Watch Out for Senior Money Moments
Trusted financial professionals can be among the first to spot a problem that's more than just normal forgetfulness.
Four years ago, employees in the legal department of Wells Fargo Advisors fielded an average of 30 reports a month from advisers in branch offices who were concerned about elderly clients. Today, reports about clients potentially being victimized by scams, suffering from dementia or simply laboring under a diminished capacity to make sound financial decisions stream in at an average rate of 100 per month. So Wells Fargo has assembled a dedicated unit called Elder Client Initiatives to investigate and handle such concerns, and even work with law enforcement or protective services, if warranted.
Certified financial planner Dennis Stearns has likewise shaped his practice to deal with issues of diminished capacity among his older clients. "Twenty years ago, we had some of these issues. Now we see them every single week. We realized that there was a tsunami of messy situations coming our way and we'd better figure out how to surf that wave," says Stearns, president of Stearns Financial Group, in Greensboro, N.C. This year, 70% of the firm's monthly training sessions have been about how to deal effectively with aging clients.
Other financial firms are ramping up similar efforts. Older adults have the most experience handling money and hold the lion's share of the nation's household wealth. But they're also subject to normal cognitive aging, which brings with it a decline in numeracy skills, processing speed, flexible decision-making and short-term memory, says Daniel Marson, a professor of neurology and director of the Alzheimer's Disease Center at the University of Alabama at Birmingham. "Warren Buffett is still an excellent investor and dealmaker, but he's not as good as he was at age 50," says Marson. He says people reach the height of financial decision-making prowess around age 53.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Seniors can fall prey to all sorts of predators, including a "senior adviser" whose designation might not be worth the business card it's printed on or a broker who's a crook. But trusted financial professionals can be among the first to spot a problem that's more than just a so-called senior moment or normal forgetfulness. "We have clients call to make the same withdrawal three days in a row, forgetting that they've called the day before," says Ron Long, head of Wells Fargo's Elder Client Initiatives. New guidelines for Merrill Lynch employees list red flags such as inconsistent decision-making (chucking a carefully constructed portfolio for investments unsuited to one's goals or risk tolerance, for example), no longer understanding where assets are invested or confusion about client-directed activity when it appears on an account statement.
Red flags. Families on the alert for signs of diminished capacity shouldn't overreact if Mom or Dad occasionally forgets to pay a bill, says Marson. Forgetting to file taxes is a more serious memory lapse. If papers have always been carefully filed, bags full of bills and a messy desk should give you pause. Watch out for uncharacteristic checkbook errors or a struggle to figure the tip at a restaurant. Are you repeatedly explaining financial concepts to someone who was once conversant in mortgages, trusts and investments? And a biggie: Beware when a careful steward of assets takes a sudden interest in get-rich-quick schemes.
More firms are asking clients—even young and healthy ones—to supply the name of a family member or friend who can be called upon if questions of capacity arise. (You should name a contact on your own if you're not asked to provide one.) Contacts don't need trading authority. But as you age, giving your adviser the ability to reach out to someone without running afoul of confidentiality rules can stop you from becoming your own worst enemy.
Anne Kates Smith is a senior editor at Kiplinger's Personal Finance magazine.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.
-
Stock Market Today: Dow Climbs 288 Points After Amazon, Intel Earnings
Post-earnings strength from Amazon and Intel helped cushion the blow of a disappointing October jobs report.
By David Dittman Published
-
Nvidia Stock Is Joining the Dow. Is It Time to Buy?
Nvidia will replace Intel in the Dow Jones Industrial Average this Friday. What does it mean for the stock?
By Dan Burrows Published
-
Lessons Learned From the College Bribery Scandal
Paying for College Being a snowplow parent who removes obstacles is not the way to raise emotionally healthy, money-smart kids.
By Anne Kates Smith Published
-
Retirees, Go Ahead and Spend a Little (More)
Investor Psychology Successful savers have prospered by living below their means. Frugality often becomes a preference—sometimes to an excessive degree.
By Anne Kates Smith Published
-
What We Can Learn from Target-Date Funds
investing These one-decision investments can teach you to stick with your investing strategy and remain calm no matter what's happening in the markets.
By Anne Kates Smith Published
-
To Save More, Tap Into Your Emotions
Investor Psychology Objecs that have special meaning to you could be the key to identifying your savings goals.
By Anne Kates Smith Published
-
Keep Health Care Out-of-Pocket Costs in Check
insurance We asked patient advocates who focus on helping consumers with their medical bills to share some secrets.
By Nellie S. Huang Published
-
Don't Step Into These Saving Traps
Investor Psychology Some behavioral biases seem tailor-made to foil retirement savers. But their ill effects are smaller for those who are aware of them.
By Anne Kates Smith Published
-
How Should Couples Merge Their Finances While Still Maintaining Financial Independence?
spending Share your best advice with fellow readers.
By the editors of Kiplinger's Personal Finance Published
-
Investors, How Much Risk Can You Stand?
investing If you are taking on more risk than you can emotionally tolerate, you’ll hit the panic button and sell at the worst possible time.
By Anne Kates Smith Published