Financial literacy goes downhill after the age of 60, no matter how wealthy or educated you are.

The finding stumped Texas Tech University professor Michael Finke who assumed that older individuals would ace the test that was part of the university’s financial literacy survey. To his surprise, they performed poorly despite their lifetime of experience with mortgages, loans, insurance and other financial products.

“What we found is that there was this amazingly consistent decline in financial literacy in old age,” he said during a webinar for members of the Retirement Income Industry Association. “It was almost like drawing a straight line downward from about age 60.”

As clients get older, advisors need to be aware of the classic signs of possible cognitive impairment in their clients. Some of the red flags include sudden account changes, unpaid bills and difficulty with routine financial tasks, such as balancing a checkbook, said Jack Tatar, CEO of GEM Research Solutions, a market research firm. These red flags may reflect the normal process of aging or what many refer to jokingly as “senior moments.” But they could also point to more serious health problems, such as Alzheimer’s and other dementia-related diseases.

“There’s a need for elderly parents and adult children alike to take a look at this and identify this early on, and I believe the advisor can play a role here,” Tatar said.

In addition to being cognizant of the warning signs, Tatar encouraged advisors to expand their conversation with elderly clients beyond financial matters. In particular, he urged advisors to talk to clients about their health, a topic that that has huge financial repercussions, Tatar said.

The expanded conversation should also include discussions about clients’ goals and attitudes as well as their involvement in social networks. As clients age and begin to lose friends and family members, elderly clients tend to move away from the social networks they relied on for support.  Tatar noted that those social structures could be replaced by loneliness and a need for friends “who are going to be less than appropriate with their finances.”

To help clients deal with cognitive decline, advisors should make it a point to involve family members. They need to make sure they include the spouse in all conversations and involve the adult children. Having a relationship with both the spouses and children is crucial if the advisor wants to maintain the relationship after a client dies, according to Tatar.

Most importantly, advisors need to be catalysts for what he calls “the talk” with clients about the risk of Alzheimer’s and dementia. “Having the talk,” he said, should take place while clients and their spouses are still thinking and communicating clearly.

“It’s important to have this discussion sooner rather than later,” he stressed repeatedly during the webinar. Very often, advisors will have the conversation when it’s too late.

When “the talk” is held later on, parents often feel that advisors are “stepping in and taking control, Tatar said. When done early with clients in possession of their cognitive skills, “you’re not taking away the senior’s dignity,” he explained.

Advisors can have the talk with the elderly client and his or her spouse or facilitate the talk between the parents and their children. Tatar encouraged advisors to act as a facilitator of the conversation between parents and their children, a role that is likely to reward the advisor long-term.

“It’s very important to show to the adult children, while the parents are still thinking clearly and communicating clearly, that you have a level of trust and commitment to their parents. When you do that, you have run more of an opportunity to stay as the advisor to the adult children," Tatar said.

Having the talk about cognitive decline, of course, isn’t easy. Tatar suggested using stories about neighbors and relatives suffering from dementia as conversation starters. He also noted that some advisors conduct seminars or bring in experts to discuss the issue of cognitive decline with their clients.

The reality, he said, is that “the talk” will have to happen at some point, usually when it’s too late.

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