Most people will, at some point in their lives, experience some degree of cognitive decline—the diminishing ability of the brain to perform tasks related to memory, decision-making, or thought-processing—whether it is triggered by a health event or simply the natural process of ageing. Any degree of cognitive impairment has the potential to impact financial decision-making.
Broaching the topic of ageing can be difficult for investors and advisers alike. But health and financial wellness are intertwined – so addressing the risks early and building a plan before its needed can help empower everyone, simply by planning ahead.
Investors with a plan in place should their decision-making abilities become diminished 1
Investors who say they have talked with their family about possible cognitive decline 1
Investors who have spoken with their financial adviser about ageing 1
This research report takes a comprehensive look at the connection between money mistakes and cognitive decline, and provides a set of proactive measures that advisers can use to help protect their clients. And with more than 60% of clients still in need of a plan, it’s time to start the conversation.
In The Impact Of Ageing On Financial Decisions, we review:
Conversations around ageing typically focus on retirement income planning and investment risk, but don’t include a plan to manage the financial risks associated with a decline in cognitive health. Ideally, financial goals, personal preferences and estate plans should be prepared and shared long before cognitive decline impacts financial decision-making.
To help you foster an open and respectful dialogue, we created a set of hypothetical conversations to encourage clients to engage in the planning process.
A comprehensive checklist of financial and legal items is a critical tool to help protect and prepare clients for the risks associated with cognitive decline. Make sure you consider:
Managing Wealth Transfers Across Generations
When creating an action plan with your client, don’t forget to reserve time to discuss wealth transfer plans with the whole family. Advisers can help to both structure the plan and begin building a relationship with the next generation.
1State Street Global Advisors’ Survey, “Not Just a Number: Perceptions and Behaviors Related to Cognitive Decline and Financial Decision Making,” 2015.