It’s a perfect storm. Americans are living longer than ever before, and often with more wealth than previous generations. According to the 2016 U.S. Census, individuals who were then age 65 to 74 are the fastest growing population in America. They also have among the highest median net worth, according to the U.S. Federal Reserve (Source: U.S. Federal Reserve Bulletin, September 2017). Yet, as people age, cognitive capacity often declines, and they may not be able to manage or make decisions about their own financial matters, which can leave them vulnerable to financial abuse. Stories of such abuse appear frequently in the news, even involving well-known celebrities such as Brooke Astor and Mickey Rooney.
As professional advisors, we need to be aware of this trend and actively protect our clients in advance of any decline. Without proper planning, those experiencing decline risk being taken advantage of by caregivers, family members and unscrupulous individuals such as Internet, mail and phone scammers. Older women are particularly at risk, as they often outlive their spouses and can end up living alone, with no family or friends nearby. According to one study from the Federal Reserve Bank of Philadelphia, the cost of financial damage to older Americans is estimated between $3 billion and $36 billion per year (Source: Addressing the Financial Well-Being of Older Adults, Federal Reserve Bank of Philadelphia, May 2018).
Indeed, most of us will be affected by this escalating crisis at some point in our lives, either directly or indirectly. In 2015, an estimated 46.8 million people worldwide were living with dementia, based on research from the Alzheimer’s Association, and the number is believed to be close to 50 million people for 2017. Worse yet, the number of those afflicted is expected to nearly double every 20 years, reaching 75 million in 2030 and 131 million in 2050.
Be Aware Of And Recognize The Warning Signs
Cognitive impairment is not a specific disease, but a broad collection of symptoms that can range from mild to severe. Dementia and Alzheimer’s disease are the terms you most often hear but these diagnoses are just a subset of the many conditions that can impact cognitive function. Symptoms of cognitive decline can include some or all of the following:
• Repeated instances of poor judgment or decision-making
• Difficulty following content that was once understood
• Struggling to maintain a conversation
• Inability to recall or remember names, events and places
Many people dismiss the warning signs of dementia for innocent signs of aging. Since these red flags can be subtle and easily covered for in the early stages, especially among highly educated individuals, it’s important for advisors to watch for repeated instances of confusion, forgetfulness or poor judgment. In addition, if an area of strength—for example, balancing the checkbook or paying taxes—suddenly becomes a weakness, it may be a sign of something more serious. When an advisor recognizes the warning signs in a client, it’s critical to try to determine whether their competence or decision-making capacity is impaired, and if so, to what extent. It may be prudent, for example, to schedule a meeting with a client at home as it is often there that the signs of disorganization and decline are more visible.