Memory loss. Confusion. Mood swings. These symptoms of dementia are part of the nightmare reality of a growing number of families as Boomers age. There’s a side effect that’s often overlooked: how even early stages of dementia cause people to make horrible financial decisions. And the problem can be much more serious than forgetting to pay the cable bill.
I know of one situation that began as a disagreement between father and daughter over investment style, as the 70-year old father moved a large portion of his portfolio into high-risk stocks. The apparently stubborn father accused his daughter of meddling and for years there was nothing she could do to convince her father to alter his increasingly more erratic financial decisions. This story had a sad ending. By the time the daughter was able to gain power of attorney once dementia was diagnosed officially, the father’s portfolio was significantly reduced in value.
Even the mildest cases of dementia affect financial decisions. Typical problems are forgetting they received an investment statement, new confusion about reading a statement, forgetting that they bought or sold shares in a company.
How can you deal with a parent who you suspect may be experiencing decreased memory capacity? Be as sensitive as possible and use humour if appropriate, although this can backfire if a parent is aware of the reduced capacity. Be aware that your parent’s financial advisor is not in a position to diagnose dementia and cannot take direction from you regarding your parent’s investment account without formal documentation.
You might want to suggest that you meet their professional advisors together. This can be framed as an opportunity for proper estate planning and to take inventory: Where are all the assets? Where are all the banking and brokerage accounts? Can you gather important documents related to estate planning and store them in one place?
As demographics shift towards an older population, we may see an increase in the number of families suffering from the effects of financial mistakes as a result of memory problems. Working with a responsible, trustworthy financial advisor who takes the time to collaborate with extended family members and the family’s team of professional advisors should mitigate most mistakes.
Heather Holden, PhD
Wealth Advisor, ScotiaMcLeod
heather_holden@scotiamcleod.com
www.heatherholden.ca
