Start Building a Team Today to Deal with Cognitive Decline in Your Future
Updated: Aug 22
Very few people are lucky enough to make it to the end of their life without experiencing some degree of mental decline. While not all people receive a formal dementia diagnosis, almost everyone sees some deterioration of their reasoning skills, processing speed, and memory ability. These don't always impact their day-to-day life in obvious ways, and as a result their decline is often invisible to their friends and family members for years.
Yet, when it comes to finances, these signs of decline are more visible and show up sooner. As a result, the financial professionals in a client's life are frequently among the first to notice that something is amiss. After all, the whole reason my profession exists is to help clients with an area of life that can be notoriously complex. This complexity makes it difficult for aging individuals to "mask" their cognitive decline with jokes, scripts, or hand-waving.
As I see it, though, the worst part about this process isn't being "found out" for being less mentally competent than you once were. The worst part is trying to hide your growing sense of confusion from those who could help you, while still making all your own decisions. Isolation is a killer.
The answer goes beyond hiring a financial advisor. Yes, you should do that too. But you should also think about identifying someone else in your personal life who you would trust to serve as your financial advocate. Ideally, these are people you trust completely and who regularly visit you in your home. They are tuned in to your day-to-day life and can help you keep a handle on things. If something is amiss, they are in a position to catch it before it becomes a bigger problem.
To be clear, this doesn't mean surrendering your financial decision-making ability, nor even creating a "springing financial power of attorney," whereupon you would cede control once certain conditions are met. You certainly don't need to set up anything like that today. But I would like to get you thinking about whether there are people who you trust, who could help you stay on top of your finances, and who could keep an eye out for any troubling patterns.
What do I mean when I say, "troubling patterns?" I've seen or heard of some pretty weird things. A family friend recently bought $60,000 of gold coins based on what he'd seen on tv. Asked why he did this, he couldn't really give a coherent answer.
Another story I heard was someone giving their luxury sedan to their housekeeper. To keep. Maybe there was a good reason for it, but it seemed fishy.
Frequent or major changes to the will and trust documents is another one to
watch out for. It sometimes suggests an unstable decision-making process.
The idea of a financial advocate is to have someone who knows you today, with whom you can have the conversation, "hey if I ever talk about buying $60,000 of gold coins, or cutting one of my kids out of the will because I'm mad at them, or if I develop a mysteriously close relationship with some stranger you've never met....would you let me know that you're concerned?"
Your advocate might then help you schedule a "team meeting" with you, your advisor, and the other professionals on your team (such as an estate attorney). Depending on the circumstances, it might be prudent to update aspects of your financial plan, or to trigger a "Phase 2" where more of your financial decisions are automated or handled by other people. But it depends.
For today, a good first step is simply to talk with your financial advisor about who you want to bring into the inner circle of your finances. As a rule, we are bound by confidentiality, but can speak to people that you explicitly authorize us to, about specific subjects that you authorize us to. You don't need to it figured out all at once, just a few potential candidates would be a good starting place.
Next, you might sit down together with your expanded inner circle and your advisor to discuss, in general terms the reasons that you have decided to include them in your financial planning process. Namely, keeping an eye out for odd financial behaviors, and helping you make decisions that pertain to your plan, based on their understanding of your preferences.
In this first meeting, you probably don't want to reference specific dollar figures. But you might say, "Nicholas has a copy of my estate plan, a summary of my assets and debts, and other information related to my financial plan. We meet periodically to discuss these numbers, and update my plan. Because you know me really well, at some point, I'd like you to join me in those meetings as my advocate to help me make decisions based on what I would want, even if I can't keep track of all the details at that time. For now, I just want you and Nicholas to have one another's contact information."
Eventually, you may choose to authorize that person to act with financial power of attorney, and by that time they should be well-prepared for the job. Not only will they have a clearer sense of your finances, but they'll also have a better grasp of your goals and wishes as a result of sitting in on meetings with you. Between them, your advisor, and other professionals, you'll have a whole team dedicated to serving your best interests. As a result, you can drastically reduce the risks to your quality of life that normally accompany cognitive decline.