As Cognition Slips, Financial Skills Are Often the First to Go
By TARA SIEGEL BERNARD

WHEN Helen Clark brought her father-in-law, then 83, to the doctor last year, she knew his mind was slowing, but a mental status exam confirmed it. He knew the year, where he lived and the name of the president. But when the doctor asked him to count backward from 100, subtracting seven from each number — 100, 93, 86, 79 — a look of confusion washed over his face.

Studies show that the ability to perform simple math problems, as well as handling financial matters, are typically one of the first set of skills to decline in diseases of the mind, like Alzheimer’s, and Ms. Clark’s father-in-law, who suffered from mild dementia, was no exception. Research has also shown that even cognitively normal people may reach a point where financial decision-making becomes more challenging.

“A person can appear to have their wherewithal cognitively, but not have the ability to understand money in the same way anymore,” said Ms. Clark, a retired registered nurse and family therapist in Cottonwood, Calif.

The issue looms large, particularly as the number of older people continues to rapidly expand: There are 44.7 million people 65 and older, representing 14 percent of the population, according to the most recent census data, but, within 10 years, they will swell to an estimated 66 million. This group collectively holds trillions of dollars in wealth, but are often left to manage their own finances, even as they become increasingly vulnerable. About half of adults in their 80s either have dementia, or at least some cognitive impairment without dementia, researchers said.

“If you can detect emerging financial impairment early, you can also step in early and protect the person,” said Daniel Marson, a neuropsychologist and director of the Alzheimer’s Disease Center at the University of Alabama at Birmingham. “It may be if you step in two months from now, they won’t be in a position to make a poor decision or be exploited a year from now.”

For Ms. Clark’s father-in-law, Francis Taylor, the intervention came too late. At 80 years old, he married a woman 17 years his junior, who, over their three-year union, according to the family, cashed $40,000 in blank checks sent by his credit-card issuer and emptied the contents of his $123,000 annuity, leaving him with little more than a giant tax bill.

Mr. Taylor, a former diesel mechanic and Korean War veteran, gave his wife permission to make two annuity withdrawals over the phone. But his wife, who couldn’t be reached for comment, made 20 more withdrawals on her own by using her husband’s Social Security number and other identifying information, and signing papers to direct money into a joint account, according to documents provided by Ms. Clark. After an internal investigation, MetLife, the annuity provider, concluded that it had followed proper procedures.

Preventing these situations is often difficult. Knowing exactly when to get involved can be fraught, whether you are an adult child or a trusted adviser. There are a series of early warning signs of financial decline, which Dr. Marson identified in a recent study, which is being submitted for publication and was funded by the National Endowment for Financial Education and the National Institute on Aging.

The signs, while perhaps not surprising, are subtle, making them easy to miss: It may become more difficult for people to identify the risks in a particular investment, and they may focus too much on the benefits. Completing various tasks on a financial to-do list may start to take longer, such as preparing bills for the mail. Everyday math may become more laborious or prone to errors, whether that’s figuring out a tip in a restaurant or doing a calculation that requires two steps. Financial concepts, like medical deductibles and minimum balances required in savings accounts, may also become harder to grasp. Naturally, these behaviors should represent a significant change: If a person was never adept with personal finances, this won’t serve as much of an indicator.

Dr. Marson said he identified these warnings signs as part of a study of 138 older adults over time who were initially deemed “cognitively normal” by a panel of four doctors when they joined the study (and after at least one annual follow-up visit). Participants were also timed as they completed financial tasks in a lab. Twenty-three members of the group later received a diagnosis of mild cognitive impairment, but when the researchers went back and looked at the original results of the financial capacity test — when the group members were deemed cognitively normal — there were already subtle signs of slowing and financial decline.

“The group that would later decline already had some emerging signs,” Dr. Marson said, though they weren’t glaring.

While many people continue to handle their finances with ease well into their later years, even people with healthy brains tend to experience cognitive decline. According to one study, which analyzed participants’ propensity to make financial mistakes, a person’s financial decision-making ability peaks at age 53, or, more generally, in their 50s. This is the sweet spot, the paper said, because they have substantial amounts of experience but they have had only modest declines in their ability to solve new problems.

There is a general tendency for our ability to solve new problems — known as fluid intelligence — to slowly decline over time, starting as early as age 20. But this is at least partly offset by our growing experiences and wisdom, known as crystallized intelligence.

David Laibson, an economics professor at Harvard and co-author of the research, said he believed that crystallized intelligence tended to plateau when people reached their 70s. That plateau, accompanied with declining fluid intelligence, might explain why older consumers made more financial mistakes than middle-age ones in his study.

“At that point, vulnerability increases,” Professor Laibson said. “Our nation’s wealth is disproportionately held by older adults, and they are exactly the group, particularly as they reach their 80s and 90s, that are most vulnerable. But our system has the fewest protections for those people.”

He said he wishes all 65-year-olds would start by simplifying their financial lives, reducing the money clutter to just a few mutual funds at a reputable institution.

Then there are the boilerplate tools, including wills, revocable living trusts, durable financial power of attorney, and health care directives. Financial institutions often want their own powers of attorney filled out, so it helps to put them in place before you need them. If ready access to more credit isn’t important, advisers suggested freezing elders’ credit files, so criminals cannot attempt to open accounts in their names. Automate bill payments.

If adult children suspect a parent needs watching over, they can also ask financial institutions to send duplicate statements or notices if a parent misses a long-term care insurance payment, for example. Monitoring can also easily be done from afar with online access to accounts, but that sort of access can be disastrous in the wrong hands. If the person does not have trusted family members or friends, a licensed fiduciary can be a good alternative to monitor accounts, said Carolyn Rosenblatt, an elder lawyer and author who counsels families on aging-related issues.

Another financial adviser asks his clients to assemble what he calls a protective tribe, or a handful of people who are willing to step in and assist if and when the need arises. “The protective tribe is important because senior abuse is often committed by a close relative or trusted professional,” said Jean-Luc Bourdon, a certified public accountant who specializes in financial planning in Santa Barbara, Calif. “A tribe is needed to have checks and balances.”

Many estate planning lawyers and financial planners ask their clients to name a person they can contact if they suspect their cognitive skills may be on the decline. Sometimes called “a letter of diminishing capacity,” the document typically authorizes the adviser to raise the issue with a trusted individual the client names.

Bob Rall, a financial planner in Merritt Island, Fla., said it came in handy when a widow with modest assets asked if he could send her $50,000 so she could host an 80th birthday party. “I immediately called her daughter, who the client had previously given me the authorization to speak with,” he said. “After a discussion, we decided to send her mom $15,000. She still had a pretty nice party.”

For many families, there isn’t much margin for error. Ms. Clark’s father-in-law still has the equity in his home; she intervened just as his wife was completing the paperwork for a reverse mortgage.

“Although this is tragic for my father-in-law,” Ms. Clark said, “what I am even more concerned about is the lack of accountability when fraud occurs across the board for elders in this position.”

測一測 你理財能力還在巔峰嗎？

紐約時報報導，有研究指出，一般人個人理財決策能力的巔峰是53歲，但隨著年齡增長或罹患阿茲海默症、失智等疾病，認知能力下降，最早受影響的一項技能就是理財能力，而且早有警訊徵兆，只是多數人渾然不覺。研究顯示，到了70歲，人們會比中年時犯更多理財錯誤。

這種現象看似不起眼，但當65歲以上人口日益增加、這群人掌握社會多數財富、又多半自己管理錢財時，就成了問題；無論是投資失利或上當受騙，對他們本人、子女和理財機構都帶來困擾和挑戰。

謹防理財能力下降帶來損失

自我察覺不易

年長者因認知能力下降而造成投資失利或受騙情況層出不窮，主因是多數人未察覺自己已出現理財能力下降警訊，且太重視獲利而輕忽風險。另外，如果從年輕時即不理財，一向不熟悉各種財務術語及概念，到老時自然無法察覺自己的理解力已下降。

專家建議

·       如發現父母或家中長者的理財能力受損，盡早介入協助處理，例如，在當事人同意的情況下設立網路銀行帳號，由子女代為監看。

·       從65歲起簡化理財方式，選擇信譽良好的理財機構，盡量把錢集中在少數幾項理財工具中，且善用銀行的約定自動付款機制。

·       金融機構在察覺用戶有可疑提領款時，主動通報警方查證。

原文參照：
http://www.nytimes.com/2015/04/25/your-money/as-cognitivity-slips-financial-skills-are-often-the-first-to-go.html

2015-04-29 聯合新聞網 馮克芸、許瑋琳製作