen a spike in in fraud and scams, particularly 222 00:13:13,040 --> 00:13:15,600 Speaker 1: amongst their elderly clients, and they really want to kind 223 00:13:15,640 --> 00:13:17,760 Speaker 1: of crack down on that because it's a risk for 224 00:13:17,800 --> 00:13:21,320 Speaker 1: them too, and in recent years, they have started, like 225 00:13:21,360 --> 00:13:24,720 Speaker 1: I say, bringing in these kind of solutions for their 226 00:13:24,760 --> 00:13:28,840 Speaker 1: senior clients so that they can manage their assets alongside 227 00:13:29,040 --> 00:13:32,680 Speaker 1: a younger family member. So these family support accounts are 228 00:13:32,880 --> 00:13:36,920 Speaker 1: kind of gaining traction. There's another company called Kagawa, which 229 00:13:36,960 --> 00:13:39,400 Speaker 1: is on Hikoku, one of the sort of more southern 230 00:13:39,400 --> 00:13:42,840 Speaker 1: islands of Japan, which has brought in a similar system 231 00:13:42,880 --> 00:13:44,560 Speaker 1: just in the last set of eighteen months or so 232 00:13:44,679 --> 00:13:47,559 Speaker 1: and has said that they've been surprised by the amount 233 00:13:47,600 --> 00:13:51,200 Speaker 1: of demand. The steps are gradual and small at this stage, 234 00:13:51,240 --> 00:13:54,120 Speaker 1: but there's definitely a sense that momentum is building. 235 00:13:54,200 --> 00:13:57,120 Speaker 2: And companies are beginning to look for ways around the 236 00:13:57,200 --> 00:14:01,320 Speaker 2: issues that come with having too many older shareholders. Japanese 237 00:14:01,400 --> 00:14:05,679 Speaker 2: telecoms provider MTT found in twenty twenty three that almost 238 00:14:05,800 --> 00:14:09,520 Speaker 2: half of its shareholders were aged over seventy. The company 239 00:14:09,600 --> 00:14:12,240 Speaker 2: solved the problem with the stock split, which had the 240 00:14:12,280 --> 00:14:15,400 Speaker 2: effect of diversifying the age of its shareholders. 241 00:14:15,640 --> 00:14:19,000 Speaker 1: So NTT, for example, did a twenty five for one 242 00:14:19,040 --> 00:14:21,840 Speaker 1: stock split in mid twenty twenty three, and they've now 243 00:14:21,880 --> 00:14:25,280 Speaker 1: seen the proportion of over seventies among their shareholders down 244 00:14:25,400 --> 00:14:29,280 Speaker 1: below twenty percent. So in that sense, it was pretty effective, right, 245 00:14:29,320 --> 00:14:31,600 Speaker 1: and we've seen stock splits kind of shooting up over 246 00:14:31,640 --> 00:14:34,400 Speaker 1: the past few years. There are lots of reasons for it. 247 00:14:34,400 --> 00:14:37,680 Speaker 1: It's partly because of the sort of corporate governance drive 248 00:14:37,760 --> 00:14:40,520 Speaker 1: and the drive for better shareholder returns. Of course, if 249 00:14:40,560 --> 00:14:43,840 Speaker 1: you can attract younger shareholders, they'll hold your stock for longer. 250 00:14:44,360 --> 00:14:47,160 Speaker 2: But Alice says, one of the biggest challenges is the 251 00:14:47,280 --> 00:14:50,400 Speaker 2: lack of awareness of this looming financial dilemma. 252 00:14:50,880 --> 00:14:54,320 Speaker 1: It is quite a taboo topic and it's one of 253 00:14:54,360 --> 00:14:56,560 Speaker 1: the biggest challenges that we found actually in trying to 254 00:14:56,600 --> 00:14:58,680 Speaker 1: report on this theme, right, is that a lot of 255 00:14:58,720 --> 00:15:00,840 Speaker 1: people don't really want to talk about it. It is 256 00:15:00,840 --> 00:15:03,320 Speaker 1: a bit of a touchy subject. And I think that's 257 00:15:03,360 --> 00:15:05,360 Speaker 1: not just in Japan. I think all across the world. 258 00:15:05,720 --> 00:15:08,080 Speaker 1: Part of the problem is almost a kind of unwillingness 259 00:15:08,080 --> 00:15:11,640 Speaker 1: to want to confront your own weaknesses. We know that, 260 00:15:11,720 --> 00:15:13,880 Speaker 1: you know a lot of market players across the world 261 00:15:13,920 --> 00:15:17,120 Speaker 1: obviously fall into the over sixty five category, and nobody 262 00:15:17,200 --> 00:15:19,680 Speaker 1: kind of wants to think that they might not be making, 263 00:15:19,720 --> 00:15:22,720 Speaker 1: you know, the best financial decisions on the day to day. 264 00:15:23,120 --> 00:15:25,240 Speaker 1: So I think there is definitely that resistance there to 265 00:15:25,360 --> 00:15:28,440 Speaker 1: kind of confront the reality people don't necessarily want to 266 00:15:28,480 --> 00:15:31,800 Speaker 1: think of themselves potentially losing independence in the ability to 267 00:15:31,920 --> 00:15:35,440 Speaker 1: handle things by themselves and having to rely on their kids. 268 00:15:37,200 --> 00:15:41,360 Speaker 2: That's if they have children to rely on. More seniors 269 00:15:41,440 --> 00:15:45,520 Speaker 2: are living alone in Japan. A government study estimates that 270 00:15:45,560 --> 00:15:48,720 Speaker 2: by twenty fifty, as many as twenty percent of Japanese 271 00:15:48,800 --> 00:15:53,880 Speaker 2: households could be occupied by elderly people living alone and 272 00:15:53,920 --> 00:15:58,960 Speaker 2: potentially handling their finances without any support. That means the 273 00:15:59,000 --> 00:16:02,560 Speaker 2: burden would all tutimately fall on the government and the 274 00:16:02,560 --> 00:16:09,000 Speaker 2: financial industry. Japan is working hard to find solutions, and 275 00:16:09,080 --> 00:16:13,040 Speaker 2: the world is paying close attention. That's because dementia and 276 00:16:13,080 --> 00:16:16,640 Speaker 2: cognitive decline are beginning to take a toll on economies 277 00:16:17,000 --> 00:16:18,040 Speaker 2: across the world. 278 00:16:18,720 --> 00:16:22,680 Speaker 1: In the US, around six trillion dollars could be owned 279 00:16:22,760 --> 00:16:25,320 Speaker 1: by dementia sufferers in the States right now. Now, that 280 00:16:25,440 --> 00:16:27,880 Speaker 1: is not a number to sniff at, and obviously that's 281 00:16:27,880 --> 00:16:30,000 Speaker 1: something that again is only going to grow as the 282 00:16:30,000 --> 00:16:34,520 Speaker 1: population continues to age. South Korea, another Asian nation that 283 00:16:34,640 --> 00:16:38,280 Speaker 1: is often in the headlines for its aging population, over 284 00:16:38,320 --> 00:16:42,080 Speaker 1: one hundred billion dollars held by dementia sufferers a lot 285 00:16:42,120 --> 00:16:44,000 Speaker 1: of that in illiquid real estate. 286 00:16:44,680 --> 00:16:47,560 Speaker 2: There's a lot of talk about the rising tide of 287 00:16:47,640 --> 00:16:51,440 Speaker 2: dementia in Japan's population, and a lot of worry about 288 00:16:51,480 --> 00:16:54,320 Speaker 2: the knock on effect that this dementia money is having 289 00:16:54,360 --> 00:16:58,240 Speaker 2: on economic growth. But Alice says she's not seeing much 290 00:16:58,400 --> 00:16:59,640 Speaker 2: in the way of solutions. 291 00:17:00,440 --> 00:17:03,520 Speaker 1: I think for me, what surprised me, or I suppose 292 00:17:03,600 --> 00:17:06,960 Speaker 1: worried me the most, was kind of how haphazard the 293 00:17:07,040 --> 00:17:11,080 Speaker 1: solutions are at this stage. So for the financial industry, 294 00:17:11,119 --> 00:17:13,240 Speaker 1: they are desperately trying to get a handle on a 295 00:17:13,240 --> 00:17:15,960 Speaker 1: problem that I think has somewhat crept up on them. 296 00:17:16,119 --> 00:17:19,240 Speaker 1: You know, there is no overarching playbook about how to 297 00:17:19,280 --> 00:17:22,119 Speaker 1: deal with this. The pace of aging in Japan is 298 00:17:22,200 --> 00:17:25,359 Speaker 1: so fast, and I think a lot of people didn't 299 00:17:25,400 --> 00:17:27,560 Speaker 1: really think about the risks that will then come with 300 00:17:27,640 --> 00:17:38,480 Speaker 1: that from the financial side. 301 00:17:46,119 --> 00:17:49,360 Speaker 2: This is The Big Take Asia from Bloomberg News. I'm wanha. 302 00:17:50,000 --> 00:17:52,760 Speaker 2: To get more from The Big Take and unlimited access 303 00:17:52,760 --> 00:17:55,840 Speaker 2: to all of Bloomberg dot Com, subscribe today at Bloomberg 304 00:17:55,840 --> 00:17:59,160 Speaker 2: dot com slash podcast offer. If you liked the episode, 305 00:17:59,320 --> 00:18:01,480 Speaker 2: make sure it's a subscribe and review The Big Tick 306 00:18:01,520 --> 00:18:04,920 Speaker 2: Asia wherever you listen to podcasts. It really helps people 307 00:18:04,920 --> 00:18:07,400 Speaker 2: find the show. Thanks for listening, See you next time.