Cognitive Decline: Getting the Timing Right for Transferring Control of Finances

One of the biggest challenges that your older clients face is deciding if and when to hand over control of their finances if they experience cognitive decline. It literally can be the million-dollar question.

Thanks to new research published in the American Economic Review, the answer might not be as elusive as it seems.

The study’s authors surveyed Vanguard clients ages 55 and up with above-average wealth to identify how many would have a trustworthy agent who could make financial decisions for them and how many are concerned about the timing of a transfer of control to their agent. The findings show that many older adults are not only eager for assistance in determining the optimal time to transfer control but also are willing to pay a significant amount for intervention that guarantees the optimal timing of the transfer.

The findings

• Identifying reliable agents: When asked if there was someone other than a spouse or partner who could make financial decisions for them if they became impaired, 70% of respondents said their agent would be one of their children.

• Transferring control: Most respondents said they do not want to transfer control to their agents immediately at the onset of cognitive decline, but MORE THAN HALF are more concerned about what would happen if they transferred control too late.

• Cost of transferring control too late: Respondents believe that a transfer of control at the wrong time could be very costly, with the damage equal to 18% of their wealth.

• Willingness to pay to guarantee optimal timing: When respondents were asked how much they would be willing to pay for a hypothetical intervention that would guarantee the optimal timing of transfer of assets, 25% said they would be willing to pay more than $50,000, and 15% would be willing to pay more than $100,000.

The solution

Wealth managers who can help with this transfer-timing issue will have an unrivaled value proposition to set them apart from the competition. The Carefull Financial Safety Service takes the guesswork out of determining when it’s time for a client’s trusted agent to intervene.

Smart monitoring: Research shows that those with Alzheimer’s and related dementias show a pattern of missed payments up to six years before a diagnosis. The Carefull Financial Safety Service was created to help catch money mistakes that are common to older adults through financial account, credit and identity monitoring. Not only does Carefull’s smart monitoring technology identify late and missed payments, but also it determines what is normal behavior to catch changes that can be early warning signs of dementia, such as:

• Reduced or increased spending
• Out-of-character purchases and withdrawals
• Increased charitable or political contributions
• Swings in pharmacy spending
• Changes in geographic radius of purchases (shorter distances traveled can indicate issues with navigation/getting lost)

Trusted contacts: The Carefull platform includes a built-in option to allow users to name trusted contacts and give them view-only access to bank, credit and investment accounts that are being monitored. Users can choose to allow trusted contacts to receive alerts when Carefull spots money mistakes and suspicious activity so that those contacts can get involved, if necessary.

A platform built for advisors to protect clients: Carefull Pro allows wealth managers and advisors to provide the Carefull service to clients in five minutes or less. Carefull Pro gives financial professionals a zero-effort way to give financial protection and family collaboration to clients: allowing you to protect assets, retain clients, cultivate deeper relationships with older customers, and foster connections with their next generation.

‍ To learn more about how Carefull’s smart money monitoring can help solve the transfer-timing issue for clients, get in touch with the Carefull team .

Cameron Huddleston

Cameron Huddleston is an editor-at-large at Carefull and the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances . You can learn more about her at CameronHuddleston.com or follow her on Instagram at @cameronkhuddleston .