How Advisors Can Help Clients Navigate Cognitive Decline

As our global population ages, we face a multitude of challenges that transcend medical issues to touch on personal independence, financial stability, and legal safeguards.

The stories of public figures like Wendy Williams and Bruce Willis, who have been diagnosed with aphasia and dementia, bring to light the stark realities of cognitive decline.

These conditions, which impair decision-making abilities, highlight the urgency of planning for incapacity.

Advisors can play a pivotal role in helping clients navigate the challenges associated with aging and cognitive decline.

At my firm, which provides a cloud-based platform for the estate planning community, we see this firsthand when we're working with the thousands of financial professionals using our platform.

To address the issue, we have committed to working with industry leaders like Capacity Clinic to raise awareness of the importance of protecting against fraud and establishing safeguards to ensure that only trusted individuals make decisions on their client's behalf.

The Cognitive Challenge and Financial Implications

Approximately 12% to 18% of people aged 60 or older are living with mild cognitive impairment (MCI), a precursor to more severe cognitive disorders such as Alzheimer's disease.

Within five years, about one-third of those diagnosed with MCI due to Alzheimer's progress to full-blown dementia.

One of the most telling and early signs of cognitive decline is the impairment of financial abilities.

This predisposes millions of individuals to significant economic perils.

Elder fraud reports to the FBI's Internet Crime Complaint Center rose 14% in 2023.

Financial mismanagement, whether due to declining cognitive abilities or exploitation, can have severe repercussions for individuals and their families.

Legal and Social Safeguards

The older population's vulnerability to financial scams and exploitation necessitates robust legal safeguards.

Elder financial abuse is alarmingly common, comprising an estimated 30% of all substantiated elder abuse reports.

This calls for a proactive approach in setting up legal frameworks like powers of attorney, living directives, and detailed estate plans well in advance.

Preparing for incapacity issues ensures that a person's financial and personal affairs are managed by trusted individuals, thereby preserving their dignity and autonomy even as they lose the capacity to make these decisions themselves.

The Great Wealth Transfer

This generation of aging individuals is also at the center of the largest intergenerational wealth transfer in history.

As baby boomers begin to pass down their life's earnings, it's critical that advisors elevate the importance of having clear and enforceable estate plans for their clients.

These plans play a pivotal role in protecting a person's assets, preventing financial disputes among heirs, and ensuring that their wishes are respected and executed as intended.

The intersection of aging, cognitive decline, and financial management requires a multifaceted approach involving medical, legal, and social strategies.

It is essential that advisors take proactive steps to establish strong legal and financial safeguards for their clients.

By planning ahead, we can protect the financial security and personal dignity of those affected and significantly reduce the stress on their families and caregivers.

Ari Brojde is the co-founder and chief executive officer of Estateably, an estate, trust, and incapacity accounting and administration platform provider.