Pat Grenier, RR, CFP®, MBA… Contributing Writer
Grenier Financial Advisors

I recently read in the June 7th Issue of the Wall Street Journal that the biggest financial risk Baby Boomer’s face is Cognitive Decline.

Throughout my career, I have first-hand knowledge of this risk. I have watched clients age and witness the changes in their ability to make the financial decisions that in the past were very easy. According to David Laibson, Professor of Economics at Harvard University who co-wrote a study that found financial skills peak at age 53.1 In addition, he informs us that during our 50’s, “our overall ability to make sophisticated decisions begins a gentle decline. By the time we are in our 80’s, our ability t make good decisions is significantly compromised, particularly in decisions that involve complicated new problems. This is just normal aging.”2
In a study by Cerulli Associates, baby boomers between 57 and 75 years old own more than half the estimated $50 trillion in total household financial assets. Approximately $6.5 trillion of the $26 trillion is invested by do-it-yourself individuals. These individuals are at a higher risk of making decisions detrimental to their financial health.3 The Center for Retirement Research at Boston College in a 2017 study concluded that in the next 10 years, nearly half of the oldest boomers face some form of cognitive impairment.4
Trillions of dollars are at risk to fraud, theft, poor use of the funds, loss of principal due to poor investment decisions. Family wealth is at risk, lifestyles are at risk. What can be done to protect the hard earned monies of the most vulnerable?

1. Simplify your financial life now before managing your funds become too complicated by combining your accounts – including bank and investment accounts.
2. Have a written record of your accounts, passwords and important documents where your “go to person” will have access if necessary.
3. Develop a relationship with a Certified Financial Advisor – someone that will have your best interest at heart, will always do what is in your best interest. A financial advisor may be the first person to notice a diminished cognitive capacity.
4. Select a trusted person who can step in, review your statements, advocate and run interference for you.
5. Set up a trust with a competent trustee to manage your investment if you are not capable
6. Have a valid, updated Power of Attorney document
7. Have a valid, updated Health Care Proxy.

Securities and advisory services offered through Cadaret Grant & Co., Inc., an SEC Registered Investment Adviser and member FINRA/SIPC. Grenier Financial Advisors and Cadaret Grant are separate entities.
Sources:
1. Wall Street Journal, Cognitive Decline, June 7, 2021, page R2
2. The Advisor’s Guide To Retirement Planning, 2021 Edition, by Edward Barrett
3. Wall Street Journal, Cognitive Decline, June 7, 2021, page R2
4. Wall Street Journal, Cognitive Decline, June 7, 2021, page R2