Editor’s note: This is the first in a two-part series focused on helping advisors understand what cognitive impairment is and how to identify and plan for the various degrees of this pervasive disease in their clients.
Modern planning theory, technology and other resources have facilitated financial planning at the highest levels for an increasingly broad spectrum of potential risks, including market declines, economic recessions, a client’s loss of employment, a client’s longevity and his or her disability. Yet planners remain challenged and sometimes ill-equipped to address one of the most pervasive and dangerous forms of specific risk—that their clients will develop Alzheimer’s disease, dementia or associated cognitive impairments.
True enough, experienced advisory professionals can at least anticipate dementia and plan for it. But they tend to do so broadly, as part of a process designed to plan for the possibility of disability in general. They may fail to consider the complex nuances—how subtle cognitive impairment can develop, or how impaired decision-making can even affect the advisor-client relationship. Such problems could interfere with even the best-conceived financial plans.
A trusted financial advisor who has known his or her client for many years may be among the first to identify the irregular behaviors commonly associated with cognitive impairment and dementia. Not only do advisors enjoy relationships with clients that have depth, intimacy and history, but advisors are among the best-positioned individuals to observe a client’s critical decision-making and evaluate whether it is rational and consistent with prior patterns and outcomes.
Yet even the best relationship might be tested if an advisor questions a client’s current faculties. For this reason, the advisor may be reluctant to have the difficult conversation and may defer until some irreparable harm, financial or otherwise, has already occurred before taking definitive action.
Alzheimer’s Disease, Dementia And Mild Cognitive Impairment
According to the Centers for Disease Control and Prevention, Alzheimer’s disease and other forms of dementia were the sixth leading cause of death in the U.S. in 2014, accounting for 29.3 deaths per 100,000 of population. They are also the only major causes of death that are increasing.
With dementia, a person’s thinking and memory have deteriorated to the point that daily function is impaired. According to the Alzheimer’s Association, Alzheimer’s disease is by far the most common cause of dementia, affecting an estimated 5.3 million of the total 46 million Americans age 65 and older. These data suggest that perhaps one in 10 clients age 65 and older have Alzheimer’s dementia.
The problem is, in fact, much worse. Before the development of dementia, Alzheimer’s disease causes more subtle thinking and memory problems that can compromise one’s ability to make complicated financial decisions, even if the issues aren’t severe enough to hinder a person’s daily ability to function. These individuals have mild cognitive impairment (MCI). According to researchers working with the American Academy of Neurology, the prevalence of MCI increases with age: It’s at 8.4% for those ages 65 to 69, 10.1% among those 70 to 74, 14.8% for those 75 to 79, and 25.2% for those 80 to 84. Adding these figures to the number of individuals with dementia means that more than 20% of clients age 65 and older likely have Alzheimer’s disease causing cognitive impairment at the level of either MCI or dementia.